Addressing Joint Property Ownership
Navigating property ownership as unmarried partners in New Jersey requires a clear understanding of your rights and options, especially when considering separation. As joint owners, you have two primary avenues to address your shared property: selling the property or executing a buyout. In this post, we address joint property ownership and the challenges related to separation.
Understanding Property Ownership: Tenancy Types in New Jersey
Before exploring the options for selling or buying out a jointly owned property, it is important to understand the types of tenancy terms in New Jersey. The way property is owned can impact your rights, responsibilities, and options when it comes to separation or selling.
1. Joint Tenancy
In a joint tenancy, two or more individuals hold equal ownership rights in a property. This type of ownership is characterized by the “four unities” of time, title, interest, and possession:
• Time: Each co-owner acquired their share at the same time.
• Title: Ownership arises from the same document, such as a deed.
• Interest: Each co-owner has an equal share of the property.
• Possession: All co-owners have equal rights to use the entire property.
One key feature of joint tenancy is the right of survivorship. This means that if one co-owner passes away, their share automatically transfers to the surviving co-owners, bypassing probate.
2. Tenancy in Common
Tenancy in common is the default form of co-ownership in New Jersey when the ownership document does not specify otherwise. Unlike joint tenancy, tenancy in common allows for unequal ownership interests. For example, one person could own 70% of the property while another owns 30%.
Other features of tenancy in common include:
• No Right of Survivorship: Upon the death of an owner, their share is passed to their heirs or beneficiaries rather than the surviving co-owners.
• Flexibility: Co-owners can transfer or sell their share without the consent of the others.
3. Tenancy by the Entirety
Tenancy by the entirety is a special type of ownership reserved for married couples. In this arrangement:
• Both spouses own the property as a single legal entity.
• The right of survivorship applies, meaning if one spouse dies, the property automatically transfers to the surviving spouse.
• Creditors of one spouse cannot attach or force the sale of the property to satisfy individual debts, providing additional protection.
This form of ownership is not available to unmarried couples, so if you and your partner are not married, you likely hold the property as joint tenants or tenants in common.
Determining Your Tenancy
To confirm your type of ownership, review the deed or title to the property. It should specify whether the property is held as joint tenants, tenants in common, or another form of ownership. If the deed does not clarify, tenancy in common is presumed under New Jersey law.
How Tenancy Affects Selling or Buying Out
The type of tenancy influences the process of separation, sale, or buyout. For example:
• Joint Tenancy: A court may need to dissolve the joint tenancy in a partition action if co-owners cannot agree on a sale or buyout.
• Tenancy in Common: Co-owners can sell their individual interest without consent, but disputes may still require legal resolution.
• Tenancy by the Entirety: This does not apply to unmarried couples, but for married couples, separation or divorce usually requires formal agreement or court intervention.
1. Selling the Property
Agreement Between Parties
Ideally, both parties should mutually agree to sell the property. Collaborative decisions often lead to smoother transactions and equitable distribution of proceeds.
Forced Sale Through Partition Action
If consensus cannot be reached, New Jersey law permits a co-owner to initiate a partition action. This legal proceeding allows the court to intervene and order the sale of the property, ensuring fair division of assets. According to N.J.S.A. § 2A:56-2, the Superior Court may direct the sale of real estate if a physical partition cannot be made without significant prejudice to the owners.
2. Buyout of One Party’s Interest
Determining the Buyout Amount
In a buyout scenario, the departing party is typically entitled to compensation equivalent to their share of the property’s current market value. For joint tenants, this usually means an equal division. However, factors such as individual contributions to the property’s purchase, mortgage payments, and improvements may influence the exact amount. Engaging a professional appraiser can provide an accurate valuation, serving as a foundation for buyout negotiations.
Financing the Buyout
The purchasing party has several options to finance the buyout:
• Personal Funds: Utilizing savings or liquid assets to cover the buyout amount.
• Mortgage Refinancing: Refinancing the existing mortgage to access sufficient funds for the buyout. This approach may involve adjusting loan terms and requires approval from a lender.
• Home Equity Loan: Securing a loan against the property’s equity to finance the buyout. This option depends on the amount of equity built in the property and the lender’s terms.
Legal Considerations
It is crucial to formalize any agreement through legal documentation to prevent future disputes. Drafting a new deed reflecting the change in ownership and ensuring all financial obligations are clearly outlined can safeguard both parties’ interests. Consulting with a real estate attorney can provide personalized guidance tailored to your situation.
Conclusion
Deciding between selling a jointly owned property and executing a buyout involves careful consideration of legal, financial, and personal factors. Understanding your tenancy type and the implications of each option is essential. Engaging with legal and financial professionals can facilitate a fair and amicable resolution, allowing both parties to move forward confidently.
If you need assistance navigating property ownership issues or are ready to take the next step, contact the Law Offices of Peter J. Lamont. Visit us online at pjlesq.com, call us at 201-904-2211, or email us at info@pjlesq.com. We are here to help.
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For detailed insights and legal assistance on topics discussed in this post, including litigation, contact the Law Offices of Peter J. Lamont at our Bergen County Office. We're here to answer your questions and provide legal advice. Contact us at (201) 904-2211 or email us at info@pjlesq.com.
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About Peter J. Lamont, Esq.
Peter J. Lamont is a nationally recognized attorney with significant experience in business, contract, litigation, and real estate law. With over two decades of legal practice, he has represented a wide array of businesses, including large international corporations. Peter is known for his practical legal and business advice, prioritizing efficient and cost-effective solutions for his clients.
Peter has an Avvo 10.0 Rating and has been acknowledged as one of America's Most Honored Lawyers since 2011. 201 Magainze and Lawyers of Distinction have also recognized him for being one of the top business and litigation attorneys in New Jersey. His commitment to his clients and the legal community is further evidenced by his active role as a speaker, lecturer, and published author in various legal and business publications.
As the founder of the Law Offices of Peter J. Lamont, Peter brings his Wall Street experience and client-focused approach to New Jersey, offering personalized legal services that align with each client's unique needs and goals.
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