As a realtor I would never dare to bring this up when I meet with clients that are both single and looking to buy a house together. Yet I really want them to know how to protect yourself when buying a home with a partner. There are many legal ramifications when buying a home with unmarried partner. From being on the mortgage, who owns what percentage and who is paying for what? Thinking about these questions below and talking through them with your future partner may make the home buying and selling process easier.
When you are single there are many challenges when combining two homes. It doesn't matter if it is a lake property in Metro Detroit or a home in Macomb County. Everybody gets in that honeymoon phase where everything is absolutely hunky-dory. You overlook those little faults, and things that may grow to bother you in years to come. Everything is good in the honeymoon phase when you first fall in love.
I myself believe that you really don't get to know somebody until you have lived with them for a year or two. After the honeymoon phase people become themselves. Little nuances that you didn't notice before may become glaring problems. After all you may have become used to doing things a certain way and now you may have to compromise or even give up what you used to do, or the way you did it.
So what is my biggest advice as a realtor and a person who has been through the single dating scene? Go slow is my first advice. I lost my wife to breast cancer 7 years ago. I met a nice lady about 30 minutes from where I lived. I moved into her house at first, but then we moved into a home that fit us better. I sold off many of my household belongings either because they didn't fit my new partners taste or my new lifestyle. There was no need to keep doubles of all the high end kitchen gadgets. She really didn't want anything of my wife's stuff. So I sold it off.
We ended up selling a lake cottage of hers that I now regret we did. She couldn't afford to buy it back after the rising real estate market. After 4 years I realized it was not working no matter how I tried. She was a nice lady, but she just wasn't the lady for me. So here is what I have to advise people that are joining two families together. I have seen too many situations where dating couples have major issues. I hope everybody's love affair last forever, but there are many that don't. So here are my thoughts.
2.) Have a serious sit down with your future partner. Discuss on who is paying for the house, how is the equite being split, and who is paying the bills afterwards. Here are a couple of stories that I am going to share with you of my client's issues.
a.) Dick and Jane were going to buy a house together. Dick was going to sell his $300,000 house and Jane wanted to use the $300,000 to buy a $400,000 house. Jane was going to put in the other $100,000 and she thought Dick was dumb. She didn't want to put in half yet she want her name on the deed. RUN DICK RUN.....Jane was out for herself right from the beginning. In this situation you need to talk to an attorney on how to put the agreement into writing to protect both parties financial interests.
b. Harry and Sally were going to buy a house. Sally was retirement age but yet working a consulting job making $5000 a month. Sally was dating Harry. They decided that they would sell Sally's house and Sally would buy herself a beautiful property in Oakland County. They never talked about finances at all. Well it came to pass that Harry was going to sell his house and put his money into a bank account. Not only that....Harry felt since Sally was making $5000 a month in income and another $3000 in rental incomes that she would pay all the bills on her house. Harry wanted to live there free. He wanted to be able to help his kids out with his $3000 a month retirement income. That was a great deal for Harry. Needless to say Sally was smart and broke up with Harry the free loader. Sally probably would not have bought the expensive lake house if they would have had a sit down financial talk.
So here are my rules:
1.) Plan for the good and the bad. Don't leave yourself high and dry if you break up. You want to come out of a relationship in the same financial shape or better than you did in the beginning without taking advantage of your love and partner.
2.) Put all financial agreements in writing. Consult an attorney if necessary
3.) Sit down and have a financial talk before you make big purchases and before you buy and sell property. You need to know up front on who is paying for what.
4.) Don't sell a property if you do not have to. Rent it out. Just in case it doesn't work out. If you sold a property 2 or 3 years ago you couldn't afford to replace it with a similar house now for the same price. It may cost you $20,000 to a $100,000 more. You may be priced out of buying a house.
I hope this tips help protect you and your partner's finances. I have been through it, and seen too many issues with clients when they are buying, when they are breaking up, and when they are selling. Good luck and may your love last forever. If you have questions feel free to call me at (248) 310-6239
Russ Ravary
Your Metro Detroit realtor
Search for Metro Detroit homes now
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