On June 24, 2011, Governor Cuomo signed the New York Marriage Equality Act into law, amending New York’s domestic relations law to recognize the right of same-sex couples to marry.
This change has a number of significant consequences for same-sex couples, many relating to real estate matters.
By way of background, a person can own property by themselves or with others. When property is owned by two or more people, title can be held in three basic ways: tenants in common, joint tenants with the right of survivorship and tenants by the entirety. When property is owned by two people who are married, title is typically held in the third form- as tenants by the entirety.
With this special type of ownership, each spouse owns an undivided one hundred percent interest in the property. Meaning, neither party has a unilateral right to sever the tenancy. If one spouse dies, the survivor becomes the sole owner of the property. If one spouse takes out a loan on the property and subsequently defaults, the creditor may not foreclose on the property and remove the non-debtor spouse. If the non-borrowing spouse survives the borrowing spouse, the lien can never be enforced against the property and is extinguished. However, if the borrowing spouse survives the non-borrowing spouse, the lien may be enforced against the whole property, not just the borrowing spouse’s original interest.
With the passage of the Marriage Equality Act, same-sex couples will “have the same access as others to the protections, responsibilities, rights, obligations, and benefits of civil marriage” (see, the Marriage Equality Act, §2), including the right to hold property as tenants by the entirety. (See EPTL 6-2.2)
If a same sex couple is looking for the same creditor protections afforded under state law and to prohibit unilateral conveyance by one spouse, then property should be acquired using this form of ownership. However, there are significant federal gift and estate tax consequences to this form of ownership, and individuals should consult an estate or tax attorney prior to closing on a property.
By Nahum M. Palefski, Esq.