Posted by: Robin Gronsky | February 7, 2013

Real Estate Legal Issues For Unmarried Couples

As more and more couples are postponing marriage, I see them in my office wanting to buy a home, not aware of the potential for problems that married couples do not face.  When I talk about unmarried couples, I do not mean same-sex couples in civil unions.  I am describing couples who may be engaged or just want to live together and decide they want to build equity in a home.

If you are not legally married to the person with whom you are buying a house, you have few legal protections when you buy a house and your co-owner dies or wants out of the relationship.  Because of the complications that unmarried couples can face, I do not recommend that you buy a house in both of your names.  However, if you do decide that you want co-ownership, you need to have a serious discussion with your partner about different issues before you start house-hunting.

You need to discuss whether both of you will be named on the mortgage as borrowers and what will happen if one of you leaves the house because the relationship is over.  There should be a conversation about how you will pay for the mortgage, home repairs and regular maintenance – equal shares, proportionally according to how much each of you earns, something else?  How will you split the sales proceeds if you both decide to sell the house?  Who will stay in the house if you split up?  You need to talk about what you want to happen if one of you dies – the home does not automatically belong to the surviving partner unless you specify this wish on the deed with a certain legal term (“joint owners with right of survivorship”).  If you decide that you want your share of the house to go to your family members, what will happen if they want to sell while the survivor wants to keep the home?  There may be income tax issues if there is enough gain on the sale to trigger capital gains tax liability – will each of you be able to prove how much of the purchase price each of you contributed?

Everything is doable if you discuss all of the issues (your real estate lawyer should be able to point out the issues to you) and if you draw up an agreement and both partners sign it, outlining every possible scenario and how the two of you will deal with each one (your real estate lawyer should be able to draft this agreement for you or help you with anything that you draw up).  If this sounds very unromantic, it may be.  However, these issues come up with most unmarried couples and the heartache it creates if you deal with this before you buy is nothing compared to the misery you will experience if you have no written agreement and one or more of these problems crops up.



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