Ways to Take Title of Real Property in Arizona

When buying a property in Arizona there are several ways that you can choose to hold title. This article discusses the various options you have and what each of them means. 

Community Property (a method of co-ownership for married persons only) As one of nine community property states, Arizona presumes that all property acquired by a validly married couple is community property, meaning the husband and wife each hold an undivided one-half interest and the consent of both parties is required to convey or encumber the property. Exceptions include property acquired through gift, device, or descent (sole and separate property), but in these cases, the property owner’s spouse must execute a disclaimer deed to avoid the presumption of community property. Upon death, the estate of the decedent must be cleared through probate, affidavit, or adjudication. Each spouse may provide by will for the disposition of his/her interest in the property. Both halves of the community property receive a revised tax basis equal to fair market value as of the date of death. A married couple seeking to hold title to real property located in Arizona in a method other than community property may do so by renouncing the community property form and specifically executing another method of co-ownership.

Community Property States (Used in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin)

Community Property with the Right of Survivorship (a method of co-ownership for married persons only) This method entails the same stipulations as community property except that upon death the estate passes to the surviving spouse (not heirs) outside of probate and there is no court action needed to clear the title. However, a certificate of death must be recorded in the Arizona county in which the property is located. Also, evidence of the intent of a married couple to hold title to real property as community property with the right of survivorship must be in writing in order to avoid the presumption of community property. In the event of annulment or divorce, the property converts to the tenancy-in-common method of ownership. Community property with the right of survivorship was enacted in Arizona during the 1995 Legislative Session and became effective retroactive to January 1, 1995. A.R.S. § 33-431.

Joint Tenancy with the Right of Survivorship (a method of ownership for two or more persons regardless of relationship) Two or more persons may hold title to real property as joint tenants with the right of survivorship. Upon the death of one of the joint tenants, his/her interest is transferred to the surviving joint tenant(s) outside of probate and no court action is required to clear the title. However, a certificate of death must be recorded in the Arizona county in which the property is located. Each tenant holds an equal and undivided interest and can partition the property by selling his/her joint interest. However, the consent of all joint tenants is required to convey or encumbrance the whole. A deceased tenant’s share is entitled to a revised tax basis equal to fair market value as of the date of death. In Arizona, evidence of the intent of a married couple to hold title to real property as tenants in common must be in writing so as to avoid the presumption of community property.

Tenancy In Common (a method of ownership for two or more persons regardless of relationship) Two or more persons may hold title to real property as tenants in common. Each owner holds an undivided fractional interest that may be disproportionate (e.g., 10%, 40%, and 50%) without the right of survivorship. The only unity involved is possession. Each tenant share can be conveyed, mortgaged or devised to a third party, but the consent of all tenants is required to convey or encumber the whole. Upon death the tenant’s share passes to heirs through will or intestacy and the estate must be cleared through probate, affidavit, or adjudication. Each share has its own tax basis. In Arizona, evidence of the intent of a married couple to hold title to real property as tenants in common must be in writing so as to avoid the presumption of community property.

General or Limited Partnership (a method of ownership for business owners) Title may be taken in the name of a general or limited partnership duly formed under the laws of the state of Arizona or the state of the formation of the partnership. A partnership is defined as a voluntary association of two or more persons as co-owners in a business for profit. A limited partnership has one or more general partners and one or more limited partners. A certificate of limited partnership must be filed in the Office of the Secretary of State, a certified copy of which must be recorded.

Corporation (a method of ownership for business owners) Title may be taken in the name of a corporation provided that the corporation is duly formed and in good standing in the state of its incorporation. 

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