4/14/11: Whether Gay Or Straight: Written Agreement Needed When Buying A Home

Housing Counsel

By Benny L. Kass

Q. My partner and I are interested in buying a condominium in this area. How should we take title?

Is there any way that we can protect each other’s interest in the event of a tragedy that claims one of us. We wish to ensure that the other gets the property with absolutely no claims considered by family members.

A. There are two ways that unmarried people can hold title. The first is called “tenants in common” and the second is “joint tenants with right of survivorship.” If you live in the District and are a same-sex married couple, you can hold title as tenants by the entirety. Maryland and Virginia residents do not have that right.

Under the first approach — tenants in common — each of you would have a divisible interest in the property. Let us assume in your case that each of you will have a 50 percent interest in the property. If one of you dies, your 50 percent interest in the property will go to your estate, presumably through your Will if you have one, which you should. The matter would have to be probated through the courts, however.

If title is held as joint tenants with right of survivorship, then if one of you should die, the other will automatically own the entire property. Even if the deceased person had a Will giving his/her property to a third party, the property will still go to the surviving joint tenant.

Tenants by the entirety is reserved for married couples. It is a more sacred evidence of title. As with joint tenants, when one tenant by the entirety dies, his/her interest automatically goes to the survivor, and no probate is necessary.

It seems that the joint tenant approach is the one you are looking for. However, let me raise a question for you to ponder before you make the final decision.

I am not interested in breaking up your relationship, but there is no certainty in life that the two of you will stay together forever, even if you are (or will get) married. If you decide to split up in the future, and if you subsequently die, your interest in the property will automatically go to your partner, which may not be what you want. You (or your partner) may have children and want to make sure that they are protected in the event of your death.

You should consider the tenant in common arrangement, coupled with a Will. Under this approach, if you should die, your interest in the property will go to your heirs, as designated in your Will. Presumably, your Will would give your interest in the property to your partner. However, if the two of you have a falling out, it is easier to change your Will than to change the title. This will, however, require probate proceedings to take place.

The Will can be unilaterally changed by you; changing the title requires action and approval by both of you.

I also recommend that you and your partner enter into a co-ownership agreement before you buy your new home. This is a written document spelling out answers to as many questions as you can think of, such as:

— how mortgage, tax and insurance payments are to be made and by whom?

– how will routine house or condominium expenses be handled?

– will you have a joint checking account?

— what happens to the house if one of the parties wants out?

— who owns the furniture and other possessions in the event of a dissolution of your partnership;

– if you agree to sell the property, how will the net sales proceeds be allocated, especially if one of your made a larger down payment when you bought it?

– should you be unable to reach agreement on any issues, how will they be resolved: through arbitration, mediation or litigation?

And if you are married, there are other issues that should be considered. Only a few states allow same-sex marriages. What if one of you moves to a state that does not recognize same -sex marriages? You will not be able to get a legal divorce. Accordingly, unless you want to spend a lot of time and money on lawyers (as well as in a potentially hostile court), your co-ownership agreement should be able to resolve all of the outstanding issues.

It is always better to reach agreement when the parties are talking to each other than when they are bitter and angry.

I suggest you discuss these matters with your respective lawyers, before you sign a contract to purchase that property. And its not a good idea to use the same attorney. That could create a conflict of interest for that lawyer, especially since she will want to counsel you directly, and incorporate your concerns into a final, formal agreement.