Financial Answer Center

Married couples generally always own their property through joint ownership as joint tenants.

Single individuals will typically own the property in their name alone.

If you are buying the property with someone who is not your legal spouse, you have a choice among the forms of ownership available. Your ultimate decision should be made after consultation with your attorney.

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.

SUGGESTION: 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 is 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 most common 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.

IMPORTANT NOTE: The formation of a partnership creates a legal entity with both tax and legal implications. We recommend you consult an attorney and your tax professional before making any moves in this area.

IMPORTANT NOTE: Any time two unmarried individuals involved in a relationship purchase property together, it is 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.

A Word about Community Property

If you reside in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) or Puerto Rico all property acquired during a marriage, including a principal residence, is considered to be jointly held. This does not include property inherited by one of the spouses, or property owned individually before the marriage by one of the spouses. If you live in one of these states, consult your attorney about special considerations that may apply to the ownership of your home.

SUGGESTION: If you are purchasing out-of-state real estate, consider putting the property in a trust to avoid probate in that state upon your death.