When a couple buys a house together, they must decide how they will "take title." In this case, title means ownership, so being clear on this now is important because it will have lasting consequences. There are three basic choices for personal title:
1. one person holds title as sole owner
2. both of you hold title as "joint tenants," or
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3. both of you hold title as "tenants in common."
I. One Named as Owner
Where one person is named on a deed, that person full legal power to sell or leave the real estate to others upon death, even if their partner contributed to the purchase and believes that have an ownership interest in it.
Sometimes a couple is tempted to name only one person in order to save on taxes, qualify for a mortgage or avoid creditors. The tax savings can be attractive if one of your incomes is very high and the other's is very low, because it allows the high-income person to take all the house-related tax deductions. Or, if one person's credit is terrible, it may seem like a good idea not to mention his or her interest in the property in order to get a loan to buy the house.
But in most cases the risks of putting real estate in one person's name far outweigh the benefits. If your partner is the only one named on the deed (and is therefore presumed to be sole owner), you may be out of luck if your partner sells the house and pockets the money, or dies and leaves it to someone else. You could try to sue, but this type of lawsuit is very difficult to win because most states have a strong legal presumption that only the person named on the deed is the owner.
If one person's credit will absolutely doom a loan application, it may be possible to take out the loan and purchase the property in one partner's name alone, and then add the second partner's name to title immediately thereafter. Be sure you actually add the partner's name officially, and be aware that this second transfer may have its own conveyance taxes and may affect the loan, which is rare if payments are maintained. It is a good idea to consider an agreement with your partner and talk to your lender before you close in one person’s name.
II. Two Named as Joint Tenants
Joint tenants have equal ownership of the real estate and each has the right to use the entire property. This is how married couples usually take title. Even if the deed is silent where the owners are married, title would be defaulted as joint tenants with rights of survivorship. If one joint tenant dies, the other automatically becomes the owner of the deceased person's share, even if there's a will to the contrary, meaning each has a right of survivorship. It is best to actually say “joint tenants with right of survivorship,” which is actually required in some states for clarity. This avoids the expenses and time of having to go through probate. Keep in mind that while title passes, there still would be documents and fees you have to pay in Connecticut.
Joint tenants own the real estate in equal shares. So if you want unequal shares, you cannot take title as joint tenants. The down-payment can be made by one party or in unequal shares, because the down-payment or investment does not mean the parties have to take unequal ownership shares. The down-payment or unequal investment could be gifted or loaned. It is advisable to document either arrangement in advance. Some states have ruled that joint tenants have no right to be reimbursed in the absence of a written agreement.
Joint tenants can terminate this arrangement at any time by amending the deed or if one joint tenant sells their share, even if the other joint tenant is not aware of the sale. The result is that the joint tenancy ends, and the new owner and the other original owner become tenants in common with no rights of survivorship.
It is not advisable to add a partner as a joint tenant on the deed in order to avoid probate. It may have tax consequences. Your act is deemed a gift, but if you break up, you have no right to get that gift back. Furthermore, if your partner incurs debts, creditors can try to collect from their share of the real estate. Ultimately, it is better to leave property to a partner in a will, in a living trust, or with a Life Estate rather than naming them on the deed as joint tenant with rights of survivorship.
III. Two Named as Tenants in Common
Perhaps the most common way for unmarried couples to take title to real property is as "tenants in common" where each has no automatic right to inherit the property when the partner passes away. Instead, his or her share of the jointly owned property is left to whomever is specified in a will or living trust. Keep in mind that each is permitted to change their will at any time, and perhaps not even inform you of the change. If there is no will, then their intestate heirs, which does not include unmarried partners, will inherit their share.
Where tenants in common want to own the property in unequal shares, then the parties are listed as tenants in common and specify your ownership percentages on the deed or in a separate written agreement that you sign. You may wish to record these documents along with the deed because the law will normally presume 50/50 ownership when the deed says either tenants in common or joint tenants.
If you want to leave the real estate to someone other than your partner when you die, you can ensure your partner has a place to live by taking title as tenants in common along with a life estate provision in the deed. This means that upon your death, your partner can remain in the home until they pass, at which time your share automatically passes to your chosen beneficiary.
You can change how you take title by filing a new deed on the land records with the owners taking title in a different type of tenancy, however there may be fees and other tax consequences.