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Unmarried
Couples
Your Property Rights: Moving in Together or Splitting Up
Recent
nationwide surveys show many couples are deciding to live together
before marriage or live together with no intention of marrying at all.
For these couples, buying a home is not necessarily more difficult but
it does come with additional challenges and items to consider before
signing the dotted line.
Unmarried couples will find they have the common options of Tenants
in Common or Joint Tenancy contracts when they purchase
property. In some states one of these options will be considered
automatically for them so they should be aware of what type of contract
they are signing in advance.
Tenants in Common:
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Contract between two or
more people to own property together. There is no
limit to the number of owners. This type of ownership is
common for unmarried couples, groups investing in larger
property and those interested in buying property in expensive
markets they could not otherwise afford on their own.
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Tenants in Common can sell
their share of the home at any time. If no additional
contract is made, they may do this without forewarning other
owners.
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Shares of the Tenants in
Common does not need to be equal. Percentages can be
assign based off contribution amounts. Sally A. may own
50%, Tony B. 25% and Mary C. 25%.
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To terminate a Tenants in
Common contract one owner may buy out the other(s) or all
parties can agree to sell the property and split the profits
according to percentage(s) owned.
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If one owner passes away,
then it is whomever they specified in their last will and
testament who inherits that share.
Joint Tenancy:
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Most of the above
conditions also apply to joint tenancy. However, a joint
tenancy offers a right of survivorship. If one of the
owners passes away, the other(s) automatically get ownership
without the necessity of a last will and testament.
It is
important to realize the above contracts cover the basic property rights
for a mortgaged/purchased home or property. The above do not
protect individual property (i.e. furniture), discrepancies in
contributions to home improvements, or other
expenses of owning a home. Therefore, it is imperative
that unmarried couples write up a contract that address these issues.
Almost like a pre-nuptial agreement (and often perceived as
unromantic as one) a contract of terms will protect both parties in case
paths do part.
Items to consider in a
contractual agreement:
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If you have a Tenants in
Common agreement, make certain all parties do have a last will
and testament to clear any possible confusion of ownership in
case of death.
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Include terms for
terminating the joint ownership.
-Specify if the other party should be given a required number of
days notice of the sale and an option to buyout before one of
the owners sells their half.
-Set limits on the amount of the time allotted for the buyout. A fair time should be offered with a consideration of time
constraints created by working through the banking process.
-If the property will be sold, make sure to include the
percentages of the property owned so each party gets their
share.
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Detail how expenses will
be kept on equal terms. Will the mortgage be split?
Will one pay the mortgage and the other all the household
utilities and joint bills? Again, if the contribution is
not equal the difference should be recorded.
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It may be too cumbersome
and unrealistic to include personal property items such as
furniture in this contract. Instead you may want to make a
separate record. List items that each individual brings
into the household. If furniture is later purchased
together, many unmarried couples will find it beneficial to keep
track of contributions. Because their separation will not
be treated as a divorce, disputes over items like these will be
harder to resolve without some record.
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Do not include chore items
such as who does the dishes. This can make your contract
frivolous and tossed out in a court of law. However, some
counselors do suggest making chore lists for all couples
(married or not) to help cope with the pressures and
expectations of our fast passed lives and homes.
If the
unthinkable does happen and you do separate, make sure to give yourself
time to cope and process. Even without a marriage it is a
major life change. With or without contracts it is important to
work together until you can sell or buyout the house if at all possible.
Some coping strategies:
- Accept and expect mood
swings
- Don't expect to be able to
concentrate and work at 100% for a while
- Don't expect to understand
why you separated right away - this takes time and reflection
- Don't become a hermit -
instead use this as a launching pad to rediscover your interests
and hobbies
- Prioritize your needs
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FREE Real Estate Q&A and Forms
In cooperation with our partners at
Lawchek® and
Lawsonline™,
Homecheck is pleased to provide sample real estate Q&A and forms.
This is not a substitute for legal advice. It is never recommended
that an individual undertake his or her own representation in such
matters as real estate law, even though most states do permit such
activity. Any individual who is serious about proper real estate
transactions would want to have capable legal assistance. An
attorney must be consulted.
What is ownership of real estate?
What are the terms of husband and wife?
Special Warranty Deed (SAMPLE)
Special Warranty Deed - Joint Tenancy (SAMPLE)
Special Warranty Deed (BLANK)
Special Warranty Deed - Joint Tenancy (BLANK)
Why have a will?
What considerations should be given to drafting a will?
Last Will & Testament (SAMPLE)
Last Will & Testament (BLANK)
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LAWCHEK, LTD."
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