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My Study Guide to The California Real Estate License Exam | PART 2 | Title & Ownership Rights

Understanding Property Ownership and Title: What Every LA Homeowner Should Know (Part 2)


In Part 1, we explored the foundational ideas behind property ownership and title:


  • What ownership really means;

  • What a title is; and

  • Why it matters when buying, selling, or inheriting real estate.


Now, in Part 2, we're diving deeper into:


  1. The different forms of ownership;

  2. How property is transferred; and

  3. What protections are available to ensure you're covered when things get complicated.


Whether you’re buying your first home, helping a loved one transfer property, or simply want to better understand the legal landscape around real estate in Los Angeles, this breakdown is for you.



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Forms of Ownership: Who Can Own What?


Let’s start with the basic ways property can be owned.


Ownership structures impact everything from how taxes are filed to who inherits the property—and even who can sell it.


Ownership in Severalty (Sole Ownership)


This is the simplest form of ownership:


One person or entity owns the entire property. That person could be an individual, a corporation, a trust, or an LLC.


Ownership in severalty means full control—but also full responsibility.


Co-Ownership (Concurrent Ownership)


When two or more people share ownership of the same property, it's called co-ownership.


Each person holds an undivided interest, meaning no one owns a specific room or portion—the ownership is shared equally or in designated shares.


Here are the most common types:


  • Tenancy in Common: Owners may hold unequal shares, and there is no right of survivorship (meaning if one owner dies, their share passes to their heirs, not the other owners).


  • Joint Tenancy: All owners must take title at the same time, through the same deed, with equal shares and equal rights.

    • This form includes the right of survivorship—when one owner dies, their interest passes to the other joint tenant(s).


  • Tenancy by the Entirety: Similar to joint tenancy, but exclusively for married couples (not recognized in California).

    • This form of ownership also includes the Right of Survivorship (harsh wording... I know)


Right of Survivorship (as it relates in marriage), essentially says that if a spouse dies, half of their property is inherited to their spouse and the other half is handed to their Heirs.



Business & Entity Ownership Structures


Not all property is owned by individuals. Businesses often hold title to real estate as part of their operations or investment strategy.


Here are the common types:


  • Sole Proprietorship: An individual owns the property under their own name.

    • Simple, but offers no legal separation between personal and business liabilities.


  • Partnerships: In general partnerships, all partners share liability.

    • Limited partnerships limit liability for some partners.

    • Partnerships can hold real estate jointly, but ownership structure must be clearly defined in the partnership agreement.


  • Corporations: A legal entity separate from its shareholders.

    • Property is owned by the corporation, not the individuals.


  • LLCs (Limited Liability Companies):

    • Popular for real estate investors. LLCs offer liability protection and pass-through taxation.


  • REITs (Real Estate Investment Trusts): These are companies that own, operate, or finance income-producing real estate.

    • Ownership is in the form of shares traded on public exchanges.



Common Interest Ownership: Condos, Co-ops & More


Some ownership structures blend private property rights with shared community areas. These are common in urban settings like Los Angeles:


  • Condominium: You own your unit in fee simple, but share ownership of common areas (like the pool or hallways) with other condo owners.


  • Cooperative (Co-op): You don't own real estate directly. Instead, you own shares in a corporation that owns the building.

    • Those shares give you the right to occupy a specific unit.


  • Townhome: Typically, you own both the interior and the land it sits on, and may share walls with other units. Often includes an HOA.


  • Timeshare: You own the right to use a unit for a certain amount of time each year. Fractional ownership is more about time than space.



How Property Changes Hands: Transfer of Title (Alienation)


Ownership doesn’t always stay the same.


When a property changes hands, it's called "alienation." That can happen voluntarily or involuntarily.


Voluntary Alienation


This includes actions like selling your home, giving it away as a gift, dedicating it for public use, or receiving a government grant.


Involuntary Alienation


Sometimes, property is transferred without the owner's choice:


  • Foreclosure: Lenders can take ownership if the mortgage isn’t paid.


  • Adverse Possession: Someone who openly uses land for a certain period of time (and meets strict legal criteria) can claim ownership.


  • Eminent Domain: The government can force the sale of property for public use—with compensation.


  • Natural Causes: Terms like avulsion (sudden loss of land) and accretion (gradual land gain) can shift property lines.




Types of Deeds and What They Mean


A deed is the legal document used to transfer title.


Not all deeds are created equal:


  • General Warranty Deed: Offers the most protection. The seller guarantees they have clear title and will defend it against any claims.


  • Special Warranty Deed: Only covers the time the seller owned the property.


  • Quitclaim Deed: Offers no guarantees. It simply transfers whatever interest the person may have.


Each deed serves a purpose, whether it’s a real estate sale, a divorce settlement, or a family gift.



Recording & Public Notice: Why It Matters


Once a property is transferred, the deed should be recorded with the county.


This creates "constructive notice"—the legal assumption that everyone knows about the change.


This protects the new owner from future claims.


  • Constructive Notice: Achieved through public record.

  • Actual Notice: Direct knowledge (e.g., you were told or shown directly).


Skipping recording can leave your ownership open to challenge. Don’t skip it.



Marketable Title, Title Insurance, and Clearing Defects


Just having a deed doesn’t mean your title is "marketable"—meaning clear, clean, and safe to transfer.


  • Chain of Title: The complete history of ownership.

  • Abstract of Title: A summary of the chain.

  • Cloud on Title: Any issue (like a lien or dispute) that must be resolved before sale.

  • Suit to Quiet Title: A court action to settle ownership disputes.


Title Insurance


There are two types:


  • Owner’s Policy: Protects you if problems with title arise after the sale.

  • Lender’s Policy: Required by your mortgage lender to protect their interest.


Don’t skip title insurance. It can save you from massive legal headaches later.


Final Thoughts: What You Should Know as a Buyer or Seller


Understanding title and ownership isn’t just for lawyers—it’s critical for anyone involved in real estate.


Know your form of ownership.


Record your deed.


Invest in title insurance.


And when in doubt, consult a professional.


As Los Angeles continues to grow, and more homeowners take advantage of laws like SB 9 or explore building ADUs, clear title and ownership rights will become even more important. Here's exactly what you need to know about ADU law in Los Angeles.



Reach out—we’re here to help make real estate simple.


As always, let me know what you thought about how you liked the content and how you want me to change the format or style to help you learn as effectively as possible.


Live well, my friends.


-- Odysseas Lamprianidis

 
 
 

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