Buying A House Before Marriage: Pros And Cons

How Do Unmarried Couples’ Property Rights Work?

The mortgage application is separate from property rights. So, whether you file jointly or singly, you can still hold the title however you see fit. This means you can choose to have one person on the title or both. When recording your title as an unmarried couple, you can split property rights in one of the following ways. 

Sole Ownership 

Under sole ownership, only one person will be on the title and retain rights to the property. If a married couple opts for sole ownership, the non-owning spouse is often required to legally renounce property rights by signing a quitclaim deed. If an unmarried couple opts for sole ownership, this is not necessary.

Pros: Transactions like selling the home or refinancing are easily accomplished, as there won’t be friction from dissenting opinions. If one person in the relationship does not want the financial obligation of homeownership, they don’t need to be legally tied to it. 

Cons: If the sole owner dies without placing the home in a will, transferring property can be extremely difficult. It must go to probate, which can be lengthy and frustrating for surviving partners. Additionally, even if both individuals in the partnership contribute to monthly mortgage payments, only one will be building equity.

Joint Tenancy

Under joint tenancy, two or more individuals are on the title. All parties receive equal rights and shares in the property’s equity. In the event of death, ownership automatically passes to the surviving co-owner(s).

Pros: The financial burden is shared equally, and all parties build equity. In the event of death, there is no need to go to probate – ownership is automatically transferred to the surviving co-owner(s).

Cons: Any transactions like refinancing or selling must be approved by all parties. The property may not be willed to an external party, as ownership automatically passes to the surviving co-owner(s). Additionally, if one party faces legal judgment for debt collection, a creditor can petition the court to force a home sale in order to pay the debt. 

Tenancy in Common 

Under tenancy in common, two or more individuals can have a vested financial interest in the home, although it does not need to be equal. Each party individually holds the title for a portion of the home. For example, one partner may own 60% of the home, and the other could own 40%. Each individual could transfer their individual title to anyone they choose, who would then own either 60% or 40%, respectively.

This type of ownership refers only to financial gain, and not to living space. With tenancy in common, both parties have equal rights to habitat the entire home.

Pros: If one partner pays more on the monthly mortgage, equity can be divided accordingly. Each party can use their portion of wealth from the property however they see fit. Individuals face no threat to their portion if a creditor places a lien on another owner’s portion. Since each party holds their own title, transfer of ownership is simpler than in a joint tenancy.

Cons: Automatic survivor rights are not in place, so if one party dies, their portion of the home will face the same lengthy probate process as a sole ownership property would. All parties are liable for debts associated with the property, so if one party does not pay their share of property taxes, for example, the other parties would be financially responsible.  

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