Refinancing & Other IssuesForms of OwnershipLegal Forms Of Ownership
There are two basic forms for the ‘partners’ to take title to the property.
Tenancy In Common
Under tenancy in common provisions, each owner has separate legal title to an undivided interest in the home. Each person is allowed, by law, to independently sell or gift their interest. In the event of the death of one of the owners, their interest in the home would pass according to terms set forth in that person’s will. The ownership interest would not pass to the other, surviving owner. If the will doesn’t include provisions for this item, or if there is no will, the property is passed on according to the provisions of state law.
Anytime two people own property as tenants in common, we strongly recommend that you have a written, signed agreement spelling out the percentage ownership of each party (especially useful if it’s not 50/50). Do this with the help of an attorney.
Joint Tenancy With Right Of Survivorship
The other form of ownership, joint tenancy, which is the ownership form used by married individuals, is also available to those buying a property that are not married.
Under this arrangement, the amount each person contributes to the purchase of the property does not affect the ownership percentage. Each person has an equal ownership interest in the property. If one person dies, the property automatically becomes owned entirely by the surviving party without having to go through probate.
Should You Use A Partnership?
You may consider putting the title to the property in the name of a legal partnership. If so, the partnership is the legal owner of the home, not the individual partners. By doing so, you need to draw up an agreement that clearly spells out how everything is handled and shared in the event of certain eventualities, such as the death of one of the partners.
The formation of a partnership creates a legal entity with both tax and legal implications. We recommend you consult an attorney and your tax advisor before making any moves in this area.
Anytime two unmarried individuals involved in a relationship purchase property together, it’s a good idea to get a written agreement drafted that stipulates just how matters are to be worked out in the event of a breakup. Doing so will prevent much unnecessary heartache and headache later on.
Article Content by Truebridge, Inc. All rights reserved. Copyright 2001-2010 |
|
