What does "Legal Title" Mean in Real Estate?

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When you purchase a property, you have to decide how you want title to read after closing. "Title" is the legal paperwork that states who owns the property. Title can be held by a person, a company, or a trust. This post will explain what your options are and how your name will look on your title in various examples.

Examples:

John Smith owns a limited liability corporation, called Smith LLC. He also has a trust, called The J. Smith Trust. When John purchases a real estate property, he can choose how to hold title:

  • Individually as John Smith
  • Jointly, with his spouse Mary Smith (title reads John Smith & Mary Smith)
  • Through Smith LLC
  • Through J. Smith Trust

Title typically is not specified when you make an offer on a property; rather it is typically done during the escrow period. The escrow company provides the buyer with a vesting worksheet, where the buyer can make his or her election. In fact, standard language in the offer to purchase real estate typically states: "Title shall vest as designated in Buyer's supplemental escrow instructions."

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