Unmarried Couples Buying A House What Do They Need To Know
Unmarried Couples Buying A House What Do They Need To Know
It has been said that falling in love consists of uncorking the imagination and bottling the common sense, and for many couples, buying a house together is an experience driven by excitement and emotion, especially in a market as hot as ours.
When a married couple in Texas buys a house, community property laws offer each person equal rights, responsibilities, and protections for their investment. But with more than 12 million unmarried partners living together in the U.S., and almost 13 percent of those being same-sex couples unable to get married in some states, it makes sense that the number of unmarried couples buying a house together is increasing.
For the unprepared couple, buying a house may mean buying trouble, too, as they fail to plan for the possibility of the relationship failing.
The home buying process is such an exciting and usually happy one, particularly for the first-time homebuyers, that people don’t like to drag in the three Ds of real estate: death, disaster, or divorce. However, I always advise clients that financial planning and estate planning is the best way to protect themselves and their investments from future unknowns.
According to research in the Annual Review of Sociology, 55 percent of different-sex cohabiters marry within five years of moving in together, but another 40 percent break up. So what happens to those 40 percent if they’ve bought a house together?
“Basically, what the law says is that you are joint tenants,” said Dallas family law and divorce attorney Lisa McKnight. “If you buy something before you’re married, it’s like a partnership, and each partner has the unequivocal right to partition, which means to sell if they want to.”
McKnight said a common scenario is for a house to be financed in both partner’s names and one person wants to keep it after a breakup, but can’t qualify on their own to refinance the mortgage. The other partner can then force a sale.
“There’s always a fight about reimbursements—one person inevitably says they’re owed more from the sale of the house because they paid more for this, that, or the other,” she said. “Everybody shows up with [their paperwork], and it’s kind of like a battle of the receipts.”
The nature of a breakup makes the scenario especially unpleasant in many cases, McKnight said.
“There are people who can treat it like a business decision, but usually somebody’s heart is involved and it becomes more like a divorce,” she said. “People are using their emotions, not logic, and they want their pound of flesh. It’s about all the unresolved issues that one person has. When you mix that in a business transaction, there are going be problems.”
So what’s a solution? A partnership agreement, sometimes called a “real estate prenup.”
“Come up with a partnership agreement about the property that says how you’re going to deal with it [in the event of a breakup],” McKnight said. “If we want to end the partnership, how does the sale of the house take place? What kind of things are we going to reimburse? How do we decide on a sales price? The person who’s still in the house often doesn’t want to sell, goes passive aggressive about it, and won’t agree to a fair sales price—sometimes you have to get a stick of dynamite to get that person out.”
A partnership agreement should make things clear about what’s reimbursable and what’s not.
“Like say one person paid the utilities and the other person paid the mortgage—you want to get that clarified so the person paying the mortgage doesn’t look for reimbursement,” she said. “In the end, when people start hating each other, they start making lists of reimbursements, like ‘I paid to put the new deck in and you owe me for that.’”
A partnership agreement allows for other possibilities as well, like forming a limited liability partnership (LLP) together before buying a house.
The bottom line is this: create good communication and clear expectations about who pays for what, and what happens if one of the three Ds of real estate happens, McKnight says: “Get your understanding in writing—an oral agreement is not good enough for real property—agreements regarding real estate must be in writing.”
Author:Deborah Boyd Phone: 940-368-1306 Dated: March 12th 2015 Views: 1,614 About Deborah: My family has lived in North Texas for generations so I personally know the residential areas of Fri...
JP And Associates REALTORS (JPAR) is one of the top 100 independently owned brokerages in the US. A full service real estate brokerage firm specializing in real estate sales and marketing services with multiple offices across the US and expanding quickly. JPAR is also one of Real Trends top 500 Brokerages in the US for volume and sales and in the top 1% in the US for sales.
Our mission is to provide extraordinary services and exceed our clients’ expectations by always committing to the highest levels of professionalism, ethics and standards in the real estate industry.
JP and Associates REALTORS is a real estate company with a solid structure and foundation built around service and productivity. We believe in providing a fun and rewarding environment for all our REALTORS® and therefore always ready to support our REALTORs® Associates in any market and in any condition. All our REALTORs® will always strive to close more transactions in a given year than the average REALTOR®. Our goal is to recruit and retain the most professional, better trained REALTORs Associates in the local market.
If you are interested in a new career in real estate or already have a real estate license but wish to learn more about our company please contact us directly to set up an interview. We offer our agents a 100% commission plan, company leads, training and mentoring and coaching from TOP Producers with no office, desk fees or monthly marketing fees ever. We are a full service brokerage at a transaction fee cost.
At JP And Associates REALTORS we strive to exceed our Clients AND our Associates expectations.
General Inquiries: firstname.lastname@example.org
Office Number: 1 (800) 683-5651
Texas Real Estate Commission Consumer Protection Notice
Sellers: Your Home is an Oasis in an Inventory Desert First-time ho
"If you are looking for a straight forward, honest, knowledgeable, reputable, hard working agent to buy or sell a property, you go directly to Brett Ross. His reputation speaks for itself. Call the Boss, Brett Ross!"