What issues need to be considered when an unmarried couple decides to purchase a home together jointly?

February 2, 2013 | By

Question by Leanne H: What issues need to be considered when an unmarried couple decides to purchase a home together jointly?
What legal forms should be drawn up? I have heard of tenancy in common, 1031, joint tenants in common? One or both of us will sell our current property in order to come up with a down payment. (We have not decided if we will be putting down 50/50 down payments yet, it depends on what purchase price we decide on.) Thanks

Best answer:

Answer by binary b
My advice: Get married before you live with romantic relationship partner.

What do you think? Answer below!

Irretrievable breakdown of marriage is now a ground for divorce - India - ibnlive-10jun2010

10 jun 2010 Irretrievable breakdown of marriage is now a ground for divorce Hindu divorce law made more flexible New Delhi, June 10: The Union Cabinet today cleared a proposal making irretrievable breakdown of marriage a ground for divorce. The procedure for obtaining divorce for this reason too will now be made easier, as per an amendment in the existing law. The Cabinet approved introduction of a Bill, 'Marriage Laws(Amendment) Bill, 2010, to further amend the Hindu Marriage Act, 1955 and Special Marriage Act, 1954 to incorporate irretrievable breakdown of marriage as a ground of divorce, Minister for Information and Broadcasting Ambika Soni told mediapersons here. She said a provision has been made in the Bill to save parties which file divorce petition in court due to harassment , she said. It has often been seen that one of the parties does not come to court or wilfully avoids the court to keep the divorce proceedings inconclusive, which causes great hardship to the party in need of divorce, so the amendments in the Act aim at avoiding such a situation, the Minister said. The proposed amendments are in consonance with the recommendations of the Law Commission given in its 217th Report, Ms Soni said. The existing Hindu Marriage Act lays down various grounds for dissolution of marriage by a decree of divorce, including adultery, cruelty, desertion, conversion to another religion, unsoundness of mind, virulent and incurable form of leprosy, venereal disease in a ...

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Comments (5)

  1. stellamay

    Go to a soliciter and get him/her to help you out. It will be worth looking into getting a Will drawn up too.

  2. mice elf

    Unmarried couples are often encouraged to enter into a cohabitation agreement.

    A cohabitation agreement is a written document where the parties to the agreement can provide for division of property, support or any other matter on death or the termination of the relationship.

    Cohabitation agreements are not easy to negotiate, as it is difficult to objectively consider the termination of a relationship or to predict how the relationship will play out. It is, however, a far better, more certain and less expensive option than going to court to determine the issue after the event.

    There are certain formal requirements that must be observed for a cohabitation agreement to be enforceable. It is strongly suggested that each party obtain independent legal advice concerning the contents of the agreement before they sign the agreement, otherwise the agreement might be set aside.

    Certified financial planner Debra Neiman, co-author of “Money Without Matrimony,” suggests that unmarried couples go into a property purchase with a written agreement. You can call it a property agreement or a partnership agreement. It spells out who contributed what toward the purchase.

    The written agreement of a property purchase should contain provisions that address “what-if” contingencies. For example: what if the relationship dissolves, what if one party suffers a medical crisis and is unable to make business or financial decisions, etc. Married couples have divorce court, rules and formulas. Unmarried couples do not. This is a way to set up your own rules from the get-go.

    Deciding how to title property can be complex, especially in an unmarried-couple relationship. It’s wise to consult with a tax or legal professional before making a final decision, but there are some basics to consider.

    If both parties contribute equally, they may choose to own the property jointly with rights of survivorship. A 50-50 split makes sense if there is an equal contribution to the property, but this isn’t always the case.

    With joint tenancy and rights of survivorship, that deed says that if one party passes away, the property automatically goes to the other person. State laws dictate property rights. Though some states may not call it ‘joint tenants with rights of survivorship,’ the law is based on the same assumption — that upon death of one of the owners, the property passes to the other.

    If the parties contributed unequally, they may want to hold the property as “tenants in common,” where the percentage owned by each person is specified. If one party passes away, the person named in the will of the deceased will receive the remaining piece of the pie.

    A tenancy in common is an interest in land in which you have your own undivided interest. If the property is sold at a later date, each party will receive his or her percentage of the proceeds.

    A downside risk to a tenancy in common is the chance of losing a share of the property in a dispute. If one party is sued, a court order could require the sale of the house, in which the party who is not sued will keep his or her share of the proceeds, and the creditor will be paid from the proceeds of the other party.

    In the event of the death of one owner, it could be problematic if the deceased’s share of the house is left to a relative who does not get along with the surviving party. In that event, the parties may not agree about what to do with the property. What if one person wants to sell the place and the other wants to keep it, but cannot afford to buy out the other?

    Ideally, the parties involved will be able to work something out.

    Ordinarily, the only way out would be to file a suit for partition of the property, which is basically the sale and distribution of the proceeds of the property. The courts have discretion to work out an equitable resolution for both parties. A suit of partition takes time, and it is something that both parties may want to avoid.

    Also, be concerned about title insurance. You want to be sure that title insurance, as well as property insurance, specifically covers both individuals.

    … congrats on your future purchase.

  3. Louiegirl_Chicago

    the first thing anyone, whether married or not, has to consider and plan for is the maximum mortgage you will be able to afford given current mortgage rates. to that you add your downstroke and closing costs, and viola!, there’s your purchase price.

    in reference to legal forms, you should always get that from a real estate attorney, but as a broker having worked a very wide variety of deals, i can say this:

    1. there are joint tenants, but not joint tenants in common. joint tenancy is the most usual way that married couples take title so that upon death of one, the ownership immediately passes to the surviving spouse.

    2. tenancy in common is what partners usually opt out to take. that means that each of you own your share of the real estate, and can rent it out, for example, should you so please, without any written approval of your partner. your shares in the parcel go down to your heirs per your will.

    3. the manner of holding title that i personally like the best is called tenancy in the entirety. that means that it’s essentially a joint tenancy, but that the debts of your spouse/partner cannot be attached to the real estate. for example, i had our lawyer change my husband’s and my joint tenancy to TE so that if i died and the lender on my school loans came after my husband to pay them, they could not attach a lien to our HOUSE, but only demand payment out of my estate.

    ask the real estate attorney. i can’t stress that more.

    another thing: when you do a 1031 starker exchange, it has nothing to do with how you hold the title. it is a means by which you defer capital gains made on the sale of investment real estate.

    both you and your partner can do this, no problem. it is only a matter of who owns what part of the INVESTMENT parcel. you could even buy a four-unit apartment building and each take one apartment. the other two would be the investment portion. they are depreciable assets against your income taxes. the land is NEVER depreciable.

    well, the math is really too complex to show you here, but i know how it works. you sell one investment property, put the capital gains amount into a secure, protected escrow account, which is to be used only to purchase the “like kind” real estate within a strictly defined period of time, as set forth by the irs. it MUST be investment real estate, not stocks and bonds, for example. but it could be any investment real estate: it could be a farm, it could be a motel, it could be condos that you rent out, it could be a vacation house in orlando that europeans coming to see WDW and universal studios rent from you, managed by a local property manager. but the rules are very, very strict. if you take one dollar from the capital gains portion, that is called “boot,” and it is taxable. it MIGHT blow up your tax deferred exchange if it is not done very, very carefully, too. but you need to talk to an “exchanger,” your CPA, as well as your real estate attorney and your Realtor (r) to set the whole trade up. then you PERFORM on it.

    the advantage to this is that taxes are DEFERRED on your capital gains. (SOMEDAY, the irs will in fact demand its taxes–what in life is as predictable as death and taxes???) if not deferred, that would mean you have far, far less money to use towards your next investment because you would have paid that money to uncle sam. you can do 1031s again and again, so long as you stick to the rules. you can even defer the taxation of the gains after your death, but i think your heirs have to pay inheritance taxes–i am fuzzy on that one.

    oh, heavens! there are ever so many ways to invest in real estate wisely and to both of your interests! this is the american way of building WEALTH.

    please write me at the email address on my page, here, should you want to ask me a specific question.

    you ARE doing the right thing, but you had better write up a very picky sort of partnership agreement, okay? no matter how you write it, there will always be some little thing that must be done that neither one of you wants to do: so are you going to lose your friendship over it? i would not. be wise. get rich.

  4. teran_realtor
  5. Jay S

    The answer to this question lies in the state in which you are purchasing property’s laws. Buying as an unmarried couple is done regularly, what is important is how it is done. I advise you to consult with an attorney and a real estate Broker. You may need to form an LLC and you may not. The question isn’t really about how you buy the property, but in how you dispose of it down the road. Make sure any agreements are in writing, and the deed or title to the property is properly reflective.