One undeniable trend over the past few years is that more couples are purchasing homes before purchasing wedding rings. And while different folks have different opinions about whether this is a good trend, one thing is clear: it is critical to have some kind of written agreement in place before taking joint title to a home.
The law treats married couples differently than unmarried couples on many levels, especially in regard to estate planning. Married couples often get federal and state legal protections that simply are not extended to unmarried partners.
At a minimum, unmarried joint home buyers should have two documents in place: a cohabitation agreement and a property agreement.
A cohabitation agreement details who pays for what. If the mortgage payments are to be shared, how are they to be shared? If bills, property taxes, or other expenses are shared, make sure they are clearly spelled out.
A property agreement defines an exit strategy. If one person becomes disabled or dies, what happens? If the relationship ends, is there a trigger that could prompt a sale? Can one party buy the other out? What if that person cannot qualify for a loan? What if the value of the home goes down?
A good real estate attorney can help with both of these subjects, as well as an estate plan, which every committed couple should have regardless of marital status. If one party should pass away unexpectedly, and no estate plan is in place, you could find that mother-in-law you never wanted suddenly empowered to make decisions that could radically affect your life and your finances.
The purchase of a home is a life changing event, and it should be treated with the care it deserves. A few hundred dollars prudently invested in legal protections today could save thousands of dollars and untold angst down the road.
