Shortly before closing, escrow will ask how you want to hold title. It is a quick question with long consequences — it affects what happens on death, who must sign to sell or refinance, and how the property is treated for tax purposes.
This is a legal and tax question, not a real estate one. We can explain the options so you know what you are being asked. For advice on which is right for you, talk to an attorney or your tax professional. The cost of an hour of good advice is small against getting this wrong.
Washington is a community property state
Washington is one of nine. In general, property acquired by a married couple or registered domestic partners during the marriage is community property, owned equally, regardless of whose name is on the paycheck. That baseline shapes several of the options below.
The common ways to hold title here
Sole ownership. One person or entity. A married person can hold property as separate estate — their own property rather than community property — though doing so generally requires the spouse to sign documentation acknowledging it.
Community property. Owned together by married persons or registered domestic partners in equal shares. Both must sign to sell or encumber the property. There can be meaningful tax advantages on the death of a spouse; ask your tax professional how that applies to you.
Community property with right of survivorship. Combines community property treatment with automatic transfer to the surviving spouse or partner on death, without probate. Popular for that reason.
Joint tenancy with right of survivorship. Two or more owners with equal shares, acquired at the same time by the same document, with the intent to create joint tenancy stated expressly. On death, the deceased owner’s interest passes automatically to the survivors. Available to people who are not married to each other.
Tenancy in common. Two or more owners holding shares that may be unequal — one person 70%, another 30%. Each owner can sell, mortgage or leave their share to whomever they choose. There is no automatic survivorship; a deceased owner’s share goes to their estate. This is the usual choice for unmarried co-buyers, siblings or friends buying together.
In a trust. Title held by a living trust, with trustees managing it under the trust’s terms. Commonly used to avoid probate. Set up with an estate planning attorney.
Entities. An LLC, partnership or corporation may hold title, typically for investment property. This affects financing significantly — many residential loan products will not lend to an entity.
Questions worth putting to your attorney
- What happens to this property if one of us dies — and does it go through probate?
- If we are not married, how are our unequal contributions protected?
- Does this choice affect our capital gains position when we eventually sell?
- Does it fit with the rest of our estate plan?
Decide this before closing week. It is a far easier decision made calmly in advance than squeezed in alongside everything else on the day.