The Family Home

April 4, 2008

The most important asset most gay or lesbian families will ever own is their home. Joint home ownership is often the first formal step couples take toward cementing their relationship. Whether you are buying your first home together or living together in a home that one or both of you currently own, you need to consider how the civil union law affects your home ownership.

Historically, New Jersey's same-sex families had only two choices for joint home ownership: ownership as tenants in common or joint tenancy with rights of survivorship.

Tenancy in common is a form of shared ownership where each partner owns an unequal and divided share of the property. The percentage of ownership is based on amount of contribution. Unless a deed recites otherwise, tenancy in common is the default form of ownership for same-sex couples who are not in a civil union.

There are three problems with tenancy in common, at least for same-sex families. First, there is no right of survivorship, so when one partner dies, his or her interest in the property passes by way of probate. This means that the deceased partner's share passes under the will, or if there is no will, by a default set of inheritance rules known as intestacy. Second, there is no automatic protection against creditors. Either partner can take out loans against their share of the property without the permission of the other, and if a third party obtains a legal judgment against one partner, they can enforce that judgment against that partner's share of the property. As a result, a creditor could force a sale of your home. Third, there is no automatic restriction on the sale of one partner's share to some unrelated party. This means one partner could sell or lease his or her share without the other's permission.

Prior to the civil union bill, the only alternative for same-sex couples was ownership as joint tenants with rights of survivorship. Unlike tenants in common, joint tenants own an equal and undivided share of the property. Joint tenancy is created when both partners acquire (1) equal interest and (2) equal title at the (3) same time and have the (4) same right to possess the entire property. These four requirements are referred to as the four unities and all must be present in order to effectively create the joint tenancy. The right of survivorship means that if one owner dies, his or her share of ownership automatically passes to the surviving owner.

In New Jersey, the deed does not need to specifically state that there are rights of survivorship it merely needs to say that it has been conveyed to you and your partner as joint tenants. However, it is safer to include the words with rights of survivorship to make clear that this is your intention.

Like tenancy in common, there are several problems with joint tenancy. First, there is no automatic protection against creditors. A judgment creditor can force the sale of the property by executing against the debtor partner. A partner's debts can, in some cases, remain attached to their share of the property even after their death. Second, there is no automatic restriction on conveying one partner's share to a third party. However, if one partner sells or leases their share, the joint tenancy is broken and becomes a tenancy in common.

Since February 19, 2007, when the civil union bill went into effect, same-sex couples have a third alternative: tenancy-by-the-entirety. Traditionally, this form of ownership was limited to opposite-sex married couples in New Jersey, and New Jersey laws and regulations still reflect this. Nonetheless, because the civil union law provides all of the same rights, benefits and obligations of married couples under state law to civil union spouses, it is undisputed that tenancy-by-the-entireties is now applicable to civil unions.

Once you and your partner have entered into a civil union, any property conveyed by sale or gift to both of you is owned as tenants-by-the-entirety by default, unless the deed specifically states otherwise. Like joint tenancy, tenancy-by-the-entireties require the same four unities plus a fifth requirement: you must be in a civil union at the time the property is conveyed to both spouses.

Normally, the deed will now specifically state that the property is conveyed to both of you as civil union partners or civil union spouses. However, even if all it does is list your name without indicating that you are in a civil union, New Jersey courts have held that the tenancy-by-the-entireties is created. A tenancy-by-the-entirety can only be terminated by agreement of both spouses or by dissolving the civil union.

Tenancy-by-the-entireties has some significant built-in legal protection that can be advantageous to you and your partner (or problematic, depending upon your point of view.) First, upon the death of one spouse, the survivor owns all of the deceased spouse's rights. Second, neither spouse can sever, alienate, or otherwise affect their interest without the other spouse's written permission. This means one spouse cannot individually sell, lease, secure a debt or mortgage the property without the other spouse's permission. It also provides some measure of protection from a spouse's creditors.

I'll have more to say in a future article on property ownership, particularly in regard to property owned prior to a civil union.

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