How Unmarried Couples Can Co-Own or Take Title to a Home

When you buy a house with your partner, you must decide how you will own the property, or "take title." Since in this context "title" is a synonym for "ownership," your decision has huge and lasting consequences, particularly on estate planning issues. Assuming you are buying the house for personal and not business use, you have three basic choices:

• one person holds title as sole owner

• both of you hold title as "joint tenants," or

• both of you hold title as "tenants in common."

One Person's Name: Sole Owner

If a recorded deed contains only one name, that person is the legal owner and has full legal power to sell or will away the house or other real property, even if someone else has contributed to its purchase and holds a nonrecorded interest.

Sometimes, a couple that jointly owns a house is tempted to put only one name on the deed to save on taxes, avoid creditors, or for some other reason. The tax savings can be attractive if one of your incomes is very high and the other's is very low, because it allows the high-income person to take all the house-related tax deductions. Or, if one person's credit is terrible, it may seem like a good idea not to mention his or her interest in the property in order to get a loan to buy the house.

Risks of Sole Ownership

In most cases the risks inherent in putting a jointly owned house in one person's name far outweigh the benefits. If your partner is the only one named on the deed (and is therefore presumed to be sole owner), you may be out of luck if your partner sells the house and pockets the money, or dies and leaves it to someone else. Sure, you can sue your ex-partner in an attempt to recover the amount of your financial interest in the property, but this type of lawsuit is often difficult to win, as most states have a strong legal presumption that the person whose name appears on the deed is the owner. In any case, a lawsuit designed to prove that a person whose name does not appear on the deed is a co-owner is likely to be expensive, stressful, and time-consuming.

If one person's credit will absolutely doom a loan application, it may be possible to take out the loan and purchase the property in one partner's name alone, and then add the second partner's name to title immediately thereafter. But be very careful here: Make sure you actually follow through and add the partner's name officially, and be aware that in some places transfer taxes and fees may apply to the transfer. In some instances the lender may be entitled to "call in the loan" if you add someone to title like this, but in our experience this rarely happens as long as you stay current on the loan payments.

What If You Don't Name Both Owners on the Deed?

If you decide to list only one name on the deed, you may want to sign a separate contract that spells out the actual property interests of both parties. Before you do this, be sure to see an experienced real estate lawyer. Being an "off-title" owner can create a myriad of problems, especially with the tax authorities. You may not be able to deduct your mortgage contributions or any profits earned if you later sell the property. Or, creditors may claim that you are trying to conceal assets from them, which could lead to other problems. You should also talk with a lawyer about whether to record such an agreement with the County Recorder's office if you do make it. In some places it can be very expensive to add someone to title later on, especially if that person is not your legal spouse, so make sure you investigate before making a final decision.

Joint Tenancy

If you take title as joint tenants, you share equal ownership of the property and each of you has the right to use the entire property. If one joint tenant dies, the other automatically becomes the owner of the deceased person's share, even if there's a will to the contrary. This is called the right of survivorship. In fact, some states require that after the words "joint tenants," you add the words "with right of survivorship" (hence the common abbreviations JTWROS or Jt Ten WROS).

An advantage of joint tenancy is that at the death of the first joint tenant, the property passes to the surviving joint tenant without the expense and trouble of probate proceedings. But just because you establish a joint tenancy does not mean it will last forever. If one joint tenant sells her share, the joint tenancy ends (in most states this is true even if the other joint tenant is unaware of the sale). The new owner and the other original owner become tenants in common (discussed below). And in most states a joint tenant may end the joint tenancy at any time, again with the result that the owners become tenants in common with no right of survivorship.

Before taking title as joint tenants, be sure to consider the following issues.

Joint Tenancy Means Equal Shares

Joint tenancy is appropriate only when each joint tenant (in theory, there can be any number) owns the same percentage of the property. Thus, you and your partner can each own 50% of the house, or three people can each own one-third. But if you own 60% of a house and your partner owns 40%, joint tenancy won't work. In that case, you'll be tenants in common.

However, having one person provide most or even all of the down payment doesn't mean you can't be joint tenants. As long as you agree to own the house equally, joint tenancy will work fine. This can be accomplished if the person making the down payment gifts a half interest to the other or, more typically, if the more affluent partner agrees to lend the other his or her half of the down payment. If this is your plan, make sure that the loan is documented in a promissory note or a written agreement, as in some states a joint tenant has no right to a reimbursement unless the owners have a written agreement.

Joint Tenancy Is Often a Poor Substitute for a Will

Taking title to a house in joint tenancy is an effective way to pass it on to the survivor without going through probate (and with no need to include it in a will). However, if you own a home by yourself, and want your partner to get it when you die, it's rarely a good idea to change the title to a joint tenancy just to achieve this result. Here's why.

First, by putting the house in joint tenancy, you immediately gift one-half of it to your partner, which may have tax consequences. Also, if you later split up, in most states you have no right to get that half back. Second, if your partner incurs debts, creditors can attempt to collect from his or her share of the equity—something that wouldn't be possible if the house were still in your name alone.

If you want your partner to get the house when you die, it is far better to make a will or living trust stating that desire. Then, if circumstances change, you can simply change the will or trust. For more on wills and trusts, see Nolo's Estate Planning section,

Sometimes, the partner who owns the home is worried that, upon the owner-partner's death, the other partner will have no place to live. But the owner-partner would eventually like the home to go to another heir, perhaps a child. In this case, the owner-partner could retain sole ownership of the property but grant a life estate to the other partner—which would give the nonowner-partner full use of the property until his or her death. Then, when the nonowner-partner dies, the home passes to the heir. Joint tenancy also can create estate tax problems if only one person in the couple has contributed to the purchase. If this is your situation, talk to an estate planning lawyer familiar with legal issues facing unmarried couples.

Tenants in Common

Perhaps the most common way for unmarried couples to take title to real property is as "tenants in common." Unlike a joint tenancy, a tenant in common has no automatic right to inherit the property when the other partner dies. When one tenant in common dies, his or her share of the jointly owned property is left to whomever is specified in a will or living trust. This might well be his or her living together partner, but it could also be someone else. If there's no will, the person's intestate heirs will inherit his or her share–and that does not include a living together partner.

If you choose to own the home as tenants in common but agree that if one partner dies, the other will get the entire home, be careful. Your partner could change his or her will at any time to leave his or her share of the property to someone other than you. And there's no rule that says your partner must notify you of the change.

Tenants in common can legally own property in unequal shares—for example, one person could own 80%, and the other 20%. When ownership is unequal, both names are still listed on the deed as tenants in common. In most states, you can specify your ownership percentages on the deed or in a separate written agreement that you sign, and in some instances may wish to record the document along with the deed at your County Recorder's office. You can also use a written agreement to provide for reimbursement of a down payment. If you do own property in unequal shares, be sure to put your agreement in writing. The law will normally presume 50-50 ownership when the deed to a piece of property says it is held by tenants in common or as joint tenants.

If you'd like your share of the home to go to someone other than your partner when you die, but want to make sure your partner has a place to live, you can own the home as tenants in common and include a life estate provision in the deed. This means that upon your death, your partner can remain in the home until he or she dies. Then, your share of the home passes to your chosen heir.

Changing Title to a House

What happens if you take title in one legal format and later jointly agree you want to change it to another? For instance, because one of you makes a larger down payment, you decide to take title as tenants in common. Several years later, after the birth of your child, you both decide it makes sense to change to joint tenants so as to avoid probate if one of you dies. This can be accomplished by purchasing a blank deed form and then making and recording a new deed granting the property "from Andrew West and Joanne Yu as Tenants in Common, to Andrew West and Joanne Yu as Joint Tenants With Right of Survivorship." You will also need to prepare and record a new deed if one partner is sole owner of a house and the other partner will become a co-owner (discussed below). Check with an experienced real estate lawyer make sure you're using the proper deed and language and to determine whether this will trigger any tax liabilities. If your home is in California, see the Nolo book Deeds for California Real Estate, by Mary Randolph.

Domestic Partners and Taking Title to a Home

In some cities, counties, and states, unmarried couples can register as domestic partners; some employers also provide benefits to registered domestic partners. Domestic partner registration won't have any impact on who holds title, nor on any claim a non-owner might have, based on contributions to a partner's property. The only effect it might have is on transfer taxes in some cities or counties. Check with your local County Recorder if this is an issue for you.

Home Buying and the Marriage Question

Buying property will likely be an occasion for the two of you to talk about "the marriage question." We don't offer any relationship advice, but we do recommend that if marriage is on the horizon, this would be the right time to make that decision. Title and taxation issues both are profoundly different if you are married, and changing your marital status after you buy the house can invite some complicated tax and ownership issues. And by the way, don't be tempted to tell the title officer you're married if you're not—it will only create confusion and possible problems down the road.

When to See a Lawyer for Questions on Title to a House

If you have any questions about taking title, be sure to consult with an experienced real estate attorney.

Resource on Buying a House

For more information on buying a house, see Nolo's Real Estate section.