Figuring out how to fairly divide community assets and debts when a married couple files for divorce in California is difficult enough, but with millennial couples and other unmarried couples now buying homes and investing in property together, this area of the law is fraught with a whole new set of challenges. There are laws in place in California that protect married couples from significant financial loss when they divorce and have to divide up their property, but there are no such laws to protect the financial well-being of unmarried couples who buy a home together. If you are considering buying property in Los Angeles with your partner, consult our knowledgeable attorneys at Divorce Lawyers Los Angeles to find out how you can protect your rights and your financial well-being in the event of an unexpected split.
Why Unwed Couples are Buying Homes Together
More and more unmarried couples are buying homes and investing in other property together, despite the fact that there are no rights or rules to protect them if they break up. According to a 2013 study from Coldwell Banker Real Estate, one in four married millennial couples purchased their first home together before they were married, and while the financial risks of this type of endeavor may seem irresponsible, their reasoning is not without its merits. The rising cost of rent coupled with low-rate mortgages and the ability to deduct mortgage interest and property taxes from income taxes make home-buying an attractive option that seems fairly low-risk. After all, unmarried couples who buy homes together don’t plan to break up. Unfortunately, these potential benefits don’t count for much if the couple does split up and is then faced with the complicated task of dividing up their shared property.
What to Consider When Purchasing a Home with Your Partner
In order to mitigate the financial consequences of a breakup between unwed homeowners, couples who aren’t yet married should consider drawing up a legal document before purchasing property together. Put into writing such resolutions as one person having the first right to buy the other out, and what to do if both of you want to keep the house. What if one partner wants to break up, move out and have someone else live in the house and pay them rent? What if you want to break up, stay in the house and bring someone else to live there with you? What about if one of you decides to move and the other person can’t afford to stay behind and maintain the house on their own?
Then there is the matter of paying the mortgage. Even if you break up with your partner, move out and take your name off the title, if you co-signed the mortgage loan, you’ll still be on the hook for those monthly payments. Furthermore, your credit will be affected by your former partner’s ability to continue paying his or her own portion of the mortgage on time. One simple solution to this problem is to prepare a legal document that says, in the event that the relationship fails, the home will be refinanced, removing the name of the partner who leaves. If the mortgage cannot be refinanced for any reason, you can agree that the house will be sold to a third party within a certain period of time.
Later-in-Life Unwed Couples Investing in Property Together
Although they may make up a large percentage of this population, it’s not only unmarried millennials who are co-owning homes. Plenty of unwed, later-in-life couples are also investing in property together, and this poses a whole new set of potential problems. Older individuals tend to have financial affairs that differ significantly from one another, and they are also more likely to have adult children, minor children or grandchildren to consider. When you buy a home with another person, you are not just entering into a living arrangement. You are also entering in a legal relationship with that person, and how you handle owning a home together can affect how you can get financing, what your rights and responsibilities are as a co-owner, and how and to whom you can sell or leave your share of the property, among other legal provisions.
Whenever you are investing in property with another person, it helps to have a written contract in place that sets forth who gets what property in the event of a breakup or death, much like a prenuptial agreement or postnuptial agreement does. Sometimes called a “no-nup” for unmarried couples, these written contracts can help ensure that the property and assets one partner brings into the relationship remain under his or her control if the relationship ends. They can also include provisions for what will happen to property, debts and assets the couple acquires during the course of the relationship, which under California law would be considered “community” or “marital” property if the couple was married.
Putting an Agreement in Writing
The bottom line is that co-owning property is complicated, especially for couples who aren’t married, and it may be a smart decision to contact a lawyer and put an agreement in writing that you can both live with should the relationship fail at some point in the future. Not only can this help avoid potential conflict down the road, it can protect both parties from adverse financial consequences and lay down some ground rules for resolving ownership issues without the couple having to go to court.
If you and your partner are considering buying a home together and you decide to sign a legal contract, the agreement should include provisions for what to do if one partner wants to sell and one doesn’t, who will inherit the other’s interest if one of you dies, what to do if one partner gets laid off and can’t contribute financially, and what happens if you break up or decide to get married. Many of these are uncomfortable issues that happy couples may not want to consider when purchasing a home together, but much like a couple with significant assets signing a prenuptial agreement before getting married, having a legal pre-purchase contract in place that puts these solutions in writing can save you a lot of time, money and aggravation down the road.
Contact Divorce Lawyers Los Angeles for a Free Consultation
There are a number of legal and financial issues to consider when co-owning a home with another person, whether you are married or not, and whatever the circumstances of your agreement, it’s always a good idea to enlist the help of an attorney in preparing a legal document that clearly outlines the details of your arrangement, including your financial commitment to the purchase and what will happen to the home and other shared property if you split up. If you are married or planning to get married and you want to draft a prenuptial or postnuptial agreement to protect yourself and your finances in the event of a divorce or death, contact our knowledgeable family law attorneys at Divorce Lawyers Los Angeles today for a free initial consultation. Our legal team is dedicated to protecting your legal rights and assets and we can help you put into writing what should happen to your home and other property should your marriage end in divorce.
Divorce Lawyers Los Angeles
5455 Wilshire Blvd
21st Floor
Los Angeles, CA 90036
(215) 550-4600
https://divorcelawyerslosangeles.com/family-law/divorce/
