Ownership of Real Estate by Unmarried People in Oregon
There are a number of common situations where unmarried people own real estate in Oregon. First, an unmarried couple may buy property together. Second, two or more unmarried people without a romantic relationship may own property together, and usually they are family members, friends, and/or investors.
Typically, unmarried people will own real estate as “tenants in common.” A tenant in common has a number of rights and responsibilities associated with ownership of property. When things are going well, the tenants in common may not really be aware of their rights and obligations with respect to property. However, when any tenant in common disagrees regarding their rights or responsibilities, difficult arguments may ensue without immediate resolution.
Oregon Revised Statutes 93.180 describes various ways in which two or more people in Oregon may hold title to real estate. ORS 93.180(1)(a) describes creation of a tenancy in common, ORS 93.180(1)(b) describes creation of a tenancy by the entirety between two married people, and ORS 93.180(1)(c) describes creation of a joint tenancy involving a trustee or personal representative.
Survivorship is a key issue which may not be addressed when unmarried people own real estate together. “Survivorship” refers to the issue of who inherits an owner’s interest in real estate when the owner dies.
In Oregon, a clear way to create a right of survivorship involving unmarried persons would be to create what is typically called an “Erickson estate,” named after the Oregon Supreme Court case of Erickson v. Erickson. 167 Or. 1 (1941). In the Erickson case, the Oregon Supreme Court found that the use of certain language ensured that unmarried people could create a right of survivorship despite the abolishment of joint tenancy estates by the General Laws of Oregon in 1862.
As indicated in ORS 93.180(3), joint tenancies are generally abolished in Oregon, meaning that unless there is a clear intent in legal documents to create a survivorship interest, no survivorship interest will be found by a court.
When a married couple, or domestic partners, separate or divorce, there is a clear process in the family law courts to address the rights and responsibilities related to real estate. However, when an unmarried couple owns real estate together, there is no clear process to easily disentangle each person’s rights and responsibilities, which can lead to a great deal of conflict.
If possible, unmarried people who buy or already own real estate together should enter an agreement which outlines the rights and responsibilities related to ownership and management of real estate. Generally, unless such an agreement exists, a court may well treat each person as a business partner, and may or may not fairly address each business partner’s rights and responsibilities related to ownership and management of real estate.
In the absence of a written agreement, unmarried people who own real estate in Oregon may be left with pursuing incomplete or unpredictable courses of action. E.g., ORS 105.805 may provide a cause of action where an owner commits waste and injures another owner, and ORS 105.820 may provide a cause of action where there is a disagreement regarding rent or profits.
When an unmarried couple enters a written agreement outlining their rights and responsibilities related ownership and management of real estate, such an agreement is often called a “cohabitation agreement,” which essentially operates like a contract between the couple. Much like a prenuptial agreement, a cohabitation agreement explains how the unmarried couple can disentangle themselves if they break up and ensure each person is treated fairly regarding how their contributions to ownership and management of the property.
It is worth noting that a same-sex couple may opt to create a domestic partnership under ORS 106 as a means to facilitate the same rights and responsibilities as a married couple (whether same sex or not).
Many issues may come up if unmarried people come up and do not have clear documentation which outlines the rights and responsibilities related to each person’s ownership and management of real estate, including:
- How are financial contributions weighted?
- What happens if one person stops contributing financially?
- What happens if one person damages or neglects the property?
- What happens if one person dies?
- What is each person’s right to possession if the couple breaks up?
One potential option is for one of the owners to initiate an action for partition. “Partition” generally means one of two things in the context of real estate: First, a partition lawsuit is a means to help two or more owners of real estate to disentangle their ownership and management interests in real estate through a forced sale; second, partition may also refer to division of land into two or three parcels. Here, the focus is on a partition lawsuit.
ORS 105.205 – 105.405 generally outlines the statutory procedure for a partition in lawsuit in an Oregon state court. As a last resort, a partition lawsuit exists to avoid an ownership of real estate being stuck indefinitely when there is disagreement over management or ownership of real property and the owners are unable to resolve differences.
When two or more unmarried people own real property, they should not only have a detailed agreement which addresses each person’s rights and responsibilities regarding ownership and management of property, but they should also, on an ongoing basis maintain detailed records to document each owner’s activities in a business-like manner. Having both a written agreement and detailed records helps ensure that each person can protect their interests in case any one person wishes to exit the arrangement.
If you do not have a written agreement, it is still possible to negotiate a resolution, but there may be challenges posed by a lack of documentation.
If you have questions about ownership of real estate in Oregon, please contact Coast Land Law for a consultation about how you can best protect your property rights. We have worked with unmarried clients to help them determine the best form of ownership of real estate, as well as work through problems when ownership of real estate is not reflected in a written agreement. We work with clients who have real estate interests in Clatsop and Tillamook Counties, as well as in the Portland area (Washington County, Multnomah County, and Clackamas County).