Home ownership has many advantages, including gains on your investment over time. Those who own property have more leeway in times of temporary economic difficulty as making a mortgage payment a week or two late costs little, but doing so with rent can rack up costly late fees. Additionally, tenants owning property can refinance it for more favorable interest rates or take out a loan to renovate the house or use toward another purpose like starting a business.
That said, if you’re in a committed, unmarried relationship and you’re thinking of buying with your partner, there are additional factors to consider. Buying a house with your boyfriend or girlfriend could lead to future financial and legal difficulties. You can also end up in a untenable situation if your relationship falters or one partner decides to move out. Take the following into consideration before making the home-buying leap.
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1. Deciding How to Take Title
When you buy a home with a boyfriend or girlfriend, you have several choices of how to take title:
- Joint tenancy with rights of survivorship. In this type of ownership, if your partner passes away, you gain title to the entire property. While this is an advantage if one partner dies, it creates complications if a breakup occurs.
- Tenants in common. In this type of ownership, you own only a portion of the property you buy. It need not be split 50/50; one partner may own 70 percent, the other 30. The advantage is either partner can sell their share if the relationship ends, but the remaining partner may then find themselves sharing a home with an incompatible party.
- Living trust. This requires attorney assistance to establish, but since hopefully, you’re consulting one anyway, this option remains on the table. In this type of ownership, your privacy is guarded as the estate holds title. The disadvantage is the appointed trustee can make decisions for an incompetent party, but the advantage is, you can include conditions such as fair compensation to a departing partner in a breakup.
Another option involves letting only one partner take title and draw up a lease agreement for the other tenant. If this option is chosen, the partner who has no ownership interest does well to request a written lease containing all terms including how long he or she has to move out and how much notice they must give before doing so.
2. How Are You Going to Split the Costs?
Many couples prefer to split expenses 50/50, but this may not prove practical if one partner earns significantly more or has greater financial resources than the other. Some couples choose to have one partner cover mortgage payments while the other handles utilities. Many couples choose to open a joint checking account for household expenses, while others maintain separate accounts.
In the end, it comes down to what works for you and your beau. And it’s natural for responsibilities to shift if one partner experiences job loss or another economic setback. Buying a house with a boyfriend or girlfriend requires some serious financial discussion well ahead of the move-in date.
3. What About Children and Other Dependents?
One of the most complicated issues concerns who inherits the property when both partners eventually pass away. This grows even more thorny if a couple has some children in common and others from former partnerships. Make sure to clearly outline the path of inheritance and have an attorney draft a will. Be aware that if a conflict arises between the will and property law, the courts will need to sort the matter out, which can lead to headaches for your kids.
4. Property Rights in the Case of Separation
Another thorny matter is what happens to property interests in the case of separation. Many couples choose to draw up a contract specifying a certain period of time — usually three to six months after the split — where one partner can buy out the others’ interest.
You don’t want to think about the possibility of breaking up, but it does happen. If one partner leaves unexpectedly, for example, the other may find themselves hard up when it comes to covering the bills on their own. A foreclosure can devastate your credit rating, so as hard as it may be to imagine, it pays to iron out ahead of time what happens if one partner gets a job offer on the other side of the nation (or world) or simply wants to walk away.
5. Tough Questions to Ask Before Buying
Buying property together has the potential to impact your credit and financial future. Before assuming such a weighty risk, ask yourself the following questions:
- Have you noticed any financial red flags? Hopefully, if you’re buying a home, you and your partner both have decent credit and an emergency fund saved. However, if your partner routinely lets bills pile up, has past due debt they’ve swept under the rug or have a history of evictions, reconsider whether buying a home is really the right choice.
- What are your true motivations? Are you buying a home with your partner as an investment? As a place you can both retire in someday? Or are you doing so to save a struggling relationship? If trust issues already exist in between you and your partner, exercise caution.
- Are you ready for the responsibility? Owning a home comes with responsibilities like fixing a roof which leaks and keeping the exterior maintained. Are you able to handle these expenses and tasks as they occur?
6. Getting Everything in Writing
Finally, getting everything written clearly in a contract is a must. Yes, hiring an attorney costs money, but it can prove far pricier down the road if things go south.
Is Buying a House with a Boyfriend or Girlfriend Worth the Risk?
Buying a home with your boyfriend or girlfriend can be a great investment, but there are considerable risks involved. If you truly love your partner, done your homework and still want to assume these risks, welcome home!