April 22nd, 2009 by Ginny Goldman

I recently ran into a female client I represented several years ago.  A bright, personable and very attractive woman who, as many women have done, relied on the good faith of her man to do the right thing by her.  Her story in brief was as follows: she was involved with a man for five years who convinced her to move to Boca Raton, FL and set up house with him.  He promised to marry her, or at least that was what she thought when he presented her with an exquisite diamond ring.  I will refer to this couple as John and Valerie.

After Valerie moved to Boca Raton, Florida, she found herself at the closing on the purchase of a home in one of the most prestigious country club communities.  Although John promised her the house would be titled in both of their names, she found out, for the first time, when she was at the closing table, that she was not listed as an owner on the deed.  Her world started to close in on her as she sat there, at the closing table, fearing she had been duped by John into giving up her nice life and good job up North to move to Florida and live with him.

When she asked John why she was not listed on the deed, he responded that his attorney advised him to put the house in his name, only, since he was the one paying for it, not her.  She reminded him that he had promised her the home would be owned by both of them.  However, here they were at the closing and all of the arrangements had already been made.  It was too late to change the documents.  He told her he would take care of it after the closing and have the house put in both of their names.

Some weeks later, John told Valerie he really did not want to get married but did want to spend the rest of his life with her.  In essence, he was now proposing that they remain in a permanent state of “engagement”.  Although she was really shattered by this news, she decided after much thought and consideration, that she could be happy without being in wedlock, but insisted that he protect her legally by putting the property in her name also.  John couldn’t possibly give up Valerie, after all, she is a woman any man would want by his side, as she is beautiful, gracious, charming, a great cook and a genuinely nice person. So, of course, he agreed to sign a deed putting the property in both of their names. After all, it was the least he could do, under the circumstances.

That’s where I stepped into the picture.  I met with them to prepare and handle the execution of a quitclaim deed transferring title to John and Valerie.  First they had to consider how they would jointly hold title to the property: as a tenancy in common, a joint tenancy or a joint tenancy with right of survivorship.  I recommended a joint tenancy with right of survivorship, as the interest of a joint tenant who dies automatically passes to the surviving joint tenant, who now becomes the sole owner of the property. John agreed to this tenancy as he had no relatives to speak of and wanted Valerie to have the home if he died before her.

The quitclaim deed was, for a real estate attorney such as myself, easy enough to prepare and execute and we accomplished this in an hour.  As the meeting was coming to an end, I mentioned to John and Valerie that they might want to consider executing an agreement regarding their respective rights, interests and obligations, as joint owners, of the property.  “For instance, what if you should break up in the future? Who will pay the expenses of the house, such as the mortgage, maintenance, insurance, taxes, utilities and any necessary repairs for the property” I asked them. Since John was the financial provider and Valerie was the homemaker who also assisted him with his business, but was not a salaried employee of his business, if they broke up she would not be able to afford the expenses for the house. Also, what if John wanted to sell the house. Since Valerie had a daughter in school, it was very important that she would be able to stay in the house until her daughter graduated high school. So, indeed, I had opened a can of worms in that it gave Joe and Valerie something to think about and they said they would be in touch.

Several weeks later, I received a call from Valerie asking me to set up an appointment for her and John to meet with me.  She wanted me to discuss with them the reasons why her and John needed an agreement regarding their joint ownership of the home. She was concerned that her ownership interest in the property would be at risk if John refused to pay the bills or wanted to sell the house before her daughter finished school. John, who was feeling sheepish after going back on his word to marry her, but not wanting to lose her, and out of a strong obligation to take care of her as well, reluctantly agreed to the appointment.

At the meeting that followed, I explained to John and Valerie that in the absence of an agreement among property owners, their respective rights, interests and obligations would be governed by the law of the State where the property is located, in this case, Florida.  Since they were not husband and wife, the laws relating to ownership of property among spouses would not apply.  Their only remedy would be by partition action, which would require bringing a lawsuit in the court for the partition and sale of the property, should a dispute arise in the future between them, which they would be unable to resolve amicably.  I also mentioned that the costly expense of a lawsuit would not necessarily obtain the results either of them wanted, as the court could only order the property sold and not require John, for instance, to continue making payments until Valerie’s daughter graduated high school.

However, I told them, by entering into a written agreement or contract they could negotiate any terms they wanted should a break-up occur in the future.  I suggested some areas they ought to consider such as who would be responsible for the upkeep of the property, how they would accomplish a sale of the property such as the selection of a broker, whether John would be reimbursed for all of the expenses he paid when the property was sold, who would have the right to continue living in the house between the date of their estrangement and the date of the closing, which could be several years if they agreed to wait until Valerie’s daughter finished high school, as she was fourteen at the time. Other issues to be considered in the contract included the distribution of proceeds on the sale of the property, reimbursement to John of the money he paid toward the purchase of the property and the expenses he paid for the property between the break up and the closing, and the distribution of the remaining funds after the payment of all closing costs, the payoff of the mortgage, taxes, homeowner association dues or other amounts owing on the property.

Furthermore, they had to consider whether they would have the right to purchase the other’s interest in the property or sell it outright.  The method of sale, the manner of selecting the real estate broker, valuing the property and the procedure for dealing with a dispute of any of these issues, which could delay the sale of the property, were also considered.  Finally, the division of the jointly owned personal property in the home, such as the furniture, furnishings, art work, appliances, electronics, household items, books, etc., had to be addressed in the agreement.  Since a lot of the personal property was paid for by John, but purchased for both of them and was jointly owned by them, if a dispute arose in the future regarding the ownership of the personal property, it would be his word against hers. By including the division of the personal property in the contract, there would be no misunderstanding as to who would receive what, should their relationship terminate.

I told them to think about the issues we discussed, take their time, go over what was important to each of them and then when they were ready, to call me and we would meet to discuss the specific terms of their joint ownership agreement.

A week or two passed and then Valerie called to say she was still working with John to have an agreement prepared by me. She was determined to enter into a joint ownership agreement with John as she realized her security as an owner of the property could be in serious jeopardy if John and her broke up and he refused to honor his promise to continue making the payments for the property. Since John already changed his mind about marriage, she was concerned he might feel different in the future and knew her only protection would be to have an executed agreement that, if necessary, she could enforce.

The difference between the right to sue under a contract, as opposed to bringing a partition action, is that the contract terms will be enforced by the court. These contract terms may include the right of any owner or owners to continue living in the house for any stated period of time.  In the case of Valerie, she wanted to be able to stay in the house until her daughter graduated high school, while John paid for all of the expenses of the property. Without an agreement specifying these terms, in the event of a dispute, Valerie would be obligated to pay one half of all of the expenses for the property since she is an owner.  It is called “contribution” and in the State of Florida, absent an agreement between co-owners of real property to the contrary, each co-owner is legally responsible for his or her respective share of the expenses incurred to maintain the property, including mortgage payments, maintenance, insurance, taxes, repairs, certain utilities and other expenses necessary to maintain the property. Without an agreement specifying John’s obligation to pay all of the expenses of the home, in the event of a break-up, Valerie would be legally obligated to pay one half of all the necessary expenses to maintain the property. Since the understanding between John and Valerie was that John would pay for all of the expenses for the property, without an agreement, should John change his mind, Valerie would be obligated for her share of the contribution and John would be able to recover against her share of the equity in the property for one-half of all of the necessary expenses incurred to maintain the property.  Moreover, it is questionable whether, in the opinion of this author, Valerie would be able to enforce a verbal agreement by John to maintain the property against his claim for contribution.

Another appointment was scheduled and they came in to discuss the specific terms they wanted to include in the agreement. We scheduled a third and final appointment for them to review and sign the agreement.  They came in and each reviewed a copy of the proposed agreement and some further discussion ensued and changes were made and finally, an agreement between them was executed.  Valerie was smiling all the way home because she knew she would now have the legal right to live in the house and have the payments made by John and if their relationship failed to stand the test of time, she would receive half of the equity in the property in the event of a sale.

As a foot note to this story, John and Valerie did break up subsequent to the execution of their joint property agreement.  Valerie continued to live in the house and John paid all the bills. Eventually, they did reconcile and continue living together today.  Although her relationship with John did not turn out the way she expected when she first moved to Florida, Valerie is content knowing she has a joint ownership agreement that  protects her right and interest in the jointly held property, should John and her split up again.

In addition to protecting your rights as a joint property owner, if you are living with someone who is the owner of the home and you are not on the title, at all, you should consider what you would do if he or she demanded that you move out of the home. Or if the owner dies, his or her heirs are going to want you to move out of the house. Where would you go? You will have no right to stay in the home unless you are on the title or the owner has left the property to you in his or her will or under a trust. If you are on the deed, you need to make sure it is a joint tenancy with right of survivorship, otherwise the interest of the deceased owner will pass to his heirs and you will own the property with his or her heirs.  If you are not on the title, you should be asking why and whether your significant other will agree to convey title to you as a co-owner.  Once you become a co-owner, you should then consider having an agreement like John and Valerie did. Without an agreement, the verbal promises that were made to you may not be enforceable and your only rights to the property will be governed by the law of the State where the property is located. For more information about the real property laws in your State, such as partition and contribution claims, you should contact an attorney in your community.