It’s not surprising that one in ten homes are purchased by unmarried couples. People are deferring marriage longer – the average age for a first marriage is 31; up from 26 in 2020. In addition, people have grown more comfortable with the idea of living together before marriage or without intending to get married at all. Among first-time homebuyers, nearly 20% were unmarried couples. Plenty of unwed, later-in-life couples are buying homes together as well. These trends are increasing even though there are no rights or rules to protect unmarried homeowners if they break up or pass away.

Buying a home with a partner is risky.

Buying a home together may seem like a natural step in a relationship toward marriage. Perhaps it’s about combining finances to make a home more affordable in a market where increasing interest rates and prices are making homes less affordable for single people. Whatever the rationale, couples often overlook the stark reality of what it means to buy a home together:

• Buying a home may be the biggest single financial investment of your lives

• You’ll both be legally obligated to pay the mortgage, whether you’re still together; whether you still live in the home

• Until the mortgage is paid off, it’ll impact your credit score and ability to borrow to purchase a different home (alone or with someone else)

What happens if you break up?

Moving out of an apartment after a breakup isn’t easy but it’s not very complicated. It’s not as easy to put the obligations of home ownership behind you. Who pays the mortgage? What happens if neither of you can afford to live there? Can you cooperate on home issues after a bad breakup?

Consider Sarah’s situation. She and her boyfriend bought a home together, intending to be married in the future. 18 months later, they broke up and Sarah moved back to her hometown with her parents. She originally agreed to continue paying some of the home costs but that sapped her savings, and she couldn’t afford to move out of her parents’ home to another place. Her ex-boyfriend lost his job and couldn’t afford his share of the expenses. The mortgage went into foreclosure and Sarah’s credit score was wrecked for years.

Buying When Unmarried – The Right Way

When asked, we typically tell unmarried couples that it’s not a good idea to buy a home together. However, if you really want to do it, we have a few suggestions for you to consider.

1. Know your partner’s finances

Both partners need to disclose their debts, bills and income to one another. Agree on a budget. Your decision to buy typically depends on both contributing to the home expenses. If something happens and one partner can’t pay the mortgage, both of you could run into some major problems. If one partner gets into debt and can’t pay their creditors, the creditor can sue. A judgment against one partner is a lien on the home and impacts both partners’ rights to the property.

2. Sign a co-habitation agreement

When you buy a home with someone to whom you aren’t married, you need to have an agreement about the property. It clearly outlines how you will share expenses and what happens in the event of a break-up. At a minimum, your agreement should address the following issues:

• How your names will appear on the deed

• What type and percentage ownership each of you will have

• How paying the mortgage will be shared

• How other home expenses will be shared

• Exit strategy in case of a breakup – who stays, who moves out?

• What happens if one partner loses a job, can’t afford to pay their share of expenses

• How you’ll split the sale proceeds

It’s best to work with an experienced real estate attorney to create this agreement. The process will force you to get on the same page when it comes to home ownership and get you a better sense of whether making the leap into home ownership with your partner is a good idea or not.

3. Don’t neglect the title and deed

The “title” to your home refers to legal ownership of the property. When you buy a home with a spouse, both of your names typically appear on the deed and the ownership passes to the survivor at death. When buying with an unmarried partner, you have many other options:

• One partner owns the whole property. Only their name will be on the deed. This might be the case if only one of you is the borrower on the mortgage for the property.

• Both partners own the property with rights of survivorship. If one partner dies, the survivor owns the entire property regardless of what the deceased partner’s will says.

• Both partners own the property as “tenants in common”. In this arrangement, each of you owns a “share” of the property. You can pass that “share” to someone other than your partner (such as your child; parent).

When buying property, if you are not working with a real estate attorney, you may not be informed about these options and take whatever the closing company puts on the deed. That could be a huge mistake. A real estate attorney can help you decide which option is best for you.

What if you regret buying a house with a partner?

You’re not alone – this is an increasingly common situation to find yourself in. If you do not have a co-habitation agreement, you still have options. If you’ve decided that the relationship isn’t working, before making the break, see if you can get your partner to agree to negotiate and sign a co-habitation agreement. If that’s not possible, you’ll have to negotiate with your partner. If you can’t reach agreement, you can force a “partition” of the property. A partition action is a lawsuit in which a court determines whether a property with multiple owners is to be partitioned or sold. When two or more owners cannot agree on the disposition of the property in question, any of the owners can file a partition action in the appropriate court. Unfortunately, this is a time consuming and messy process with an uncertain outcome.

Before you buy, work with us.

Our experienced real estate lawyers work with home buyers regularly. Whether you and your partner are first time buyers or an experienced later-in-life couple, we can help you with a closing on your home purchase and prepare a co-habitation agreement that protects and serves both of your interests.