Buying a home together when you’re not married carries certain risks that may not affect married couples. Here are some precautions that you should taken when buying a home with someone to whom you are not married.
When you’re married, assets, such as real estate, are protected by property laws. When you buy a home together and you’re not married, there aren’t any laws in place to protect the individuals. As a result of this, if you split up, you’ll need to come up with your own plan of what will happen. Will one person buy the other person out and get the house? Or will the house be sold and you’ll split the profits? All of this needs to be taken into consideration prior to buying the home.
One of the first steps you’ll need to take is to select the type of house title that will work best for your situation. There are three main types of house titles:
Sole ownership is exactly what it sounds like; there is only one person who is on the deed to the house and they assume all responsibilities of ownership. Many people choose this option if only one part of the couple is in a position to buy a home, i.e. the other person has a bad credit score and may not be approved for the loan.
With this type of ownership, if the couple splits up, the person with no ownership runs the risk of walking away with nothing, even if they have financially contributed to the home.
Joint tenancy means that each party owns 50% of the home. Both people would be protected in this case if something happens to the other person.
The con of this option is that if the couple splits and one party is unable or unwilling to sell or buy out the other half, it could become a very long and expensive legal battle.
Tenants in Common:
Tenants in common is the in between option for many. This will allow the buyers to split ownership in the home depending on their personal financial situation. For example, one person could own 70% of the home while the other person owns 30%.
In this case, if the majority owner dies, the minority owner isn’t necessarily guaranteed the rights to the other share of the home if they aren’t specifically named in a will.
Disclaimer: This article is intended for educational purposes and not as legal advice. As every situation is different, please speak to an attorney or mortgage professional if you have specific questions when buying a home.