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Note: None of the information provided on this site should be construed as legal advice. The information published is a general summary of developments or principles of interest, and may not apply to your specific circumstances. You should seek professional advice regarding your particular situation before taking action based on this information. Holding
Title to Property in North Carolina If a married couple owns property together in North Carolina, their form of title ownership is known as"Tenancy by the Entirety." This form of concurrent ownership gives both owners equal rights to the control, use, possession, and income of the property. It also provides for the rights of survivorship. This means that if one owner were to die, full and complete ownership of the property would transfer automatically to the surviving owner. Unfortunately in North Carolina, Tenancy by the Entirety is reserved solely for a legally married husband and wife. Therefore, gay & lesbian couples are not able to hold title in this manner. However, there is a way to come very close to the same arrangement. Couples can hold title as "Joint Tenants with the rights of survivorship." This form of ownership establishes equal, undivided interests (rights) in the property. One must specify their desire for rights of survivorship if they wish the property to pass automatically to the surviving owner in the event of the death of other owner. For a more complete explanation of this matter, please download JoEllen’s brochure, "A Legal Guide to Homebuying in North Carolina for Gay & Lesbian Couples," created in partnership with Durham attorney, Lisa Logan (919-688-6858) Gay and lesbian couples may prefer to specify ownership percentages such as a 20/80% split or a 60/40% split, or any other percentage they define. This form of ownership is held as "Tenants in Common" and the owners can choose whether or not they want to add the Rights of Survivorship or not. There is no right or wrong, best or worst way to hold title. Each has pros and cons, as well as varied tax ramifications. Consult an attorney knowledgeable about gay and lesbian issues before buying property in North Carolina. For a more complete explanation of this matter, please click here. Obtaining
Financing as a Gay or Lesbian Couple Most loan officers work on a commission basis. Therefore, they are quite motivated to help you get a loan, regardless of your personal relationship. However, let’s be realistic. Sometimes bias or inexperience can creep into the transaction. To assist my clients in finding gay-friendly lenders, I screen the loan officers that I recommend. In most cases, I have met with these individuals, explained to them that I have many gay & lesbian clients and we discuss their opinions and feelings on working with these individuals. If I have any reservations about a loan officer’s sincerity, I won’t recommend them to you. Plain and simple. Some issues that come up are unique to gay & lesbian clients, mostly with couples who are buying a home together. For example, let’s say that you and your partner are going to buy a house together. You have excellent credit and steady employment, but you don’t have money for the down-payment. On the other hand, your partner has bad credit but is going to provide the cash for the down payment. So you go to the bank and only you are listed as the borrower on the loan application. Now the bank wants evidence of where you’re getting the cash and will only allow it to come in the form of "gift money" from a relative. What do you do now??!! There are several ways around this. Many institutions are moving away from the strict concept of allowing only blood relatives to give a gift to the loan applicant. As long as you can explain a "significant interest" in the applicant and sign that you do not expect repayment of the money, they will probably allow the gift. However, they may not allow it--then what?? If you’re not buying a house immediately (in the next 2-3 months) I would recommend one of two things: either get a joint checking account to hold the money you intend to use as your down-payment (then the bank will consider it as belonging to both of you) or deposit the down-payment in the account of the person who will apply for the loan at least 4-5 months prior to filing the application. The primary goal of the bank is to assure that you did not incur a second loan that you will have to repay once you buy the house so if you can prove that’s not the case, you should be okay! What
if you buy a house together and then breakup later? Most of us don’t like to think of this possibility-it’s not a fun thought!! However, the reality is that just like straight couples, sometimes our relationships don’t work out. So, what do you do about the house? A simple answer is to sell it and divide the proceeds according to whatever feels equitable to you and your former partner. (If you need a listing agent, call JoEllen!) However, you may find that one of you desires to stay in the home and "buy-out" the other. If this is the case, I would recommend that you pay the money for a certified appraisal of the property so that there will be less chance of disagreement over value. If you and your former spouse are having a hard time agreeing on anything, you might consider two appraisals and agree to use the average of the two values. Most importantly, though, keep this in mind!! If you both are listed as owners on the title to the property and you wish to remove one person from the title, legally speaking this is easily done. Where you could run into problems is with the bank. If it took both of you to qualify for the loan and now only one of you is going to be left making the payments, the bank may be worried about the remaining owner’s ability to pay. If you look through your original loan documents, you may very likely find a clause that indicates what happens in this situation. Most often, the bank reserves the right to require the remaining owner to re-qualify for the loan based on his/her own income, assets and credit. Research this requirement prior to buying-out the other half! Every couple handles legal matters differently. Some people want everything spelled out up-front in legal agreements, whereas others decide they will work it out if the situation occurs. If you decide that it is best for you and your partner to have a legal document that spells out your financial investment in the real estate you own, contact an attorney in your area that is familiar with gay & lesbian family law. This attorney can create an equity-sharing agreement between you that will spell it all out. Deducting
the Mortgage Interest Because gay and lesbian couples must file separate tax returns, I am often asked the question, "who gets to deduct the mortgage interest and property taxes when a home is owned jointly by a gay or lesbian couple?" The answer is quite simple. You can do it almost any way you want to. One person can take 100% of the deduction or you could split it up into any 2 percentages so long as the total doesn't exceed 100% of the interest and/or taxes paid. Whatever way works best for both of you. However, you must be able to document that you paid the amount of interest/taxes that you are deducting on your return. For example, if I'm deducting 50% of the interest on my tax return, I must be able to show (through canceled checks, bank statements, etc) that I paid 50% of the mortgage. The best advice on this topic is to consult with a tax professional when it comes time to do your tax return...especially if you're doing it for the first time since you bought a home together. |
