Thursday, November 16, 2006

Two ways to hold title

I thought this was an interesting question from a reader:

My girlfriend and I want to buy a condo in Roseville. I am self-employed, and so was not planning on going on the mortgage application. We want to know how to ensure that the house is equally both of ours and will go fully to the other person should one of us die. Do we put me on the title and deed at closing? Can we do this if I am not on the mortgage app? What effect will this have on us when we get married?

Answer: Since you are not currently married, you and your girl-friend can co-own the condo either as Tenants In Common or as Joint Tenants With Right of Survivorship. NUPPLegal defines these two methods of ownership as:

1. Tenancy in Common: In a tenancy in common, all owners have equal rights to use the property. Ownership shares may be equal, however, unequal shares may be arranged by deed or other written contract. An advantage of tenancy in common ownership is that each co-owner is free to transfer or bequeath his/her interest to anyone he/she chooses.
Tenancy in common is the most common way for unmarried people to own property together. Married couples also can use this form of co-ownership, but more often choose joint tenancy or tenancy by the entirety.

2. Joint Tenancy with Right of Survivorship: Any two (or more) people can own property-typically real estate or a bank account-in joint tenancy with rights of survivorship. When one of them dies, his or her share automatically goes to the surviving owner. The phrase "as joint tenants with full rights of survivorship" or similar wording (governed by state statute) must appear in the deed. A joint tenant cannot use a will to leave his or her share of joint tenancy property to someone else. If all joint tenants die simultaneously, no one owner has survived any of the others, each joint tenant's interest in the property passes by their will.
Sometimes owners decide to change ownership of property from joint tenancy to tenancy in common in order to leave their interests to someone other than the surviving joint tenant(s). In most all states, transfers out of joint tenancy into another form of co-ownership can be done even if the other joint tenant objects.
Having your girl-friend have all the liability for the mortgage while you have equal rights to the property may be an ideal situation for you but may not be fair for her. As long as you have good credit you can still go on the mortgage without it affecting the loan. She can also take title in her name only and then add your name to title after you get married. That might be good motivation for you to make the commitment.


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