Unmarried Buyers Should Consider Title Wording Carefully
It's usually best for unmarried co-buyers to take title as "tenants-in-common," even if they plan to wed each other soon.
Q. My fiancee and I are planning to buy a house now because prices and interest rates are so low. When we eventually "take title" to the home, can we take ownership as joint tenants even though we don't plan on getting married until she graduates from college next year?
A. You could, but it probably wouldn't be a good idea. Although most buyers who are already married hold title to their homes as joint tenants, it's usually best for nonmarried couples to take title as "tenants-in-common" -- even if they plan to tie the matrimonial knot soon. If you and your fiancee take title as joint tenants, your half-interest in the home would automatically pass to her when you die. Likewise, her 50 percent stake would go to you if she died first.
Taking title as tenants-in-common instead would provide more flexibility. That's because either owner who holds property through a so-called TIC arrangement can will or sell his or her respective interest in the home to whomever he or she wishes, without the approval of the other owner.
You should certainly take title as tenants-in-common if either of you has a child from a previous relationship and wants to ensure that the child, rather than your betrothed, eventually inherits your interest in the property. Most unrelated investors also choose the TIC option, so they can sell or give away their share whenever they wish.
I don't want to seem unromantic, but taking title as tenants-in-common rather than joint tenants also could make things a bit easier if you purchase the house now but later decide to cancel the wedding. If the breakup got nasty and the two of you couldn't agree to sell the place or keep it, either of you would have the right to sell the respective 50 percent stake without first getting the other's approval.
Your real estate agent, the attorney or escrow officer who will close the deal, or a representative from the title-insurance company you select can provide more details.
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