Guide To Community Property In Real Estate

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Community property is a legal real estate concept that deals with who rightfully owns a property when a couple is married. Not every state has community property laws.

Community property is when spouses share equality in the ownership of any property they acquire during their marriage, even if only one spouse has their name down on the property title deed. Under community property, both spouses jointly share in the ownership and debit of the other spouse as it is all considered communal property.

Table of Contents

What Is Community Property?

Community property is a concept in real estate. Community property follows what is known as a marital status model means that community property concerns real estate property acquired during a marriage.

Community Property Is Only For Married Couples

Community property is only for legally married couples. Two people who live together, are roommates, or even relatives would not be protected under the community property law as they are not legally married.

Community property is considered a marital property law. Marital property under U.S. law is a legal term that refers to property acquired by a couple during their marriage.

Property that an individual owned before a marriage is considered separate property, as are inheritances or third-party gifts given to an individual during the marriage.

Signing a prenuptial or postnuptial agreement can exclude specific property from marital property or the community property law.

Community Property Ensures Both Spouses Jointly Own Property

In community property, both spouses own the property even if only one has their name on the property deed. Community property ensures that both parties in a marriage own the property.

If the property is acquired during a marriage and one spouse only has their name on the deed, under community property, both spouses are considered equal owners; the other spouse automatically has joint ownership rights and is considered an equal partner in the real property.

Not Every States Has Community Property Laws

Community property is not in every state of the United States. Nine states in the United States have community property laws, including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Community property states will recognize the rights of both spouses even if only the name of one spouse is in the property deed. In these states, one spouse cannot use or dispose of the property unless both spouses agree.

Listen To Our Podcast About The Ultimate Guide To Community Property In Real Estate by clicking here.

Community Property Also Applies To Debits

Community property also applies to debits as well as property. That means if a spouse acquires a mortgage or other debts during the marriage, the debts are shared equally.

The community property also applies to the spouses even if only one spouse has their name on the loan agreement. So community property can work both for the debits and real estate property.

Community Property And Right Of Survivorship

Community property comes with the Right of Survivorship. The Right of Survivorship is a legal term that means that when one spouse dies, the other spouse’s 50% interest would be transferred to the surviving spouse.

The advantage of this is that it ensures that property is not tied up in probate or other issues when one spouse dies. The surviving spouse can then become the complete owner of the property.

Community Property Extends Beyond Real Estate Property

Community property extends beyond Real Estate property and concerns other aspects of a married couple’s wealth.

In a community property state, any income that includes any real or personal property acquired by the spouse during a marriage is considered community property. This could consist of income, wealth, and the accumulation of debts.

Under community property, spouses will own and owe everything equally regardless of who earns or spend the income.

Community Property And Divorce

Like most aspects of martial property laws, when a couple is happily married, the laws work well, but when a couple decides to divorce, things can get messy. When a couple decides to split up, the courts will look at all the assets and debts of the marriage and divide them up.

Under community property, when a couple divorces, most courts will usually divide the debits and assets equally 50/50, no matter who was the primary income earner or who acquired the debits.

If you are married and living in a community property state, you must understand what community property means and why it is essential.

Another type of marital property law is Tenants By Entirety. By clicking here, you can read more about this by reading our blog Guide To Tenants By Entirety In Real Estate.

Note: This content is for informational purposes only and does not constitute legal advice. Please consult a qualified legal professional for advice. Real Estate Crunch always recommends that you seek professional advice for where you are living to understand the local real estate laws fully.

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