When you purchase property in the State of Arizona your title company will ask you to fill out a form designating how you wish to title the property. Arizona is a community property state. All property acquired by husband and wife is presumed to be community property unless otherwise specified. To follow are the different ways to title a property in the State of Arizona:
Community Property:
- Requires a valid marriage between two people
- Each spouse holds an undivided one half interest in the estate
- One spouse cannot partition the property by selling his or her interest
- Requires signatures of both spouses to convey or encumber
- Each spouse can devise (will) one half of the community property
- Upon death, the estate of the decedent must be “cleared” through probate, affidavit or adjudication
- Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death
Joint Tenancy with the Right of Survivorship
- Parties need not be married; may be more than two joint tenants
- Each joint tenant holds an equal and undivided interest in the estate, unity of interest
- One joint tenant can partition the property be selling his or her interest
- Requires signatures of all joint tenants to convey or encumber the whole
- Estate passes to surviving joint tenant outside of probate
- No court action required to “clear” title upon the death of joint tenant(s)
- Deceased tenant’s share is entitled to a “stepped up” tax basis as of the date of death
Community Property with Right of Survivorship
- Requires a valid marriage between two people
- Each spouse holds an undivided one half interest in the estate
- One spouse cannot partition the property by selling his or her interest
- Requires signatures of both spouses to convey or encumber
- Estate passes to the surviving spouse outside of probate
- No court action required to “clear” title upon the first death
- Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death
Tenancy in Common
- Parties need not be married; may be more than two joint tenants
- Each tenant in common holds an undivided fractional interest in the estate. Can be disproportionate, e.g., 60% and 40%.
- Each tenant’s share can be conveyed, mortgaged or devised to a third party
- Requires signatures of all tenants to convey or encumber the whole
- Upon death, the tenant’s proportionate share passes too his or her heirs by will or intestacy
- Upon death the estate of the decedent must be “cleared” through probate, affidavit or adjudication
- Each share has its own tax basis
Sole and Separate
- Single or unmarried persons or married taking title WITHOUT Spouse
- If married, applies to property acquired prior to marriage, or after marriage by gift or devise, descent or specific intent. If a married person acquires title Sole and Separate, his or her spouse must execute a disclaimer deed to avoid the presumption of community property
Trust
- Names and addresses of ALL Trust beneficiaries must be included on the deed
- Name and date of the Trust must appear exactly as stated in the name of the Trust
Limited Liability Company, LLC
- LLC must be authorized to do business in the State of Arizona
- Must designate name of managing partner of the LLC
Information provided by Kristin Paxson, Sr. Escrow Officer, Equity Title Scottsdale Office. Questions about title or escrow? Kristin can be reached at (480) 607-0200 x18 or kristinp@eta-az.com.
