Sharing and Owning a Property with Your Significant Other

What happens you when you buy property with your significant other? What happens to the property if you break up? What happens to your separately owned property after getting married? Does it become community property automatically? How is property characterized after getting married? There are a lot of questions that need to be answered depending on the status of your relationship.

Owning Property Before Marriage

1. Do you have a plan if the relationship does not work out?

It is wise to discuss this ahead of time. Write down an agreement that both parties sign that governs the co-tenancy relationship.

2. What if one person wants to sell the property and the other does not?

In reality, you should write down in the agreement what happens (See Point 1). It is recommended to enter into an agreement of co-tenants where you can discuss things like whether either party can force a sale (has an unqualified right to partition) or whether there is going to be a waiver of partition rights. The parties can agree to terms like a right of first refusal, a period of time during which the property cannot be sold, or even a mechanism for sale or a buyout.

3. Are you both going to be on the title?

There are lots of cases with real estate break ups where one party is not even on title. This becomes tricky. Usually, what happens in these situations is one party agrees to go on title because they have a better credit score, but the other party contributes equally to the purchase of the property. Years or months later the parties end their relationship and the party who is on title tries to squeeze out the other party by denying their ownership interest and often times even attempting to evict them with an unlawful detainer.

It is recommended that both parties be on title – but if not, see number 1, above, and sign an agreement.

Owning Property After Marriage

There are states that follow the community property rule. That means that once two people get married, all their belongings, whether personal property or real property, belong to the community. This is true even if only one spouse is the breadwinner and uses his/her earnings to purchase property. However, there are certain exceptions to this rule. Certain property remains a spouse’s separate property after getting married. This includes property gained by gift and inheritance.

Also, property that a spouse owned prior to marriage remains the spouse’s separate property after getting married. This includes all property, including real property, personal property, and business ownership. Indeed, property remains a spouse’s separate property even when the spouse has not obtained full legal title to the property until after marriage. For example, a spouse who only had an equitable right to property before marriage is deemed to have acquired that property before marriage. Accordingly, it remains separate property even though legal title is not perfected until after marriage.

If a spouse wishes to convert separate property into community property, the spouse must declare in writing that he/she is transmuting separate property to community property. Keep in mind that transmutation of the character of real property is not effective as to third parties unless a notice of transmutation is recorded in the county in which the property is located.

The same rules apply if a spouse wishes to transmute community property to separate property or the separate property of one spouse to the separate property of the other spouse.

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