A 2013 marriage and home buying study by Coldwell Banker found that approximately 1 in 4 married millennials (24% of U.S. adults ages 18-34) purchased their first home together with their current spouse before they were married. In my experience, that trend isn’t slowing down as people marry at older ages and invest beforehand, as a couple or individually. As divorce attorneys, we see how the legislature and case law dictate how property is divided amongst married parties at the end of their relationship, and often draft premarital agreements for engaged couples looking to modify or streamline that process.

Even absent plans to marry, those same considerations should be made by any couple purchasing a home together. Entering into a property, partnership, or co-residency agreement can clarify each party’s rights and responsibilities with respect to a home and prevent future litigation in a partition action or probate court. The agreement can cover the most basic aspects of the purchase such as how the property will be titled, to how it will be valued in the event of a buy out or sale down the road.

Unmarried couples are limited to titling a property as joint tenants or tenants in common. As joint tenants, the parties own the property equally, and the surviving owner automatically inherits the other party’s interest. As tenants in common, a percentage ownership is assigned to each party, and the deceased party’s interest passes to his or her heirs pursuant an estate plan or probate. In either case, proper estate planning via a will or life insurance policy may be necessary to enable the surviving party to afford the property after the other’s death.

During the relationship, an unmarried couple cannot file a joint tax return, and the parties must decide how the mortgage interest deduction will be allocated. The other party could be compensated by contributing less to property taxes, homeowners insurance, capital expenditures, or day to day expenses incurred for the property such as utilities.   

If one party chooses to move out, the agreement can require notice in advance and determine how expenses are paid thereafter. The agreement should set forth a mechanism for choosing a broker, setting a list price and adjustments, and determine the acceptance of an offer in the event of a sale. It should also set forth a process for valuing the property in the event one party chooses to buy out the other’s interest.

Whether or not you marry, the advice of an attorney can better protect your current and future interest in a property purchased with a significant other, saving additional expense and heartache should the relationship end.

Kaitlin M. Post, Family Law Attorney