Overcome the risks with planning, a lawyer and a slightly awkward conversation or two.
Are you and your partner considering buying a home as an unmarried couple? Look no further! Discover the essential steps that unmarried couples should take when purchasing a home together. Learn how signing a prenup, choosing the right type of title, and having open discussions with your partner and a lawyer can protect your interests and provide you with peace of mind throughout the homeownership journey.
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Love and marriage dont always go together, no matter what Sinatra says. If youre in a committed relationship but nuptials are on the back burner, just know your dream of buying a home doesnt have to be.
In 2019, unmarried couples made up 21% of home buyers ages 22 to 29, an annual National Association of Realtors report found. More than 85% were first-time home buyers.
But many couples dont realize how risky buying a home with an unmarried partner can be. Heres how to overcome these risks with some planning, a good lawyer and a slightly awkward conversation or two.
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1. Sign a prenup… for the house
No couple wants to talk about breaking up, but if youre going to be co-homeowners, its a must, says Renee Bergmann, a real estate attorney and owner of Bergmann Law LLC in Westmont, New Jersey. She recommends unmarried couples create a co-ownership contract with the help of a legal professional before closing day.
The agreement should answer basic questions like: What happens to the property if you split? What if one of you becomes disabled or dies? Who pays utility bills or for major repairs?
Dont just “wait and see what happens,” Bergmann says, because without a written agreement “things could get messy very quickly.”
» MORE: Find out how much house you can afford
2. Choose the right type of title
Turns out theres more than one way to own a house, and taking title the right way is especially important for unmarried couples. Options vary from state to state but generally include:
Sole ownership. Only one name is recorded on the deed, and that person has all the rights and responsibilities of ownership.
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Pros: Sole ownership may yield tax savings if your incomes are drastically different. And, if your partner has bad credit, applying for a home loan in your name only may help with approval. Remember, however, that ownership rights are determined by names on the deed, not the mortgage, Anna Fabian, vice president of product at SoFi, said in an email.
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Con: If the relationship ends and youre not on the title, youll risk walking away with nothing, even if you contributed money to the purchase or mortgage payments.
» MORE: Down payment strategies for first-time home buyers
Joint tenancy. Each person owns 50% of the property. If a tenant dies, their share automatically transfers to the other joint tenant.
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Pro: Joint tenants enjoy right of survivorship, so you wont have to worry about fighting estates or relatives for the house in the event of your partners death.
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Con: An unfriendly breakup could spell trouble, especially if one partner cant or wont buy the other out.
Tenants in common. Allows unequal ownership, so you could own a 75% stake while your partner owns 25%.
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Pro: Ownership shares can be tailored to match financial contributions; if you paid more toward the down payment, for example, you can own a larger percentage.
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Con: If one tenant dies, the other has no automatic rights to that person’s share of the property unless named in a will or living trust.
No matter which approach you choose, if you tie the knot after buying, consider revising the deed to reflect your new legal status with something called a “quitclaim deed,” Bergmann says.
» MORE: Why you probably need title insurance
3. Leave your parents at home
Buying a home is a stressful decision, so younger unmarried couples often involve their parents, but sometimes this only makes things more confusing, says Danielle Moy, an agent with Coldwell Banker residential brokerage in Orland Park, Illinois.
“I can tell the parents are unsure of the situation, and it causes a bit of an emotional roller coaster when theyre looking at homes,” Moy says.
Parents may mean well, but ultimately its your house and your decision, Moy says, so make sure you and your partner agree about what you want — no matter what Mom and Dad think.
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Unmarried Couples Buying a Home Together
