Changing property ownership and transferring titles can be a little confusing. If you own property and will be getting married, entering into a partnership regarding business, or creating a trust, you will need to reassess your property title. This also applies if you are selling or inheriting a property.
You will need to consider the following when transferring titles:
Confirmation of ownership and title chain
The first thing you need to do is to obtain a Condition of Title Guarantee. You will need a title company to do this, which usually costs around $400 and $500. This document provides a property owner with a comprehensive report on the subject property, including who owns it and any defects. This will guarantee that the party selling has the legal right to transfer the title and that the title received is valid.
This comes at a cost, but the clarity it brings will prevent further issues from coming up with titles.
Are there associated exceptions and exclusions?
Real estate transfers come with several tax ramifications, but the two specific ones to consider are possible tax exemptions and reassessment exclusions. This varies depending on state laws, but you should consider them before making any title transfers.
Some of the exemptions under the revenue and tax codes can allow you to skip the payment for transfer tax after recording a transfer document. These clauses mainly apply to trust transfers, properties gifted, or going through dissolution. You may need these exclusions to protect your property tax from increasing over time.
Is the deed type correct?
The type of title deed to be used depends on the property type. In transferring property, the most common types of deeds used are trust transfer deeds, grant deeds, gifts deeds, and interspousal transfer deeds. An affidavit of death is used in cases of the title owner passing. Grant deeds are usually the most popular, but you should ensure that your deed type suits the circumstance you require it for.
For example, grant deeds are not the appropriate document for a legal transfer of a jointly owned property going to a surviving partner. The law protects the interest of the deceased joint tenant by directly transferring the property to the surviving owner, eliminating the need to use a grant deed.
How is the title held?
How a title deed is held is just as important as the type of title deed to use for transferring property.
The way the title deed is held is what determines the transferability of the title, as well as the owner’s rights. It also covers the rights of survivorship in cases where multiple parties own a property. A title can be held in the name of the owning parties, a trust, or business’s name. If you are going to hold a property, you should be fully aware of the merits and rights that come with the method of holding the title.
The law offices of Lamb, Carroll, Papp, and Cunabaugh deal in issues regarding real estate law including property disputes, joint tenancy, and title transfers. Reach out to us for a consultation.