What to Know Before Buying a Home With Your Partner
If you're unmarried, homebuying comes with extra legal considerations. Here's how to protect yourself.by Gretchen Brown
When Jeff Campbell purchased a home with his girlfriend, they bought the house 50/50, each of their names on the deed and loan.
They ran into problems after their breakup two years later. Campbell wanted to stay in the home. So did his ex.
"She stayed in the house for six months after the breakup, and rarely contributed to the mortgage payment," he said. "But, of course, you can't evict someone from their own home."
What followed was a negotiation period that lasted about two years. He couldn't refinance the home without her signature. His ex finally agreed to sell her half of the home for $80,000, an amount much higher than his estimate of her equity.
"It's the only time I've ever bought a home with someone else without being married to them, and I will most certainly never do that again," he said. These days, he's married, so that's not an issue.
This might be a horror story, but it's a possibility for unmarried couples who choose to buy a home together.
No couple who makes that leap plans to split. But while a divorce means you might have a judge or mediator help you reach a fair settlement, unmarried couples who break up don't automatically have that same resource.
According to the U.S. Census Bureau, 17 million unmarried partners live together in the United States, triple the number from two decades ago.
As more unmarried couples live together, more are buying homes. But there are a few things these folks should keep in mind.
Who's on the title?
When you buy a home with another person, you get to choose who is listed on the title and how they are listed, said Rajeh A. Saadeh, a New Jersey-based divorce, family law and real estate attorney.
If you both want to be on the title of the home, you can choose to be tenants in common — meaning that if one of you dies, the survivor shares the title with the departed's estate.
Or, you can be joint tenants with the right of survivorship, meaning if one of you dies, the survivor owns 100 percent of the property.
"You also have to consider what percentage ownership you each are going to own; it does not have to be 50/50," Saadeh said.
Some couples, for financial reasons, might choose to have just one partner officially "own" the home, maybe because the other doesn't qualify for a mortgage. Others might split it based on who makes more money or who made the down payment.
When Preston Roach purchased a home in 2014 with his then-girlfriend, only Roach's name was on the mortgage.
While his girlfriend was still in college, Roach was a year out, and had some money saved up for the down payment.
"We went into it knowing that it would be 'our house,' but since I was the primary mortgage holder, I would be the one paying the mortgage note," he said. "She covered the other monthly expenses such as electricity, gas, internet and water."
Their arrangement worked because they talked it through ahead of time. They made a plan for who would pay what. They did not make any formal legal protections.
Saadeh recommends making this a written agreement. Include things like taxes, insurance, utilities and maintenance.
Make it official
To truly protect yourself legally, you can put together a cohabitation agreement, which is sort of like a prenup.
"Cohabitation agreements usually include how property will be divided in the event of a separation," said attorney David Reischer, CEO of LegalAdvice.com.
A cohabitation agreement will help you be treated like a married couple in the eyes of the law, in the event of a breakup. It's legally binding, so make sure you talk it through with an attorney. And keep in mind that some states still don't recognize cohabitation contracts.
This is especially important if only one person has their name on the title, but both partners are paying into the mortgage. The partner without their name on the title is left more vulnerable if a split occurs.
"The non-titled party should ensure that there is a written agreement confirming that they contributed to the home, have a right to live in it and are entitled to reimbursement for those contributions before they can be forced to move out or waive any interest in the home," Saadeh said.
"Otherwise, a simple ejection lawsuit, which is similar to an eviction but is for non-tenants, will remove the non-titled party from the home, and they'll be left trying to get reimbursement in court without the benefit or proof of having any interest in the home."
Think about finances
When you co-sign a home loan with your partner, you should trust that they'll be good for the payments. If not, you will be held legally liable for the account.
"When you become a co-signer, you're potentially putting not just your name, but your credit history, credit scores and your finances in harm's way," said Nathan Grant, Senior Credit Industry Analyst at Credit Card Insider.
If the debt collectors go after your partner, or ex partner, they'll go after you too. And if that person files bankruptcy, and includes the home, they won't have to make payments anymore. You still will.
On the flip side, if you have a lower income and not the best credit history, co-signing a home loan with your partner can help make homeownership possible for you in a way that maybe wasn't possible on your own.
If you're both good on the payments, you'll see both your credit scores improve.
For some folks, the legal aspect can make them change their mind.
Jon Dulin considered buying a home with his girlfriend. While they both would have been on the mortgage, she would have been putting more money down and making larger monthly payments.
They decided against it once they realized the amount of work involved to make sure things were fair if they ever decided to break up.
"In the end, it was a smart thing because a year later we did end up breaking up," he said.
"Thankfully we didn't have to deal with the headache of the house on top of the emotions of the breakup."