You’ve written that a house owned jointly with right of survivorship is automatically inherited by the surviving owner. But what happens when an unmarried couple owns a house jointly without the right of survivorship?
There are two ways an unmarried couple can own a house together: jointly with right of survivorship, widely known as JTWROS, or as tenants-in-common.
When a couple owns their house JTWROS, any sale of the property requires the consent of both; and when one of them dies, the other automatically inherits the entire property. By contrast, tenants-in-common are both listed as owners on the deed, but don’t automatically inherit each other’s shares. Each tenant-in-common is the sole owner of his/her shares, and can sell, gift, or bequeath them in a will as he or she wishes.
(A form of JTWROS called “jointly by the entirety” is reserved for married couples. Owners by the entirety are treated as a single legal entity. This means creditors can’t force a sale of the house to satisfy a judgment for debts incurred only by one spouse.)
Tenants-in-common should have a written agreement on how they’ll handle selling their house if they break up. The agreement should address issues like giving each other first right of refusal, how they’ll value their shares, and how they’ll ensure that the selling tenant’s name will be taken off the promissory note and mortgage. That’s important because tenants-in-common are each liable for 100 percent of their mortgage.
In a buyout, the only way to eliminate the selling tenant’s mortgage liability typically is for the buying tenant to refinance the house in his or her name alone. The tenants-in-common agreement may state that if that’s impossible, the house must be sold to a third party.
THE BOTTOM LINE The wording of the deed determines how you own your house.
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