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Buying a home with your partner before marriage

On Behalf of | Nov 20, 2023 | Uncategorized |

Social attitudes toward marriage have changed quite a bit in the last few decades, as have certain economic realities. While couples have traditionally “tied the knot” before buying a home together, that’s no longer the case today. An increasing number of couples are now purchasing homes together before they marry. In 1985, only 4% of first-time home buyers were unmarried couples. Last year, unmarried couples made up 18% of home sales.

People are delaying marriage for all kinds of reasons, and some folks simply see marriage as an outdated or unnecessary step in their relationship. Married or not, pooling your resources with your partner to obtain the housing you want and need can make a lot of sense. Just the same, you need to plan for the worst – even as you hope for the best. These are a few things that you’ll want to keep in mind if you’re thinking about purchasing a home with your partner while you remain unwed.

How will the ownership of the property be structured?

Options include joint tenancy with rights of survivorship, tenancy in common or forming an entity, like a limited liability corporation (LLC), to take the title. Using an entity can help outline who is responsible for what part of the down payment, monthly mortgage and maintenance costs. A joint tenancy gives both of you an equal, undivided interest in the property which would automatically transfer the property to the other should one of you die.

A tenancy in common allows you to separate your ownership rights according to whatever percentage you agree is fair. That can be useful if, for example, one of you is contributing 75% of the money toward the house and the other is only able to contribute 25%. However, neither your ownership interest nor your partner’s would automatically pass to the other after death, and either of you can sell your ownership interest in the home without the other party’s consent or will it to a third party.

Should you consider a cohabitation agreement?

One of the benefits of marriage is that it creates legal obligations between spouses that are difficult to simply abandon. If you intend to buy a home with your unmarried partner, it may be wise to consider a legally binding cohabitation agreement that outlines each of your financial responsibilities, rights and obligations. If there’s a breakup, this can help you exit the relationship (and the financial obligations you share) gracefully, with a minimum of damage.

Ultimately, seeking legal guidance is always wise in these situations, as it can be unreasonably difficult to safeguard everyone’s interests efficiently and effectively concerning what can become a consequential situation.