Bulletin: NJ000088

Dear Associates:

The New Jersey Legislature has passed the Domestic Partnership Act, which becomes effective on July 10, 2004. The purpose of this Bulletin is to discuss some items in connection with the Act which may have an affect on your title practice.

The Act provides a mechanism for the registration of Domestic Partnerships (the "Partnership"), defined as either two persons of the same sex, or two persons of different sexes both of whom are over the age of 62 (the "Partners"). The registration of the partnership is memorialized in a Certificate of Domestic Partnership from the local registrar.

Property may be held by the Partners as either tenants in common or as joint tenants with right of survivorship, but not as tenants by the entirities. They may also own property separately. The usual rules of determining whether the property is held as tenants in common or as joint tenants apply; in the absence of any designation to the contrary, Partners are presumed to hold as tenants in common.

Partners are responsible for their own debts incurred prior to the registration of the Partnership, and for debts contracted separately during the Partnership. If the Partners jointly incur a debt, then both are liable. Judgments solely against one Partner do not attach to the property of the other Partner in his or her sole name. However, where property is held by Partners together, the usual rules concerning tenancy in common and joint tenancies apply.

Partnerships must be terminated by a decree of the Superior Court; however, the Act makes no provision for equitable distribution rights or rights of possession to property resulting from Partnership status. This directly affects our usual signature requirements for mortgages. If you are dealing with a Partnership and the property to be mortgaged is in the name of only one Partner, the other Partner does not have to sign the mortgage. The "principle marital residence" requirement does not apply to a domestic partner. If the property to be mortgaged is held in the name of both Partners, of course both must sign.

Inheritance rights are not greatly changed by the Act. Because the Partners do not hold as tenants by the entireties, property held as tenants in common will not pass to the other Partner as a matter of law. Property held as joint tenants will. You must review the documents carefully and determine the ownership.

However, there is a change as far as inheritance taxes. The Act provides that persons who have registered their domestic partnership will be treated as Class A beneficiaries as to each other's estates under the New Jersey Inheritance Tax rules. Rules for New Jersey Estate Taxes and Federal Estate Taxes remain unchanged, as an inheriting Partner is not treated as a spouse for the purpose of these taxes.

Please call the State Office if you have any questions concerning this matter.