Metro Phoenix Economic Snapshot – Arizona 2014

Metro Phoenix Economic Snapshot

Arizona 2014

This comprehensive report on the current economic outlook of the Phoenix Metro market was penned by well respected experts Michael Orr (left) and Elliott Pollack (right) for our friends at Old Republic Title Company.

Check out the report here:  Metro Phoenix Economic Snapshot

Elliott Pollack

Michael Orr

Where did the the term “Deed” come from? (Livery of Seisin)

Credit: Getty Images

Credit: Getty Images

What’s in a name?

We’ve all heard and used the term. Here at docprepper.com headquarters, we probably say, type or think it about 1000 times a day! So just for kicks, we decided to explore the term deed a bit further than it’s taken on a regular basis.

A deed is a deed, indeed!

So it turns out, all of our modern day deeds derive from an early English common law technique called “feoffment.” More specifically, there was a ritual (deed) performed called “livery of seisin” (or seizin).

The term “livery” is related to “delivery” and is still used in modern contract law. Livery of seisin could mean either livery in law, whereby the parties would go within sight of the land, a declaration is made and the recipient walks into the land or it could refer to livery in deedan ancient display in front of witnesses that included a physical transfer of land from one party to another!

In this act, also referred to as the “turf and twig ceremony,” the person transferring the land would take a handful of dirt, a twig or a stone from the actual land and hand it over to the person receiving the property while making a recital, such as “This turf and twig I give to thee, as free as Athelstan gave to me, and I hope a loving brother thou wilt be!”

A Famous Example

In fact, William Penn (of Pennsylvania fame) took possession of his land through the ceremony of livery of seisin! You can visit the site of the ceremony even today and see this plaque:

Credit: Public Domain, Wikipedia Commons

Today at the closing table we may hand over keys instead of dirt, and we may sign a Warranty Deed instead of performing the livery of seisin, but it’s not so far off that you can’t recognize the ancient in the modern… pretty cool!

What states are community property states?

Community Property States

Credit: sXc

Credit: sXc

We’ve often been asked the question:

What states have community property laws?

Well, that’s easy! In the US, there are currently nine community property states. They are as follows:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

In these states, the acquisition of property is treated differently when you’re married… and it’s something you need to consider even if you don’t live there.

For example: if you purchase rental property in Arizona but you live in New York, Arizona State law will take precedence! And by default, in Arizona you and your spouse will own that property together as “community property“. If you want to keep it separate from your spouse he or she must sign a Disclaimer Deed simply stating you will acquire it as your “sole and separate property” on the deed is not enough!

On the other hand, Arizona will not give you the “right of survivorship” by statutory default. So unless you and your spouse clearly indicate it’s your intention to acquire title as “community property with right of survivorship” on the deed and have both your signatures notarized, your estate will be subject to probate! If you need assistance changing the manner in which you hold title to real estate, just let us know. We’re happy to help!

 

Ways to Hold Title to Real Property in Arizona

Ways to Hold Title to Real Estate in Arizona

To download a PDF version of this post, click here: “Ways to Hold Title In Arizona“.

 

 

Credit: UnknownCOMMUNITY PROPERTY

Because Arizona is a community property State, there is a statutory presumption that all property acquired by husband and wife during the marriage, except property acquired by gift, devise or descent, is community propertyCommunity property is an estate of co-ownership between married persons only. Neither spouse, acting individually, may transfer or encumber real estate that is vested as community property.  Upon death of one of the spouses, the decedent’s interest will pass by will (if one exists) or intestate succession (if no will exists).

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP

A Community property estate between married persons that vests the title to real property in the surviving spouse provided it is expressly declared in the deed.  This vesting has the tax benefits of holding title as “community property” and the ability to avoid probate through “survivorship rights”.

JOINT TENANCY WITH RIGHT OF SURVIVORSHIP

Joint Tenancy with right of survivorship is a method of co-ownership that gives title to the real property to the surviving tenant(s) upon death of a joint tenant owner.  Title to real property can be held in joint tenancy by two or more individuals either married or unmarried.  If a married couple acquires title as joint tenants with the right of survivorship, they must specifically accept the joint tenancy to avoid the presumption of community property.

TENANCY IN COMMON

Tenancy in common (or tenants in common) is co-ownership where parties do not have survivorship rights and each owns a specific undivided interest in the entire title. For example, one party could own “an undivided 25% interest” while another 2 parties own 60% and 15%. It’s important to note that this can be combined with other ways to hold title, e.g. JOHN SMITH and JANE SMITH, husband and wife as community property with right of survivorship as to an undivided 50% interest. They would be “tenants in common” with whoever else were on title, but their 50% interest would be “community property with right of survivorship“.

TRUST (WITH A TRUSTEE)

Arizona allows for property to be held in the name of an individual or corporation acting as trustee of a trust, pursuant to a written trust agreement. The name of the trustee, trust and date of the trust agreement must all be declared as grantee. (Also, Arizona law requires that the names and addresses of the trust beneficiaries are disclosed when transferring property into or out of a trust.)

SOLE AND SEPARATE PROPERTY

Sole and separate property is real property owned by a spouse before marriage or any acquired after marriage by gift, devise, descent or specific intent to hold the title separate from the marital community.  If a married person acquires title as sole and separate property, his or her spouse must execute a disclaimer deed.

CORPORATION

Title may be taken in the name of a corporation provided the corporation is duly formed and in good standing in the State of its incorporation.

GENERAL PARTNERSHIP

Title may be taken in the name of a general partnership duly formed under the laws of 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.

LIMITED PARTNERSHIP

A partnership formed by two or more persons under the laws of Arizona or another State and having one or more general 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.

Using generic real estate forms may cost you a fortune

If it sounds like too good a deal, it probably is.

Boilerplate formsBeware of using generic legal forms (Robert Pears, Getty Images / October 23, 2013)

Beware of fill-in-the-blank forms

Benny L. Kass, Housing Counsel recently wrote an article for the Chicago Tribune we at docprepper.com found quite interesting! He points out the prevalence of downloadable, generic forms on the internet… and why using them isn’t always a good idea. Here’s a few excerpts from that article:

…I cannot recommend using boilerplate forms, even those that you can tailor to your particular state. Forms are created to deal with the most basic issues and do not consider specific situations. And forms cannot answer questions or provide advice.”

…You are considering entering into what might be the most expensive transaction of your life. Don’t rely on a form. Talk with a professional…”

We couldn’t agree more! If you need specific legal or tax advice you should always consult an attorney such as Mr. Kass. For general information, a Legal Document Preparer that specializes in real estate documents (like our experts at Professional Escrow Resources) can also provide you with some answers.

Transfer on Death / Beneficiary Deeds

The author also mentions the new trend of “Transfer on Death Deeds”, or Beneficiary Deeds as they’re known in States like Arizona:

…There is a relatively new concept that has been adopted in several states, called “transfer on death deed,” also called “beneficiary deeds.” This allows you, as property owner, to prepare a deed giving the property to whomever you name as your heir, and have the deed recorded among the land records where your property is located.”

We’ve been touting the benefits of these estate planning tools for some time. Check out our Transfer on Death / Beneficiary Deed services for Arizona, ArkansasColoradoDistrict of ColumbiaHawaiiIllinoisIndianaKansasMinnesotaMissouriMontanaNebraskaNevadaNew MexicoNorth DakotaOhioOklahomaOregonVirginia, and Wisconsin. As more States allow for this valuable tool, rest assured we’re doing what we can to encourage them along! And when they do come around we’ll be ready to assist you with the proper preparation, execution and recording of the instrument.

Time Share Nightmare

I can’t tell you how often we hear horror stories about timeshares! Here’s what one reader wrote in:

I am writing in response to a reader’s question regarding disposal of a time share. We had a Hawaiian time share from 2004 until 2011. The annual maintenance fees doubled during that time, making ownership much less attractive than when we initially made the purchase. After researching various ways to sell, donate or dispose of this asset, we determined that we could “deed back” the unit to the property at zero cost. We were able to take a deduction for this loss which resulted in a tax benefit nearly comparable to what we would have pocketed from a sale after commission and taxes. While all owners might not be in a higher tax bracket, I would recommend pursuing this option as it was relatively quick and painless and only involved contacting the resort and signing minimal paperwork.”

Sounds good, right? But that’s not always the case. Here was Mr. Kass’ reply:

Excellent suggestion, but it takes two to tango. You told me that the time-share developer agreed to take back the property. You were lucky. My experience is that most projects will not agree. And you cannot deed property to anyone unless the proposed receiver agrees to accept the property.” 

I can’t tell you how often we get requests to transfer a timeshare! Although every situation is different, we’re usually able to transfer your interest in a timeshare to whoever you like (so long as they accept it)!
Real estate forms can be tricky. Make sure you consult an attorney or certified legal document preparer like Professional Escrow Resources, CLDP #81407 for your real estate form needs.