On January 1, 2013, Maryland joined Washington, D.C., Massachusetts, Connecticut, Iowa, Vermont, New Hampshire and New York in allowing same-sex marriages.While many herald this move as a progressive step toward acceptance, it has given rise to a number of practical questions for gay couples in these states, and this includes title concerns with regard to property ownership.
Typically, cohabitating couples hold title as tenants in common or as joint tenants with the rights of survivorship. However, married partners have the additional option of holding title as tenants by the entirety. With the legalization of same-sex marriage in several states, married couples of the same gender now have this option.
Why is this important?
When you elect to take title as tenants in common, both tenants share a percentage of interest in the property, the advantage being that both co-owners can bequeath their interest in their wills. The disadvantage, though, is that a creditor can attach the co-owner’s interest in the property to satisfy their claim.
Joint tenants with the right of survivorship each own their pro-rata interest in the property. If there are two joint tenants, both are deemed to own 50 percent of the interest in the property. The problem is that by taking title as joint tenants with the right of survivorship, one tenant cannot bequeath his or her interest. When one joint tenant dies, their interest automatically transfers to the surviving joint tenant.
In the past, this seemed to work best for same-sex couples, ensuring that upon the death of one partner, that individual’s interest would pass on to the surviving partner and he or she would become the sole owner. However, the main drawback is that property held in a joint tenancy is vulnerable to claims against either joint tenant. For example, if one of the joint tenants received a judgment against them, that judgment would attach to his or her interest in the property as a lien.
The strongest way to hold title is as tenants by the entirety. This allows for an undivided interest in the property between the parties and because of this, in most cases, a judgment lien levied against one of the parties would not attach to the other (although a federal tax lien would be an exception). However, tenancy by the entirety is only available to married couples. As is the case with joint tenants, when one partner dies, the surviving partner would be the sole holder of the title and 100 percent of the interest in the property.
In states where same-sex marriage is legal, couples currently holding title by tenants in common should consider retitling their property and taking title as tenants by the entirety to better protect their interests.