Singles Buying Real Estate Together - Seek Advice
You've been together for a while. You think this is going to last. You're tired of renting and throwing your money away. You think the time is right to buy a house with your significant other-but you're not married. No big deal right?
Wrong. Or at least, it could go very, very wrong. A whole bunch of things could make your life very miserable. While we don't want to be naysayers, it's always a good idea to hope for the best and prepare for the worst. Here are a few ways that things can get murky and areas where seeking legal advice is a great idea.
First, who is going to be on the mortgage and on the deed? If you're both on the deed, you'll both need to be on the mortgage, making you both equally responsible for paying for the property. That doesn't sound so terrible, but what if one of you has bad credit? It could hike your interest rate up, or even make it hard to get approved. Maybe it's so bad that you agree to leave that person off the mortgage and the deed. If you decide to do this, it leaves one person wholly unprotected in the event of a breakup.
What happens if you break up? You've probably known a few people who have gone through a divorce and had some controversy over who gets the house. Many of the same emotions are at play when you break up and have to divide real property, but there aren't the same protections in place for unmarried people. If you're both on the deed and if you cannot come to an agreement on your own, a partition will need to happen. If the property is one that can be easily divided (a duplex, or maybe a hobby farm with a house and some outbuildings or fields), you can petition a court for partition in kind. Of course, you might have a fight over who gets what portion of the land. If the property can't really be divided, then you'll petition the court for a partition by sale, in which the property is sold and the profits divided. The court may take into account who paid the taxes, repairs, and down payment when deciding how to divide the profits.
What if you're not on the deed or the mortgage and you put money down for a down payment or you've been paying for the repairs? You may be completely out of luck unless there is some written agreement as to what happens in the event of a breakup. In fact, even if you're on the deed and the mortgage it's a really good idea to have a written agreement to cover all of the possible what-ifs. It's a little like having a pre-nuptial agreement or an operating agreement. It can be a little tense when you're trying to hammer out the details. If you can't come to an agreement before you buy the house, imagine how difficult it will be if you break up!
All of these issues and more are issues we have seen more than a time or two. If you're thinking about buying property with someone who isn't your spouse, make sure to consult an attorney about protecting yourself.