The Unity of Title Rule

The so-called “unity of title” rule requires that all of the owners receive their interest in the property from the same event or at the same time. If, for any reason, the “unity” of the tenants is broken, the joint tenancy is dissolved. This rule can create significant complications. For example, if an owner uses their interest as collateral on a loan or transfers their share to a loved one, the joint tenancy agreement is automatically voided—even if the owner did not inform their fellow tenants of the change.

Tax Disadvantages

California homeowners pay capital gains taxes upon the acquisition of a property. These initial costs form the property’s “basis.” However, when the owner dies, the basis is “stepped up” to its current value. Ordinarily, this “stepped up” basis can benefit heirs, who need only pay capital gains taxes on the property’s original value. But in joint tenancy arrangements, the heir inherits a proportionate share of the basis. So, if there are two co-owners, the beneficiary will receive a “stepped up” basis equivalent only to the deceased tenant’s interest in the property.


Joint tenancy arrangements only survive when owners cooperate with one another. However, if and when a tenant decides to transfer their interest to a third party—a bank, a spouse, or a child—the agreement is permanently voided, irrespective of the other owners’ wishes.

Alternatives to Joint Tenancy Agreements

Joint tenancy is not for everyone. Depending on your circumstances, your estate may be better served through:

  • The creation of a revocable living trust, which allows the homeowners’ heirs avoid probate in its entirety.
  • The formation of a limited liability corporation, facilitating privacy and bolstering a business’s assets.
  • A community property arrangement, which allows spouses and their heirs to save big on taxes and avoid the perils of third-party interference.

Since every family has vastly different needs, you should always consult an estate planning attorney before entering into an ownership agreement that could compromise your heirs’ aspirations.


Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.