Buying Home with Partner

[Small Law Survivor]

Well, my 29 year old daughter is about to close on a house in Rhode Island, with her boy friend (SO). So far, they haven't hired lawyers to draft a co-ownership agreement. And, with all the activity and stress of buying this house I suspect they've given little thought to this so far. I suspect they are planning to deal with this after the closing. I completely agree that they need separate lawyers, or that they need to hire one lawyer and waive conflicts.

They will both be on the mortgage, of course. Joint and several liability, I'm sure. However, the down payment will not be 50-50. The SO is putting down more than 50% of the down payment. My immediate question, as they are about to close is - how is this reflected in the deed?

Yes, I am a lawyer, but other than buying a house for myself 30+ years ago, I have no background, experience or training in property/real estate law.

Small Law Survivor

[Pops1860]

This thread has been split from a previous thread because it starts a new question.

For reference, the previous thread is:

viewtopic.php?t=388308

Moderator Pops1860

[michaeljc70]

Where/who the down payment comes from is not reflected on the deed. In fact, the title company (that does closings where I live) doesn't usually even know where the down payment came from. Of course, the mortgage company wants to know because they may be concerned if you borrowed it. But that is more of where it came from and not who.

[changingtimes]

Many years ago, DH and I bought our (only) house exactly the same way--unmarried, both on the deed, he paid about 60% of the down payment and that much of the mortgage until my income started getting closer to his, then we went 50-50. We got married a few years after buying, but before that I told people that we opted for the 30-year fixed commitment rather than rings and a ceremony. (actually, it was a 10-year adjustable commitment, but same diff) We didn't draw up papers--we trusted each other that if things went south we would do the right thing. I'm still in the house 28 years later, though he died six years ago. It was never reflected on any of the deeds--we just both knew what the setup was.

Of course, that's just about the most optimal outcome for unmarrieds going in on a house together, and I'm not sure I can wholeheartedly endorse doing so without getting lawyers involved, but it's hard for two younguns in love to prepare for the possibility that things might not work out. On the flip side, there's only so much you can do--if their situation falls apart, it might just have to be a learning experience for them.

[quantAndHold]

My wife and I did the same, except she supplied nearly all of the down payment, and I paid 2/3 of the payments. I always knew (or would have been able to calculate) how much of the house each of us owned, and if we had split up before I caught up, I would have given her her actual share of what went into the house. But we had been living together in her house for a year and knew we were in it for the long haul, so i don’t think either of us ever really worried about it. Since gay marriage wasn’t legal at the time, everyone we knew were in informal agreements like that.

That was in 1997, btw. We’ve been legally married since 2008.

[Nate79]

Well, my 29 year old daughter is about to close on a house in Rhode Island, with her boy friend (SO). So far, they haven't hired lawyers to draft a co-ownership agreement. And, with all the activity and stress of buying this house I suspect they've given little thought to this so far. I suspect they are planning to deal with this after the closing. I completely agree that they need separate lawyers, or that they need to hire one lawyer and waive conflicts.

They will both be on the mortgage, of course. Joint and several liability, I'm sure. However, the down payment will not be 50-50. The SO is putting down more than 50% of the down payment. My immediate question, as they are about to close is - how is this reflected in the deed?

Yes, I am a lawyer, but other than buying a house for myself 30+ years ago, I have no background, experience or training in property/real estate law.

Small Law Survivor

I would believe that the source of the down-payment doesn't impact the deed in any way. Both of their names will be on it as joint owners. If they want some other type of ownership structure they need a lawyer.

[gtrplayer]

It’ll be 50/50 no matter who pays the down payment. Sounds like if relationship doesn’t work out, your daughter will come out ahead. Many couples are buying houses before marriage. IMO, there’s nothing wrong with it, as long as they understand if they sell the house, it’s 50/50 no matter who is paying. That’s a pretty significant form of commitment itself.

[bsteiner]

We’re litigating two of these now (involving the same two people — there are two homes involved).

They can make whatever agreement they want but they should make sure the agreement is clear.

What happens if he dies? What happens if she dies? What happens if one wants to sell? Should the result be different if they get married? In each case, how if at all are differences in the down payment, the principal payments, payments for capital improvements, etc., taken into account? Does it matter what the deed says?

[LotsaGray]

It’ll be 50/50 no matter who pays the down payment. Sounds like if relationship doesn’t work out, your daughter will come out ahead. Many couples are buying houses before marriage. IMO, there’s nothing wrong with it, as long as they understand if they sell the house, it’s 50/50 no matter who is paying. That’s a pretty significant form of commitment itself.

Not saying this is never true but it certainly is not always true in all jurisdictions. It might be the legal default presumption but any such presumption can be rebutted. There can also be a specific agreement, private or filed, between the parties.

[michaeljc70]

We’re litigating two of these now (involving the same two people — there are two homes involved).

They can make whatever agreement they want but they should make sure the agreement is clear.

What happens if he dies? What happens if she dies? What happens if one wants to sell? Should the result be different if they get married? In each case, how if at all are differences in the down payment, the principal payments, payments for capital improvements, etc., taken into account? Does it matter what the deed says?

How the title is held will determine what happens if one of them dies (which I'm sure you know).

The other questions should all be in an agreement between the two parties. If there are any disputes and it winds up in court, that can get very expensive. I'd suggest a clause too for when one wants to sell and the other doesn't that the one that wants out can be bought out based on an appraised value with x months notice.

I have a family member that is in a mess of a situation due to this. Long story short engagement called off, one doesn't want to maintain the house, misses payments, disparity in down payment, didn't want to refinance when rates went in half, etc. The sad thing is if this family member dies the deadbeat ex-girlfriend gets the house and the real family doesn't get his 1/2.

[White Coat Investor]

Well, my 29 year old daughter is about to close on a house in Rhode Island, with her boy friend (SO). So far, they haven't hired lawyers to draft a co-ownership agreement. And, with all the activity and stress of buying this house I suspect they've given little thought to this so far. I suspect they are planning to deal with this after the closing. I completely agree that they need separate lawyers, or that they need to hire one lawyer and waive conflicts.

They will both be on the mortgage, of course. Joint and several liability, I'm sure. However, the down payment will not be 50-50. The SO is putting down more than 50% of the down payment. My immediate question, as they are about to close is - how is this reflected in the deed?

Yes, I am a lawyer, but other than buying a house for myself 30+ years ago, I have no background, experience or training in property/real estate law.

Small Law Survivor

While I know people do it all the time, I think it's a terrible idea to buy a house with someone you're not married to. My guess is that this works out poorly more often than it works out well. Not all change is progress.

One should buy it and the other can rent from them. Keep finances separate until marriage, then combine. Keep that time period between "we're serious" and "we're married" relatively short and you'll be more successful in all aspects of life in my experience. I get that some people want to "try before they buy" but that's a very high risk period of time financially speaking and so should be minimized.

If they go ahead and do this, there needs to be a carefully drafted legal document that breaks all potential future scenarios (death, disability, separation etc) down and explains what will happen with each. I suspect if they start down this path they'll either # 1 go with the owner/renter set-up or #2 move up the marriage date.