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by Reginald Butler, Jr.
Quick answer: Most co-buyers in Maryland, DC, and Virginia should take title as tenants in common, with a written co-ownership agreement signed at the same time as the deed. Tenancy in common lets you own unequal shares that match unequal down payments, and it lets your share pass to whoever you name rather than automatically to your co-owner. The structure is the easy part. The exit is what you actually need to get right, because the mortgage does not care about your friendship.
Why tenancy in common is usually the right default
Maryland, DC, and Virginia all presume tenancy in common unless the deed expressly says otherwise. DC Code § 42-516 and Virginia Code § 55.1-134 both require survivorship language to be stated in plain terms, and without it you are tenants in common by operation of law.
That default works in your favor. Tenancy in common allows unequal ownership percentages, which matters enormously when one buyer brings $60,000 to the table and the other brings $20,000. Those percentages have to be recited in the deed itself. Do not assume that an unequal down payment automatically creates unequal ownership, because it does not. If the deed is silent, you are presumed equal owners, and the person who put down three times as much has quietly gifted away equity.
Tenancy in common also means your share passes through your will or, if you have none, through intestacy. It does not automatically go to your co-owner. For unmarried partners and friends, that is almost always what you want.
When does joint tenancy with right of survivorship make sense?
Joint tenancy with right of survivorship presumes equal shares and passes your interest directly to the surviving owner at death, overriding whatever your will says. That is a powerful tool for a committed unmarried couple who genuinely intend for the survivor to keep the home, and it avoids probate on that transfer.
But understand what you are giving up. A will does not override survivorship, so changing your will accomplishes nothing. And joint tenancy can generally be severed unilaterally here, meaning your co-owner can convert it to a tenancy in common without your consent.
One DC-specific wrinkle is worth knowing. Tenancy by the entirety is married-only in Maryland and Virginia, but DC Code § 42-516(b) extends it to registered domestic partners. That creditor-protection advantage exists in the District and not across the river.
Should we buy the house through an LLC?
For an owner-occupied home, almost certainly not. Fannie Mae and Freddie Mac will not buy a loan on a primary residence titled in an LLC, which pushes you into commercial or portfolio financing at worse rates and shorter terms. Transferring an existing property in can trigger the due-on-sale clause and, in Maryland, recordation and transfer tax.
You also lose the Section 121 exclusion. Two unmarried co-owners each get their own $250,000 capital gains exclusion if each has owned and occupied the home for two of the last five years. That is $500,000 of tax-free gain between you, and an LLC throws it away.
What has to be in the co-ownership agreement?
Everything you would rather not discuss. Ownership percentages and how they were calculated. Who pays what share of the mortgage, taxes, insurance, and HOA dues, and what happens when someone is late. A repair-spending threshold, so one owner can approve a $600 water heater but a $9,000 roof requires both signatures. Whether improvements paid by one owner earn a credit at sale. Occupancy rules, including whether a new romantic partner can move in. And a dispute process that goes to mediation before arbitration, so you are not filing suit over a dishwasher.
How do we get out?
Build a buyout mechanism with a real pricing method. The cleanest version: each party hires an appraiser, and if the two values land within a stated percentage of each other you average them; if not, the two appraisers select a third and that number controls. Attach a right of first refusal, so an owner who wants out must offer to the co-owner before listing publicly. Include mandatory sale triggers for events like extended nonpayment.
You may see a “shotgun” clause recommended, where one owner names a price and the other must either buy or sell at it. Be careful. It systematically favors whoever has more cash on hand.
Whatever you write, you cannot contract away the right to file for partition. In Maryland, Real Property § 14-107 governs, and the Maryland Partition of Property Act effective October 1, 2022 added appraisal and cotenant buyout rights that give a co-owner a path to buy out the other before a forced sale. An uncontested partition still runs roughly six to twelve months and $5,000 to $15,000. A contested one runs eighteen months or more and $25,000 to $50,000 and up. Your agreement’s job is to make sure nobody gets there.
What does the mortgage do to all of this?
This is the part that surprises people. Your mortgage liability is joint and several. If your co-owner stops paying, the lender does not collect half from you. It collects all of it, and both credit reports take the damage.
On qualification, Fannie Mae uses the average of the borrowers’ median scores for eligibility but prices the loan off the representative score, which is the lowest one. Your co-buyer’s 640 raises your rate even if your 780 gets you approved.
And a quitclaim deed does not remove anyone from the mortgage. It only moves title. Removing a departing owner from the debt requires a refinance, which means the one staying has to qualify alone, at whatever rates exist that year.
Frequently Asked Questions
Can we own unequal shares of the house? Yes, as tenants in common. The percentages must be stated in the deed. If the deed is silent, you are presumed to own equally regardless of who paid what.
If my co-owner moves out, do they owe me rent? Generally no. A co-tenant in exclusive possession typically owes nothing absent an ouster. If you want a rent obligation, your co-ownership agreement has to create one.
Who deducts the mortgage interest and property taxes? Whoever is both legally liable on the debt and actually paid it. Following Voss v. Commissioner and IRS AOD 2016-02, the Section 163(h)(3) debt limits apply per taxpayer rather than per residence for unmarried co-owners.
Do we really need an attorney? Yes. I can walk you through how these structures work and what questions to ask, but deed language, the co-ownership agreement, and any buyout formula have to be drafted by a licensed attorney in your jurisdiction.
Thinking about buying with a friend or partner and want to talk through how the numbers and the exit should be structured before you write an offer?
No pressure — just an honest conversation.
