In today’s world, it is not at all uncommon for an unmarried couple to purchase a home
together. Choices need to be made as to how to take title, and there should be a written agreement
discussing the terms of their arrangement (although this is rarely done). With regard to title, the only
choices are to be tenants in common, where each party owns a separate interest in the property (and
the separate interest could be devised to anyone in a properly prepared last will and testament), or joint
tenants with rights of survivorship, in which case the ownership would pass automatically to the survivor
in the event of the death of either.
Couples should give careful consideration to how to take title before they even enter into a
contract of purchase. For example, if they are about to be married in the very near future, they could
decide to take title as joint tenants, with the intention to transfer title into tenants by the entireties
after they are married. In tenants by the entirety ownership, each party is deemed to own the “entire”
home, so it takes joint action of both to sell, mortgage, or do anything with respect to the property
ownership. If the parties are married, there are multiple volumes of legal treatises that dictate how
property is to be dealt with in the event of a separation or divorce. But if the couple is not married,
determining their rights and responsibilities can be harrowing.
Ideally, the parties should consult with an attorney and have a document properly drafted. In
the alternative, there are forms that can be found on the internet that provide some guidance for a “do
it yourself” agreement, although that would not nearly be as advisable as one that is professionally
The first consideration is of course how to take title, whether as tenants in common or joint
tenants with survivorship. I recently spoke with a couple in which the husband has children from a prior
marriage who he wants to inherit his share and the wife wants her parents to inherit if she were to pass
away. The only way to take title for them would be as tenants in common. Next is how the down
payment is to allocated as well as the closing costs. Are those funds paid equally or in some
proportional amount, and how does that payment affect the percentage ownership in the property?
Who is responsible for the monthly PITI payments as well as the maintenance and repairs, gas, electric,
water, and any other utilities serving the property?
Provisions should be included that consider the rights of the parties if they separate, or if they
get married and then subsequently divorce. Is there is a right to purchase the interest of the other party
and how are the price and terms of the purchase determined? Provision may be made for the property
to be appraised by one or more appraisers and have the price set in that manner. The couple needs to
consider how the proceeds of any such purchase and sale would be allocated. First, of course, would be
payment of any mortgages, then the costs of sale. What if one of the owners has been paying more or
less costs of the house? Do they get repaid out of the sales proceeds, or is there no change to the
ownership percentage regardless of who has been making the payments.
Agreement should be reached as to who pays the cost of any substantial alterations, additions
or improvements to the property, and whether changes can be made without the prior consent of the
other owner. If one party pays for a major improvement such as building a deck, does that cost get
priority treatment if the property is sold or one party buys out the interest of the other?
There are no magic answers to any of the many issues to consider, and I have described only a
few of the issues couples need to consider. It is easier to come to an agreement if the couple does not
have responsibilities that they want to fulfill that predate the relationship such as to parents or children.
But it is probably more important for a couple with prior obligations to enter into a written agreement to consider these questions. Concededly, most couples do not enter into written agreements, as the
entire discussion is uncomfortable to most people. A discussion of expectations and obligations at the
outset could be very helpful, even without a formal agreement. It would be prudent to pay to have an
agreement prepared prior to purchasing a home, as it would cost far less than legal fees in the event of
a subsequent dispute about ownership. I recognize that written agreements are rarely prepared, but
couples are advised to consider the advantages or resolving disputes before they arise.
By: James E. Savitz, Esq.