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Taking Title To a Home With Your Friend

Written by Posted On Monday, 27 February 2017 12:35

Question. My fiancee and I expect to settle on our new house shortly, but we will not be married until the end of this year. We need to know if there is some addendum that we need to protect each other's interest in the event of a tragedy that claims one of us. We wish to ensure that the other gets the property with absolutely no claims considered by family members.

Answer. For unmarried people who own property, there are two ways that they can hold title. The first is called "tenants in common" and the second is "joint tenants with right of survivorship."

Under the first approach -- tenants in common -- each of you would have a divisible interest in the property. Let us assume in your case that each of you will have a 50 percent interest in the property, although the percentage of interest can be anything you both decide upon. If one of you dies, your 50 percent interest in the property will go to your estate, presumably through your Will, which you should have.

If title is held as joint tenants with right of survivorship, however, then there is no divisible interest. If one of you should die, the other would automatically own the entire property.

It seems to me that the joint-tenant approach is the one you are looking for. However, let me raise a question for you to ponder before you make the final decision.

I am not interested in breaking up your relationship before you get married, but what happens if you find out before the marriage that you and your fiancee are not right for each other? If you should die under the circumstance, your interest in the property may automatically go to your fiancee, which may not be what you want.

You might want to consider the tenant in common arrangement, coupled with a Will. Under this approach, if you die before marriage, your interest in the property will go to your heirs, as designated in your Will. Presumably, your Will would give your interest in the property to your fiancee. However, if you and your fiancee have a falling out, it is easier to change the Will than to change the title.

The Will can be unilaterally changed by you; changing the title requires action and approval by both of you. You also will have to pay a transfer and recordation tax to the jurisdiction in which the property is located if you change title as unmarried persons.

Once you get married, however, I recommend you have the title changed to a "tenant by the entirety" arrangement. This has the same effect as a joint tenant with right of survivorship, but creates a more sacred relationship for husband and wife that is honored by law.

It is possible under some circumstances, for example, for a creditor of one of you to break a joint tenancy. Generally speaking, it is almost impossible for the tenant by the entirety arrangement to be attached by a creditor of only one party to the title.

And before you take title, the two of you must enter into what I call a "partnership agreement". Spell out -- in a written document -- answers to such questions as (1) what happens if one of us wants out; (2) how much do each of us have to pay every month for the mortgage, insurance, real estate tax and food and household supplies, and (3) what if one of us cannot make the monthly payment. This is just a few of the many questions the two of you must work out and resolve. The time to reach agreement is when you are talking to each other, not when you are at odds.

I suggest you discuss these matters with your fiancee, and with your respective lawyers, before you go to settlement.

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Benny L Kass

Author of the weekly Housing Counsel column with The Washington Post for nearly 30 years, Benny Kass is the senior partner with the Washington, DC law firm of KASS LEGAL GROUP, PLLC and a specialist in such real estate legal areas as commercial and residential financing, closings, foreclosures and workouts.

Mr. Kass is a Charter Member of the College of Community Association Attorneys, and has written extensively about community association issues. In addition, he is a life member of the National Conference of Commissioners on Uniform State Laws. In this capacity, he has been involved in the development of almost all of the Commission’s real estate laws, including the Uniform Common Interest Ownership Act which has been adopted in many states.

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