When a couple buys a property during marriage, they have to determine how they want to hold title. A couple can hold title as tenants in common. Each tenant in common owns a specified interest in the property and it need not be equal. Each tenant can will his or her share to whomever he or she wishes.
The most common way for married couples to hold title is as joint tenants with the right of survivorship. When title is held in this manner, all co-owners must take title at the same time. All co-owners own equal shares and the survivor co-owner winds up owning the entire property. In other words, after a joint tenant dies, the survivor joint tenant(s) receives the deceased’s share. In some states, when husband and wife use this method, it is called tenancy by the entireties.
Husbands and wives that acquire property in community property states, such as Arizona, California, Louisiana, and Texas, can take title as community property. Each spouse owns half the property which can be passed by the spouse’s will either to the survivor spouse or someone else. Any property acquired during marriage can be considered community property.
Many other married couples hold title in a revocable living trust.
Why Is Changing Ownership During Divorce Important?
When “forever” doesn’t last as long as anticipated, it is essential to change joint ownership. Most likely, you held title to your home shared by your ex-spouse as joint tenants with the right of survivorship. Chances are you would not want your ex-spouse to retain full ownership of your home should you pass away first.
There can also be problems with continuing to share the mortgage on the home along with title. If one ex-spouse acquires negative judgments or outstanding loans, it’s possible that the only remaining asset your ex-spouse has with any value is co-ownership of your home. In that regard, creditors may place liens on your home until your ex-spouse pays off the debt. A creditor is permitted to put a lien on your house to recover payment on a debt as long as the creditor obtains a court judgment first.
If your ex-spouse’s financial troubles lead to him or her filing for bankruptcy, you may be left paying the entire mortgage on your own. For some, the financial burden is too much, and this can lead to foreclosure on your home. Foreclosure can ruin your credit and make it impossible to buy a home in the future.
How Do You Sever Title?
Spouses that break up amicably can come to an agreement during divorce so that one party retains ownership of the property and title is transferred into that party’s name. The ex-spouse receives compensation as a buy-out. However, most divorces do not end amicably.
If you and your ex-spouse hold title as joint tenants, one party can prepare a Notice of Severance. After the document is signed and sent to the ex-spouse, it has the effect of severing the joint tenancy and converting it into tenancy in common.
With both joint tenancy and tenancy in common, title can also be severed by a partition act. A partition action is a lawsuit in which one co-owner asks the court to divide a piece of real estate equally between the owners or to sell the property. In order to start the partition process, one party must file a Notice for Partition. Each co-owner receives a portion of the property.
Should I Consult a Lawyer?
If you are facing divorce and considering sharing title to a home post-divorce, a family law attorney can help you evaluate whether this is right for your situation. Additionally, if you currently share title with a former spouse and would like to change this, an attorney can help.