Moving in with your significant other can be an exciting time. Many think of it as a new adventure or an opportunity to spend even more time with the person they love. If you are considering purchasing a home with your partner, and the two of you are not married, it is important to also take the appropriate steps to protect yourself and your investments.
According to Zillow.com, a leading online real estate and rental marketplace, unmarried couples ages 24 to 35 years old account for about 15% of young homebuyers. That is up from 11% in 2005. Zillow’s economic analysts say that percentage is increasing due to a couple of factors: more young adults are choosing to live together prior to marriage, more young adults are waiting until later in life to marry, and/or young couples are looking to save money because of rising real estate prices.
In the Atlanta, Georgia area specifically, the home value index for 2017 is around $173,300. Approximately 12% of young homebuyers are unmarried couples, which is up from 8% in 2005. These percentages are close to the national average.
Prior to purchasing a house, you should consider drafting a homeownership contract with your partner. This is a legal document in which you map out what you and your partner’s rights and responsibilities will be when it comes to the home. The two of you should discuss how you will share the regular bills like the mortgage and utilities, how you will handle unexpected expenses and repairs, and how you plan to pay for any improvement projects. Will you share each expense 50-50? Will one partner pay a larger portion of the bills? You can also talk about how any unequal contributions would be handled if the two of you, for whatever reason, sell the house in the future.
Although it might not be the most romantic issue to address, unmarried couples need to talk about ownership interests in the property and how it will be divided in the event they break up. Unmarried couples do not have the same property interest protections that married couples do. Will the property be divided equally or in proportion to each parties’ contributions? If you make a decision to put only one party’s name on the title or mortgage, a homeownership contract is particularly important to define the rights and obligations of both parties.
It is a good idea to have an attorney help you draft a homeownership contract, to make sure you have considered and worked out all of the relevant details, and that the terms of the contract are legally enforceable. Additionally, once you have signed the contract and moved into your new home, you should start keeping records about who pays the bills, when, and for how much. These records may be needed as evidence down the line if you need to enforce the homeownership contract or divide your interests in the property.
If you are considering purchasing a home, or if you have already bought a home with your partner, and would like to discuss drafting a homeownership contract, contact Porchlight at [email protected] or (678) 435-9069.