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Protecting Yourself When Homeownership Doesn't Come with "Love and Marriage"

Love and marriage, love and marriage, goes together like horse and carriage... you can't have one, you can't have none, you can't have one  without the other... Frank Sinatra

So went a popular song of the 50's, sung by Frank Sinatra.  Not even Frankie always followed through at the time, but in 2010, young people starting out their lives certainly do not always follow the order of love, marriage, family, buy a home.  Some have the baby or buy the home long before the legalities, while singles, single parents, siblings or multiple generations with a family, life partners, and roommates pursue homeownership as well as "traditional couples."  While social mores may change, real estate law is not so flexible.  In most states, there are legal guidelines to determine what happens to property when one of the co-owners dies - or if the relationship does - when the parties are married, but not otherwise.  In any case, if breaking up is hard to do, breaking down the assets is even harder.



If you find yourself thinking of buying a home with someone, figuring out what would happen to it in case things change in the relationship is an important part of planning to become homeowners.  Think about this: Over 50% of marriages fail; undoubtedly, if anyone kept track of the longevity of other housing arrangements, the conclusion would be that many arrangements end up being even more temporary.  Roommates move on and move out, siblings marry and want to buy a home with their new spouse, single parents marry and want a jointly-agreed on house.  The beat goes on.

In Ann Arbor, a college town, parents often help their children buy a condo as an alternative to student housing.  While Mom and Dad may be paying the mortgage, what happens if Junior graduates (or even if he doesn't stay in school) but wants to wants to stay in town, keep the condo, and take over the payments?  Thinking out all the possibilities (and maybe even having them in writing) in advance will come in handy if a parent dies, the step parent doesn't like the arrangement, or if Mom and Junior fall out.

Larry Elkin, in Financial Self-Defense for Unmarried Couples, laid out questions posed by homeownership in more legal terms.  For example,

•         If the partnership breaks up, who stays in the house and who goes?

•         If one partner dies and his estate goes to his family, what happens if the heirs want to sell?

•         In case of death, how is tax liability ascertained when one partner has paid more of the downpayment, mortgage, improvements, etc? 

•         Similarly, what right do partners have to claim ownership when their contributions have been different?

Answers to questions like this need to be formalized in a legal document before you buy a place together.  Often times, even talking about these issues brings to light differences in values that make it clear that renting is a better option.  Once you are comfortable that co-ownership is practical and workable, with the legalities in place, you may decide to take the plunge.

As noted in our blog  Moving In? Think of your Exit Strategy, planning for change at the beginning of ownership will make things easier when change inevitably occurs.

Have all your details worked out and ready to buy?  Whether you are buying or selling your home the Bouma Group can help you with your real estate needs in Ann Arbor, as well as keep you up to date about Washtenaw County and Ann Arbor neighborhoods.  Check out our Condo Hotline to get a handle on the Ann Arbor condo market.





Posted Tuesday, April 27, 2010 by Martin Bouma
Tags: ann arbor condo , home ownership for unmarried couples, ann arbor homes for sale