Many unmarried couples buy homes together. When making what is generally the largest investment in one’s life, most people do not take into account consideration what will happen if the couple breaks up, or when one of them dies.
For unmarried couples, title to real property can be held in several different ways:
1. Joint Tenants with Right of Survivorship: This means that the couple owns the house by the “whole” and when one person dies, the other person automatically owns the house.
2. Tenants in Common: This means that the couple owns the property by the “part” and not by the whole. Each party can leave his or her share upon death to whomever they choose. Further, if the couple break up each owns his/her share.
While owning property as Joint Tenants is wonderful if your only concern is dying, it becomes much messier if the couple breaks up. If the property is owned by the whole, there is no easy way to sever the shares. While a partition action can be brought (NY RPAPL Art. 9), it is a difficult and expensive proceeding, but if successful forces the severing of the tenancy and the sale of the property.
Tenants in Common is often a good method to own property if you want to leave your share to someone upon your death (it can be your partner), or, in the event of a breakup, you want to sell your share. While this makes it easier to divide the property, how many of us are going to want to be roommates with your ex? It is important that the deed specifically states what percent each person owns (is it equal or unequal?).
However, how you hold title does not address issues such as recoupment of down payments, closing costs, or how the costs will be shared during the time that you own it.
The best and simplest way to address all of these issues is to have a partnership agreement. You would not go into a transaction with a business partner without this type of agreement, and yet, most people are willy- nilly about addressing these issues with a loved one. A partnership agreement can include who is paying what expenses ; addressing what happens to the house in the event of a dissolution of the relationship- recouping closing costs and down payments ; who will live in the house upon a breakup, and how expenses will be shared while the property is on the market for sale.
If an unmarried couple buys a home together and at some point marries, the partnership agreement can continue or be amended. If a home is titled to “me” before the marriage, it does not automatically become “ours” when we marry, or vice versa.
While we all hope for the best, we always need to prepare for the worst (a breakup) or the inevitable (passing away). It is always wise to prepare for the worst case scenario which is why we stock pile disaster kits, buy insurance, and take other measures to protect ourselves and our loved ones.