In 2019, Business Insider published an article stating, “Marriage is also taking a backseat as homeownership takes on more significance in millennials’ lives…homeownership is more important than other major life goals and events, like getting married and having children.” Several factors are at play here, such as marriage rates declining and rent prices increasing steadily. However, large groups prefer investing in real estate before paying the perceived high costs of a traditional wedding. (CNN reported that the average wedding cost this year was $29,000.)
When a married couple purchases a home and later divorces, laws facilitate how their assets and liabilities get divided. Conversely, there is significantly more gray area for unmarried couples who invest in a house and later decide to break up. Can some people give tens of thousands of dollars to their unmarried partner only to realize they have no ownership claim on the property they’ve been paying off? Absolutely, and this is why you must protect yourself if you buy a home out of wedlock.
Define Ownership
When you and your partner decide to buy a home, defining your ownership rights and responsibilities is critical early in the process. You can do this by how the Deed is drawn up as well as a co-ownership agreement, a legally binding document that outlines how much of the home you and your significant other own. Additionally, it defines how it will be split should you and your partner break up. Should that happen, each person walks away knowing their financial responsibilities regarding the home.
When you meet with your lender, which is typically through a series of phone conversations, let them know about your situation. They can give you different mortgage options to use the correct type of loan and financial structure for your situation. The goal is to protect your credit and ensure transparency for the loan’s obligations.
Protecting Your Investment
After you have purchased the home, you can maintain separate bank accounts. This is because you can use your money for any property-related payments. This establishes a clear paper trail and minimizes the chances of disputes in the future. When you commingle funds, showing how much you invested into the home becomes exponentially more challenging.
Although it may sound odd, you should consider having a property agreement such as a cohabitation or domestic partnership agreement. These, too, can define what your financial responsibilities are. However, this is something that is best done through an attorney. A wide range of other details should be considered when crafting this agreement, and your attorney can discuss them as they apply to your specific circumstances.
Get In Touch with a Real Estate Attorney
When buying a house out of wedlock, the key is to take proactive steps to protect your interests. By defining ownership, payment responsibilities, and planning for the unexpected, you safeguard your financial future while mitigating potential risks from a breakup. Lastly, you should also have professional legal counsel to guide you through the legal components of the home-buying process. Contact Auricchio Law Offices to schedule a free consultation.
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