Here's the one question you must be able to answer before buying a home with another person


So you've finally found the perfect house, gone through the whole buying process, and it's closing day. You're all set and excited to sign the papers

Then you get asked, "How do you want to take title?"

Wait, what? 

Title refers to ownership rights in property. When you take ownership of the property, vesting of title must occur. Legal ownership is officially transferred to you and a title deed is written and recorded to make clear who the new property owners are and what their rights are. 

If you want to be named the sole owner, your spouse will need to relinquish his or her ownership rights, Investopedia noted. More likely, you'll want both of your names on the title. Here are the four main options.

Are you soul mates or just "tenants in common"?

Tenancy in common is an option for both married and unmarried couples that allows each person to own unequal shares of the property. It's also common among business partners making an unequal investment in a property, the Washington Post noted.

With tenancy in common, each owner can transfer their interest to whomever they want. 

What does this mean for you? If Lisa and Laura buy property together, they can choose to take title as tenants in common. 

Lisa could have a 60% ownership interest and Laura 40%, each could own a 50% share, Laura could own 90% and Lisa 10% or another breakdown. It's up to them to decide. Both have the right to use the whole property. 

If either Laura or Lisa dies or wants to give away or sell his share of the property to someone else, this is allowed; it could be hard to sell, though. If Lisa sold her share, both Laura and the new buyer would have full rights to use the whole house. Better hope Laura likes the new owner. 

Or you could fully commit and become "joint tenants with rights of survivorship"

When title is held in joint tenancy with right of survivorship, all co-owners must take title at the same time via the same transfer of ownership; they must own equal shares and the surviving co-owner must wind up owning the entire property, according to the Los Angeles Times

Rights of survivorship means the property automatically passes to the co-owner upon the death of one of the owners. "When one owner dies, property ownership transfers to the surviving owner(s) through the rights of survivorship," Fidelity explained.

What does this mean for you? If Lisa and Laura buy property together and take title as joint tenants with rights of survivorship, regardless of whether they are married, they both own a 50-50 share of the property. If Lisa dies, Laura inherits the property without it passing through probate and regardless of anything Laura may have specified in her will. 

Community property is the default option in these 9 states

Not good at making tough choices? You may not have to — at least not when it comes to taking title — if you are married (or domestic partners) and live in Arizona, California, Idaho, Nevada, New Mexico, Louisiana, Texas, Washington or Wisconsin.  

Since these states follow community property law, married couples take title as community property by default. This means that each spouse or domestic partner "owns half the property, which can be passed by the spouse's will either to the surviving spouse or someone else," as the Los Angeles Times explains.

What does this mean for you? If Tim and Tony are married and buy property in a community property state, they will take title by community property unless they specify otherwise. Each will own half the property but can use the whole thing. 

If either wants to transfer his interest to someone else, including leaving it to a friend or a child in his will, he can do that. If Tim specifies in his will that Carrie should inherit and Tim dies first, Tony and Carrie will become the new co-owners of the property. 

You may also be able to opt for community property with rights of survivorship

Of the nine community property states, there are five — Alaska, Arizona, California, Nevada or Wisconsin — in which you also have the option to make sure you inherit property when your spouse dies by taking title as community property with rights of survivorship.

What does this mean for you? If Tim and Tony own property as community property with rights of survivorship, and Tim dies, then Tony automatically becomes the owner of the entire 100% of the property rights. 

If Tim dies and his will specified that Carrie should get all of his property and assets, Tom would still get the house. 

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