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Complications Arising from Joint Homeownership

Joint ownership of a house, whether between an unmarried couple, friends or business partners, can come with complications that must be considered. It’s important to address a number of issues prior to buying the house, including: Who will be on the title? How much of the mortgage will each person be responsible for? Can each owner buy and sell his or her share of ownership in the property?

Once those questions have been answered, buyers must choose a form of ownership. Among the most common forms of home ownership are Joint Tenants with Right of Survivorship (JT) and Tenancy in Common (TIC). There are important differences between these two forms of ownership of which buyers must be aware. With a JT, both owners have a full, undivided ownership interest in the home. If one owner dies, the surviving owner receives sole ownership of the home. The deceased owner’s share ends and does not pass to his or her heirs. With a TIC, both owners generally have equal rights to the property, but if one owner dies, their share in the property passes to his her heirs. Therefore, the surviving owner may now be a co-owner of the home with several individuals he does not know. If an unmarried couple buys a home using a TIC but later marries, to avoid a number of potential legal issues, the couple should file a new deed that will place the title in both of their names as a married couple – a form of ownership referred to as a Tenancy by the Entirety.

Another option for joint ownership is for buyers to form a limited liability company (LLC). This may be a good option if there are more than two homebuyers, or if the property will be used for business purposes.

Purchasers may also consider a living trust. This option may be useful for joint ownership with family or other individuals (for example, multiple members of a family buying a shared vacation home).

No matter which option joint owners choose, it is important to be guided by experienced attorneys along the way. An attorney can help owners figure out the best route to take and help with each step in the process. They can also prepare a contract outlining the rights and responsibilities of the owners to help avoid potential problems down the road. Partner Paul Schultz have extensive experience representing both individuals and business in real estate transactions and related matters. They can be reached in our Philadelphia office at (215) 567-1530 or our New Jersey office at (856) 273-6679.


Published January 25, 2017

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