Can Multiple People Buy a House Together?

Multiple individuals can purchase a house together, an arrangement known as co-ownership. This involves two or more parties sharing the rights and responsibilities of owning real estate. Co-ownership is a strategy for friends, family, or unmarried partners to pool resources and enter the housing market. Understanding this shared endeavor helps clarify expectations among all parties.

Common Legal Structures for Co-ownership

When multiple people purchase property together, the chosen legal framework impacts their rights and responsibilities. The primary structures are Tenancy in Common, Joint Tenancy with Right of Survivorship, and Tenancy by the Entirety. Each offers distinct implications for property control, inheritance, and creditor claims.

Tenancy in Common (TIC)

Tenancy in Common (TIC) allows two or more individuals to own interests in real estate, with each co-owner holding a separate, undivided share of the property. Shares do not have to be equal. TIC lacks a right of survivorship; if a co-owner dies, their share passes to their heirs or beneficiaries, often requiring probate. Each tenant in common can independently sell, mortgage, or transfer their share without needing the consent of the other co-owners, offering flexibility. This structure is often favored by unrelated parties, such as friends or investors, who desire individual control over their respective portions of the property.

Joint Tenancy with Right of Survivorship (JTWROS)

Joint Tenancy with Right of Survivorship (JTWROS) is a common co-ownership form where individuals own an entire asset rather than proportional shares. JTWROS includes the right of survivorship, meaning a deceased joint tenant’s share automatically passes to the surviving joint tenants, bypassing probate. To establish a JTWROS, specific conditions, often referred to as the “four unities,” must be met:
Possession: Each joint tenant has the right to possess the entire property.
Interest: All joint tenants have identical interests in nature, extent, and duration.
Title: All interests arise from the same instrument, such as a single deed.
Time: All interests vest simultaneously.

If any of these unities are broken, the joint tenancy may convert into a tenancy in common, altering the survivorship aspect.

Tenancy by the Entirety

Tenancy by the Entirety is a specialized form of joint tenancy available exclusively to married couples in many states. Similar to JTWROS, it includes the right of survivorship, ensuring the surviving spouse automatically receives full title without probate. This form of ownership treats the married couple as a single legal entity, providing protections. For example, in many states, creditors of only one spouse cannot place a lien on property held as tenancy by the entirety; both spouses must be indebted for the property to be subject to such claims. This structure typically requires a fifth unity, the unity of marriage, in addition to the four unities of joint tenancy.

Financial Considerations for Co-owners

Purchasing a home with others involves financial arrangements, from securing the mortgage to managing expenses and understanding tax implications. Clear communication and agreement among co-owners are essential for financial stability.

Applying for a Joint Mortgage

Lenders assess combined incomes and credit scores for a joint mortgage, which can strengthen the application and lead to better loan terms. A key aspect of joint mortgages is “joint and several liability,” meaning each borrower is individually responsible for the entire debt, not just their proportional share. If one co-borrower fails to make payments, the lender can pursue repayment from any or all of the other borrowers for the full amount due. Missed or late payments by one party can negatively affect the credit scores of all co-borrowers on the loan.

Initial Financial Contributions

Initial financial contributions, such as the down payment and closing costs, can be split equally or unequally among co-owners. The agreed-upon split should reflect the desired ownership percentages and will influence each owner’s equity accrual over time. For example, if one owner contributes $60,000 and another $20,000 to an $80,000 down payment, their equity stakes will differ. This initial investment forms the basis for calculating each owner’s share of equity as property value changes and the mortgage principal is paid down.

Ongoing Homeownership Expenses

Ongoing homeownership expenses require careful allocation among co-owners. These typically include:
Monthly mortgage payments
Property taxes
Homeowner’s insurance premiums
Utility costs
Maintenance, repairs, and improvements

Establishing a clear system for collecting and remitting these shared expenses is essential to avoid disputes and ensure timely payments.

Tax Implications

Co-owners can benefit from shared deductions available to homeowners. Mortgage interest paid on qualified home loans is deductible, with current limits allowing deductions on up to $750,000 of mortgage debt for single filers or married couples filing jointly, or $375,000 if married filing separately. This limit applies to loans incurred after December 16, 2017. Property taxes paid are also deductible, subject to the state and local tax (SALT) deduction limit. For tax years 2025 through 2028, the SALT deduction limit is $40,000 ($20,000 if married filing separately) for a combination of property taxes and either state and local income or sales taxes. These deductions are typically claimed by itemizing on Schedule A of Form 1040, which means the total itemized deductions must exceed the standard deduction to provide a tax benefit. The allocation of these deductions among co-owners often mirrors their ownership percentages or their agreed-upon contributions to these expenses.

Establishing a Co-ownership Agreement

A formal co-ownership agreement is a foundational document for co-owners, clarifying terms, establishing expectations, and providing a framework for resolving disagreements. Without it, co-owners may face challenges if circumstances change. The agreement prevents disputes by outlining each owner’s rights and obligations. It provides a roadmap for managing the property and financial relationship, ensuring all parties understand their commitments.

Key Provisions

Key provisions within a co-ownership agreement typically include a clear record of initial financial contributions, such as down payments and closing costs. It specifies how ongoing expenses, including mortgage payments, property taxes, insurance, utilities, and maintenance, will be divided among the owners. The agreement should also define procedures for decision-making regarding major property matters, such as renovations, significant repairs, or whether to rent out portions of the property. A comprehensive agreement will address dispute resolution mechanisms, outlining steps for mediating or arbitrating disagreements before they escalate into legal conflicts. Include exit strategies, detailing how an owner can sell their share, how others might buy out a departing owner, or what happens if an owner defaults on obligations. For instance, it might specify a right of first refusal for existing co-owners if one desires to sell their interest. Consulting with legal counsel to draft this agreement is advisable, ensuring it is legally sound and addresses the specific needs and intentions of all co-owners.

Navigating Changes in Co-ownership

Homeownership’s long-term nature means co-owner circumstances can change, necessitating a clear process for transitions. Anticipating these within a co-ownership agreement facilitates smooth adjustments and minimizes conflicts.

Selling the Entire Property

When the time comes to sell the entire property, the co-ownership agreement should detail the process for listing the home, agreeing on a sale price, and distributing the proceeds. This typically involves deducting outstanding mortgage balances, selling costs, and any agreed-upon reimbursements, with the remaining funds distributed according to ownership shares or specific terms outlined in the agreement. Without clear guidelines, disagreements over selling strategy or profit distribution can arise.

Selling an Individual Share

If one owner wishes to sell their share while others prefer to retain ownership, the agreement can outline options such as selling to a third party or being bought out by the remaining co-owner(s). Buyout clauses often specify valuation methods and payment terms, such as a predetermined appraisal process or a structured payment plan. This provides a clear pathway for an individual to exit the arrangement without forcing a sale of the entire property.

Death of an Owner

The death of an owner is a significant event directly impacted by the chosen legal ownership structure. For properties held as Tenancy in Common, the deceased owner’s share passes to their estate, requiring probate to transfer ownership to their heirs. For Joint Tenancy with Right of Survivorship or Tenancy by the Entirety, the deceased owner’s interest automatically transfers to the surviving co-owner(s), bypassing probate. This automatic transfer simplifies the process during a difficult time.

Refinancing and Home Equity

Actions such as refinancing the mortgage or accessing home equity typically require the agreement and signatures of all co-owners. Lenders generally require all parties on the deed and mortgage to consent to new loan terms or equity withdrawals, as all owners are jointly and severally liable for the debt. Therefore, any decision to alter the mortgage or leverage the property’s equity necessitates collective approval and understanding of the financial implications for everyone involved.