En-Titled

It's a new week. It's also a "new economy," a euphemism for the contraction and correction of the market we've always had in response to the unbelievable growth of the last few years that seemed too good to be true (and, as it turns out, was).

Many of you, I know, have or are invested in real estate. I don't mean your homes, which are assets afforded special protection under the law. I am talking about investment properties. Some of you were into flipping, some of you wanted rental income and some of you were looking for a vacation home. Many of you gave little or no thought to how to title the property.

By titling, you understand, I am not referring to your preference to call the place "Return to Tara" and your husband's preference to call it "My Escape From You." I am talking about legal title.

I know, you think this is dry stuff. I suppose it is. But it's also very important. Many of you are now considering walking away from your investment and just letting the bank take it over. Ah, if only life were that simple. You see, just how deep you may be in often depends on who has title to the property.

Did you put the property in your own name? Did you title it as Bill and Sue, as husband and wife? Believe it or not, whether the property can be reached by your creditors often depends on who has title. As husband and wife, you and your spouse are considered legally indivisible. If the mortgage is in just your name but the property is titled in your joint name, there isn't much the bank can do. The bank is probably secured by some other form of collateral or wasn't dumb enough in the first place to loan you the money without securing the house, but you see where I'm going.

Here's another quick example. Suppose you have a terrible shopping addiction. You just can't get enough EBay in your day. You run up massive debt and the credit card company comes after you. If that property of yours is titled in the name of you and your spouse, the bank can't touch it because the law treats you and your spouse as a single, indivisible person. If it's in your name, you'll be paying for that set of eight Darth Vader mugs, after all, once the foreclosure proceeds are doled out.

Title matters. If you bought investment property, or even if you own your own primary residence, you may want to check out who owns it. You may also want to consider what's he best way to title the property so as to afford you the maximum protection.