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Couples "Uncoupling" and Owning Real Estate--"Breaking Up is Hard to Do"

Reblogger
Real Estate Agent with Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605

Although this is from MA and not NY, I think it is a very fine explanation of ownership options available to unmarried couples or simply friends and family who wish to jointly own property.  The explanation is clear and the consequences of not mapping out an exit strategy that works for all is spelled out.

Original content by Elliott S. Topkins

In Massachusetts, where I have been practicing real estate law for more than 40 years, many unmarried couples purchase real estate together. Some engaged people are trying to take advantage of the current low interest rates, and market indecision, to get something "we own before we marry". Other couples, whio never intend to marry, have the inclination to pool their assets to make joint ownership  a part of their personal relationship.

When I assist people in purchases who are in this situation, I explain to them their two ownership options; tenancies in common and joint owners with right of survivorship. Only the extremely practical even consider tenancies in common, whereby at the death of one of the owners, his or her undivided one half interest in the property passes to the person's estate. Almost everyone chooses "joint ownership with right of survivorship" I might add that in each of these situations, I strongly suggest that the parties enter into Tenancy In Common Agreements or Joint Ownership Agreements to provide in advance for the possibility that they may part company from each other while owning the property in both names.

Very few clients are willing to enter into the Agreements I outline above. I may write a future post on what  terms and conditions these documents contain. In any event, most couple says "No", so when a couple breaks up, the "fun" really starts. One party moves out, and says "why should she continue to make the mortgage payments, I no longer live here".  And "by the way, I put down most of the down payment, and I want my money back, NOW" "I will only pay the mortgage payment if I can claim ALL the deductions on my tax return."  "I will not sign for a refinancing, even at better rates, unless you buy me out on my terms" "OK, if you have moved out, I am changing the locks, and you cannot have access to the property" I can honestly tell you I have heard all these statements and more.

There is a judicial solution for these situations. It is called a "Petition for Partition" and it is an equitable proceeding, wherein all the factors involving the Tenancy are examined. It is not cheap!!! It is not fast!! It rarely reaches a conclusion that addresses all the concerns of the parties!!!

When you, as real estate professionals,  see an unmarried couple buying real estate, urge them to enter into some kind of "exit strategy" agreement. It is truly for their own good. A failure to have something in place can only exacerbate the drama of the break up. This piece of advice could be the single most important thing you do for these customers; they will thank you somewhere down the line. Topkins & Bevans are there to help, if any of your customers wish to discuss this entirely sensible, and prudent, strategy.

Comments (1)

Sandy Fenton
Keller Williams NY Realty * Licensed Associate Broker - Mount Kisco, NY
ABR, ASP, CDPE, GRI -Westchester NY - Condos to Luxury Homes

When my hubby and I bought our first apartment, we were not married.  We owned as joint tenants w rights of survivorship.  We did have a separate legal agreement that spelled out what happens should we have broken up - what happens w the down payment, how the equity was going to be split up etc.  I insisted on it and he went along.  We were totally committed to each other but you just never know what is going to happen.  This was way before I became a real estate professional.

We were married out of that apartment and when we sold, we bought the property we live in now.  That was a happy ending!  :-)

Whenever I have unmarrieds buying, I tell them my story and urge them to look into an agreement of some sort.  I can't imagine why some people wouldn't do that.  It makes so much sense.

Jan 24, 2010 08:16 AM