Mistakes By the Untrained Eye Can Be Costly
We recently had a client that purchased a property with his father. The out-of-state closing agent never added the “vesting,” so in this scenario they became Tenants-in-Common. Title vesting is the way two or more people own the property and it identifies what happens upon the death of one of the owners. Let’s review title vesting:
- Joint Tenancy with Right of Survivorship – upon the death of one of the joint tenants the property transfers to the surviving joint tenant(s) and does not go through probate.
- Community Property with Right of Survivorship – similar to Joint Tenancy, however this is for married couples only and check with your State if it is a Community Property State such as Nevada.
- Sole and Separate Property – the spouse has executed a deed relinquishing their interest in the property.
- Tenants-in-Common – typically used by people purchasing a property together with a percentage of interest, in the event that vesting is omitted this then becomes the vesting by default.
As a result of the closing agent omitting the vesting, the father and son each own 50% of the property. The father then wanted to transfer his interest to his son and daughter-in-law. Most people doing this independently would have assumed that transferring the title from father to son and daughter-in-law would have resulted in his son and daughter-in-law being 100% owners of the property. Here’s where the untrained eye can lead to a costly mistake. Mistake number one was made during the purchase of the property whereby the closing agent inadvertently omitted the vesting. Now let’s take a look at the potential for mistake number two.
At the time the father wanted to transfer his interest in the property, his son reached out to someone he knew in the real estate industry. Unfortunately, the person he contacted wasn’t versed in title vesting even though they are in the industry. The son followed his gut instinct that something wasn’t correct with the document that he got from his friend. He called his lender for a second opinion and his lender suggested he contact us. The lender said, “you want someone trained.”
Had they used that original document from his real estate friend, and had something happened to the son, the result is that the wife would have needed to probate 50% of her husband’s interest. What we did to fix it was draft the deed that both the father and son signed transferring 100% of the property to the son and his wife as Joint Tenants with Right of Survivorship. Now, probate for this property is not an issue.
**as an aside, with potential changes in the estate tax laws, it is important to review your estate plan with your attorney and tax advisor before making any changes**
This is one example of why “NOT” to DIY your own deeds; most consumers would have missed this, including real estate professionals and residential mortgage loan officers. In the end, real estate agents and residential mortgage loan officers are not trained in catching potential vesting issues nor are some legal and tax professionals. This is why you hire a professional firm that has the knowledge and experience to look out for your vesting interest. We are always happy to answer your questions. 702.233.4014 and you may also chat with us online at our website.
Quick Claim USA and their employees are not attorneys in the State of Nevada or in any other State or Jurisdiction. Quick Claim USA is not licensed to give legal advice and may not accept fees for giving legal advice. Should you have questions regarding any of the above items, you must seek the advice of independent legal/tax counsel of your choosing.
