Listen, I love my boyfriend, but if we break up I want at least half of the stuff we've bought together. Now, this isn't too much of a worry for me right now as our only joint property is a few pieces of furniture and a dying Bonsai named Bonnie.
But what if we went in together on something major like a house? In the past decade, more unmarried couples have purchased a home together than ever before. So, I know I'm not the only one asking this question—and I'm glad I'm asking it now rather than later.
"I have had clients who were certain they found their soulmates, only to realize they had not," says Mark Hakim, a real estate lawyer with SSRGA in New York City. "They now have a huge problem and financial albatross."
Most people don't get married because they don't want to deal with the costs of divorce (among other things, of course)—so it seems terrifying that I could spend years paying for a mortgage with my boyfriend, only to lose my investment if we broke up. What's scarier? Having an awkward conversation with your partner and discussing what life would look like if you didn't end up together or literally losing hundreds of thousands of dollars?
I know the answer for me. So, to prevent all that for myself (and to help you, too), I asked some experts about the smart way to buy a house with partner—both financially and emotionally—if you're not married. Here's what they said:
Step One: Have the Conversation
Talking about what to do with co-owned property in the event of the breakup is a "complicated conversation" to quote my boyfriend. It's never easy to contemplate the end of a relationship, and it becomes even harder when you throw money into the equation. But being civil and fair when you're happy with each other is so much easier than when you're dealing with a breakup
The easiest way to take your emotions out of it? Treat it like a business transaction, says Alan Nelson, a counselor with Just Mind, in Austin, Texas. "What I like to call 'Us, Inc.' is a vital facet that is often overlooked and undervalued."
Easier said than done, I know, but you need to remember that while you may love the other person, it's also important to take your own legal well-being into account. Nelson recommends softening the awkwardness of the conversation by scheduling the meeting well in advance, creating a specific agenda and deadlines, and disseminating data and "reports" (like bank statements, income/expenses, etc.) before so there aren't any surprises.
"Be explicit that there is a future-focus rather than spending time pointing fingers and blaming," Nelson says. "It's totally unsexy, but I think that can be an advantage in difficult discussions."
Following Nelson's advice, My boyfriend and I set a time and place to have a frank discussion about what should happen if we buy a home together... and what should happen if we break up. The conversation wasn't easy—and definitely wasn't sexy—but it was made less difficult by our mutual belief that should our relationship end, we both want the other to be in a place where they can care for themselves financially, mentally, and emotionally.
Step Two: Define Your Terms
Tell your partner what you want. Do you want a rose garden? How about a large yard for the dog you hope to one day adopt? How about an hour to be alone in the home every weekend? Whatever it may be, it's important that you're honest with your terms and core needs. It's equally important that you're buying with a partner who respects your stated boundaries.
"If you have a partner that stonewalls [your needs], then that should be a warning sign to you," says William Schroeder, clinical director of Just Mind.
Schroeder recalls a client that told their partner that they would need an extra bedroom in their apartment, in case a space was needed to retreat. Together, the couple discussed the history and context of the need, and discussed ways to make it work for the both of them. In the end, they found a place with the extra bedroom that was mainly used as an office, but they also added a pull-out bed for when they needed it.
"This process of flexibility as a couple can help you to see how you will handle future adversity as it arises," Schroeder said. I personally think this skill is extra useful in homebuying, don't you think?
You shouldn't just talk about the living situation—you should talk about what will happen if you break up, too.
Hakim recommends that you draw up a "proverbial prenuptial agreement" that details what will happen during every step of the homebuying and homeownership process, as well as what will happen if you break up or tragedy befalls one of you.
My boyfriend and I decided that he would pay the entire down payment and I would invest in renovations. In the event of a breakup, it could go either two ways: He would sell the home and we would split the proceeds 80/20 in his favor, or he would keep the home and repay me back all the money I put into renovations in full.
But what works for us may not work for you. During this process (it will probably be many conversations), you should ask yourselves basic questions like:
- What happens to the property if you split? Do you keep the house? Do they keep the house? Do you sell it?
- What if one of you becomes disabled or dies?
- Who pays utility bills or for major repairs?
- How you are taking title or sharing ownership? Will you be joint tenants or tenants in common?
- How you are splitting costs (down payment, purchase price, closing costs, taxes, and all other housing costs, including maintenance and repair bills)?
You'll need a complete picture of each other's finances as well as a written contract. It's best to do this under a trusted lawyer's supervision. That way, you'll know all your i's are dotted and your t's are crossed.
Step Three: Get it Finalized
After your contract is written and signed under your lawyer's supervision, the safest legal approach is to record it at your county recorder's office along with the deed of your home.
What should happen if you decide to buy a home without a legal agreement, and then separate? According to Nolo, it varies from state to state. The general blanket decision is that, if you chose to take it to court, the court will order the property to be sold and the proceeds to be divided—given you have the documentation to prove your partial ownership and investment in/and of the home. Even if you don't have documentation, it could be worth it to speak to a family lawyer and see what your options are in your state.
Whatever path you and your partner may take before purchasing, just remember that it's wiser to go into home ownership with eyes wide open rather than being blinded by love.