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Unmarried couples: the importance of property rights agreements

In our last post, we began discussing property division for unmarried couples who decide to separate, and the importance of having a written agreement specifying their rights and obligations in regard to property ownership in the event of their separation. We left off discussing the first way property may be held by unmarried couples, namely joint tenancy.

The second possibility for property ownership for unmarried couples is tenancy in common. Unless specified otherwise, tenancy in common is the default form of ownership between two or more parties. In this form of ownership, each party has an undivided interest in the whole property without right of survivorship. So when a tenant in common passes away, their share of the property will pass to their estate and become the property of their heirs. Tenants in common may sell, mortgage, or convey their ownership interest, and seek to have the property partitioned.

These forms of ownership provide their own limitations and conditions, and it is important for unmarried couples to draw up a contract defining their rights and responsibilities in the event of a split.

•· Some things to consider in drawing up an agreement are:

•· Will the property be sold in the event of separation?

•· Will one of the parties have first right to buy out other party?

•· If one party stays at the property after the breakup, will the other party be repaid for their interest over time or in one lump sum?

•· Who will remain obligated under the mortgage note, and will the permit an assignment and release of obligations?

•· What are the tax consequences of a potential future property transfer, and how can those consequences be minimized?

Keep in mind that, in order for such an agreement to be binding, it must be in writing, and it is best to draw it up prior to purchasing the property.

Planning is a good way to minimize the negative consequences of a split, both for couples not planning to get married or for those who are. Couples planning to marry often benefit from drawing up a prenuptial agreement specifying their rights and obligations in the event of a divorce.

Source:, “Property Rights of Unmarried Couples,” Tracey Daniels, 27 Jan 2011.