Consider your situation before deciding on how you will take title to your new home. Consulting a real estate attorney and accountant can save you future headaches.

How should you take title
One of the first things that a mortgage loan officer will ask you when you purchase real estate is how you want to take title. Don't assume that the mortgage loan officer or your Realtor knows. You should have an answer based on your situation.

One of the things that we’re constantly amazed at is the number of books about buying homes that pay so little attention to how buyers should take title. Most assume that you are Mr. and Mrs. Buyer, but you and I know that life is not always that simple. Today, you might be singe, engaged to be married, divorced, in the middle of a divorce, living together, etc. You may also thinking of buying a home with a friend, lover, parents or relatives.

What if we go our separate ways?
Everyone has to consider and answer the above question because it may affect how you decide to take title. For you married folks, things are pretty straight forward. Nevertheless, things vary by the State you reside in. It's a bit more complicated for the rest of you, especially if you are not in a legally married. You should consult an attorney and accountant on these matters since how you take title may be linked to who is on the mortgage and ultimately to any tax benefits you're entitled to.

You may be asking yourself "what's the big deal?" Well, its because of the very nature of real property. Real property is not easily divisible or converted to cash as a very liquid asset like stocks. For example the 100 shares of Apple Computer that you both own. If one day your significant other or partner says “I think I’m going to look for dinosaur fossils in Africa for the next 3 years, you can always retitle the stock certificate, sell 50 shares, and say goodbye, good riddens and @#&^!!. It also doesn't cost a lot to do convert stock to cash and in some cases less than $20 with an online brokerage account.

With houses and property, there’s a significant cost and time needed to convert them to cash. Realtors charge between 5-7 percent commission on the sales price. Lets take your friend, the dinosaur hunter. He or she is also probably leaving you with a mortgage to pay. Yikes! Maybe they would also like to get out of the deal meaning “lets sell this house or buy me out.” Without any prior agreement on this matter, it's not going to be easy.

With a house, there are consequences like dealing with Realtors if you are going to sell, lenders if you are going to buy your partner out, moving etc. The current housing market whose prices have been declining for 9 straight months may also play a role in your decision.

Forms of Title
The legal definition of “undivided interest” is title to real property held by two or more persons without specifying the interests of each party by percentage or description of a portion of the real estate. OK, time for a quiz.

If you and your boy friend buy a condominium unit and the title specifies that you both have an “undivided interest in it, then what percentage does he own? If you said 50 percent or any percentage, you’re incorrect. If you want to know exactly what you own then you need to make sure that you specify the percentages and have a “divided interest” in the property. Please keep the term “undivided interest in your mind as we discuss the forms of title. Always specify the interest in the deed to the house if you want a divided interest. For example. Lisa Malloy shall have 52 percent and Theodore Rex will have a 48 percent interest.

Tenancy by the Entirety
This form of title is applies to a husband and wife. I am not going to get into the issue of same sex marriages. You folks should definitely see and attorney if you are thinking of taking title this way. It specifies joint ownership by each of them whereby they both have the right to the entire property. If one of the marriage partners dies, the other spouse has title to the property. This form of title is used in the seven community property states (California, Arizona, New Mexico, Texas, Nevada, Idaho, Washington and Louisiana). If you’re married, please don’t automatically assume that this is what you need. Consult an attorney.

Joint Tenancy
Joint tenancy or Joint Tenants with the Right of Survivorship is somewhat like tenants by the entirety. The big difference is that joint tenancy can be used by unmarried people. Joint tenancy says that each person owns an "undivided interest" in the entire property with both having the right to use all of it. If the dinosaur hunter is bitten by poisonous African viper and dies, then you get title to the entire property.

If you and the your friend don’t want title to the property to go to the survivor, then by all means don’t use joint tenancy. Our advice, consult an attorney and an accountant before taking title at settlement.

Tenancy in Common
Tenancy in Common may be a good form of title when there will be two or more people taking title and you want to specify the percentage of interests. Tenancy in Common is title to property in which each has an “undivided interest” in the property and all have an equal right to use the property even if each has a different specific interest. For example, a group of three people have a 60-15-25 percentage interest such as you-your partner-your father. They all can use any part of the property.

There is no right of survivorship if you take title by using tenancy in common. So if you and the dinosaur hunter have taken title as Tenants in Common with a 52% and 48% interest and you pass away, your heirs will have your 52% to do with as they please or whatever you say in your will.

Written Agreements and Other Legal Matters
We recommend that you have an attorney craft an agreement that will state specifically what procedures you’ll follow if one of you wants to split from the relationship or doesn’t want to be a part of the housing arrangement. The written agreement among you should:

1. Show who owns what, the rights and obligations of each of you,
2. What happens if someone wants to sell (and someone else doesn't),
3. How profits and losses are to be handled, and
4. How disputes are to be resolved.