There are two ways that unmarried people can hold title. The first is called “tenants in common,” and the second is “joint tenants with right of survivorship.” Married couples also can hold title as tenants by the entirety. If you live in the District and are a same-sex married couple, you can hold title as tenants by the entirety. Residents of Maryland and Virginia do not have that right.
Under the first approach — tenants in common — each of you would have a divisible interest in the property and could control his own portion. The ownership split can be proportional based on your contribution to the down payment or on some other measure. For this example, let us assume that each of you will have a 50 percent interest in the property. If one of you dies, your 50 percent interest would go to your estate, presumably through your will, if you have one, which you should. The matter would have to be probated through the courts, however.
If the title is held as joint tenants with right of survivorship, then should one of you die, the other would automatically own the entire property. Even if the deceased person had a will giving his or her property to a third party, the property would still go to the surviving joint tenant.
Tenants by the entirety, the option reserved for married couples, is a more sacred evidence of title. As with joint tenants, when one tenant by the entirety dies, his or her interest automatically goes to the survivor, and no probate is necessary.
It seems that the joint tenant approach is the one you are looking for because you want the house to go to your partner instead of having relatives challenge the property in probate court. However, let me raise a question for you to ponder before you decide.
Married or unmarried, there is no certainty in life that two people will stay together forever, even if you are (or will get) married. If, someday, you decide to split up, when you die, your interest in the property would automatically go to your partner, which may not be what you want. You may have children and may want to ensure that they are protected in the event of your death.
You should consider the tenant-in-common arrangement, coupled with a will. Under this approach, if you should die, your interest in the property would go to your heirs, as designated in your will. Presumably, your will would give your interest in the property to your partner. However, if the two of you have a falling out, it is easier to change your will than to change the title. This will, however, require probate proceedings.
You can unilaterally change your will; changing the title requires approval by both of you.
I also recommend that you and your partner enter into a co-ownership agreement before you buy your new home. This is a written document spelling out answers to as many questions as you can think of, such as:
l How will mortgage, tax and insurance payments be made and who will make them?
l How will routine housing expenses be handled?
l Will you have a joint checking account?
l What happens to the house if one of the parties wants out?
l Who owns the furniture and other possessions in the event of a dissolution of your partnership?
l If you agree to sell the property, how will the net sales proceeds be allocated, especially if one of you made a larger down payment when you bought it?
l Should you be unable to reach agreement on any issues, how will they be resolved? Will you go through through arbitration, mediation or litigation?
If you are married, there are other issues that should be considered. Only a few states allow same-sex marriages. What if one of you moves to a state that does not recognize same-sex marriages? You would not be able to get a legal divorce. Accordingly, unless you want to spend a lot of time and money on lawyers (as well as in a potentially hostile court), your co-ownership agreement should be able to resolve all of the outstanding real estate issues.
I hope, of course, that you and your partner never have to deal with a dissolution of your relationship. But it’s prudent to prepare for that possibility. It is always better to reach agreement when the parties are talking to each other than when they are bitter and angry.
I suggest you discuss these matters with your respective attorneys before you sign a contract to buy that property. And it’s not a good idea for the two of you to use the same lawyer, even if you are married. That could create a conflict of interest for that lawyer, especially because he or she will want to counsel you directly and incorporate your concerns into a final, formal agreement.
Benny L. Kass is a Washington lawyer. This column does not offer legal advice and should not be acted upon without obtaining your own legal counsel. For a free copy of the booklet “A Guide to Settlement on Your New Home,” send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036.