COMMON WAYS OF HOLDING TITLE


How Should I Take Ownership of the Property I am Buying?
Deirdre Remax Keys
Property has become increasingly more valuable and the question of how parties can take ownership of their property has gained greater importance. The form of ownership taken i.e the vesting of title, will determine who may sign various documents involving the property and future rights of the parties to the transaction.


These rights involve such matters as: real property taxes, income taxes, inheritance and gift taxes, transferability of title and exposure to creditor's claims. Also, how title is vested can have significant probate implications in the event of death.
 
There have been some horror stories of spouses allowing their husband or wife to conclude a property transaction and sign all documents only to find out later that they have no rights to the property whatsoever. It is therefore important to know prior to concluding any contract exactly who will hold tile to the property and the consequences of that title holding.

We therefore advise those purchasing real estate to give careful consideration to the manner in which title will be held – and to do so prior to undertaking any purchase. Buyers may wish to consult legal counsel to determine the most advantageous form of ownership for their particular situation, especially in cases of multiple owners of a single property.

Below are some brief definitions of common vestings as an informational overview but as always – the information I provide is for general assistance only and clients should not rely on these as legal definitions.
 
Common Methods of Holding Title
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SOLE OWNERSHIP

Sole ownership may be described as ownership by an individual or other entity capable of acquiring title. Examples of common vestings in cases of sole ownership are:

1. A Single Man/Woman:
A man or woman who has not been legally married. For example: Xhanti Buso, a single man.

2. An Unmarried Man/Woman:
A man or woman who has never been married or was previously married and is now legally divorced. For example: Sharon Botha, an unmarried woman.

3. A Married Man/Woman as His/Her Sole and Separate Property:
A married man or woman who wishes to acquire title in his or her name alone.

The title company insuring title will require the spouse of the married man or woman acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that it is the desire of both spouses that title to the property be granted to one spouse as that spouse's sole and separate property. For example: Alan Jasper, a married man, as his sole and separate property.

CO-OWNERSHIP

Title to property owned by two or more persons may be vested in the following forms:

1. Community of Property:
A form of vesting title to property owned by husband and wife during their marriage which they intend to own together. Community property is distinguished from separate property, which is property acquired before marriage, by separate gift or bequest, after legal separation, or which is agreed to be owned only by one spouse.

Real estate conveyed to a married man or woman is presumed to be community property, unless otherwise stated. Since all such property is owned equally, husband and wife must sign all agreements and documents of transfer. Under community property, either spouse has the right to dispose of one half of the community property, including transfers by will. For example: Aaron Cramer and Jill Cramer, husband and wife as community property.

2. Joint Tenancy
A form of vesting title to property owned by two or more persons, who may or may not be married, in equal interest, subject to the right of survivorship in the surviving joint tenant(s). Title must have been acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate. When a joint tenant dies, title to the property is automatically conveyed by operation of law to the surviving joint tenant(s). Therefore, joint tenancy property is not subject to disposition by will. For example: Bruce Buyer and Barbara Buyer, husband and wife as joint tenants.

3. Tenancy in Common:
A form of vesting title to property owned by any two or more individuals in undivided fractional interests. These fractional interests may be unequal in quantity or duration and may arise at different times. Each tenant in common owns a share of the property, is entitled to a comparable portion of the income from the property and must bear an equivalent share of expenses. Each co-tenant may sell, lease or will to his/her heir that share of the property belonging to him/her. For example: Colin Sizani, a single man, as to an undivided 3/4 interest and Tumi Tlale,  a single woman, as to an undivided 1/4 interest, as tenants in common.

Other ways of vesting title include as:

1. A Corporation:
A corporation (or commonly called a company) is a legal entity, created under state law, consisting of one or more shareholders but regarded under law as having an existence and personality separate from such shareholders. This may take the form of a private or public company or a Close Corporation

2. A Partnership:
A partnership is an association of two or more persons who can carry on business for profit as co-owners, as governed by the relevant commercial laws applicable.. A partnership may hold title to real property in the name of the partnership.

3. A Trust
 Estate planners often recommend Trusts as a viable option when contemplating the manner in which to hold title to real property. When a property is held in a Trust, title companies have particular requirements to facilitate the transaction. While not comprehensive, following are answers to many commonly asked questions. If you have questions that are not answered below, your title company representative may be able to assist you, however, one may wish to seek legal counsel.

A typical trust is the Family Trust in which the Husband and Wife are the Trustees and, with their children, the Beneficiaries. Those who establish the trust and transfer their property into it are known as Trustors or Settlors. The settlor's usually appoint themselves as Trustees and they are the primary beneficiaries during their lifetime. After their passing, their children and grandchildren usually become the primary beneficiaries if the trust is to survive, or the beneficiaries receive distributions directly from the trust if it is to close out.
 
QUESTIONS AND ANSWERS
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What is the best way to hold my property?

Only your attorney or accountant can answer the question fully, as there are cost as well as tax implications to consider; some common reasons for holding property in a Trust are to minimize or postpone death taxes, to avoid a time consuming probate, and to shield property from attack by certain unsecured creditors. For most homeowners, in South Africa, the simplest and best way is simple direct personal ownership.

What taxes can I avoid by putting my property in trust?

Married persons can usually exempt a significant part of their assets from taxation and may postpone taxes after the first of them to die passes. You should check with your attorney or accountant before taking any action.

Can a Trustee borrow money against the property?

Generally, the conditions of the trust might not allow this but it is important to remember that a Trustee can take any action permitted by the terms of theTrust. However, not all lenders will lend on a property held in trust, so check with your lender first.

Can someone else hold title for me?

In South Africa, the only legal title holder to property is the person/s whose name appears on the Title Deed at the Deeds Office. If you wish to remain anonymous as a title holder and place the property in someone else’s name, you do so at own risk.
Remember:
How title is vested has important legal consequences. You may wish to consult an attorney to determine the most advantageous form of ownership for your particular situation.
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Please feel free to contact us with questions or comments

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