 |
 |
|
by
Unmarried people who want to buy real estate together
probably should not. If
you insist on doing it anyway, you need to give this decision
sufficient thought and planning.
You need to remember that real estate that is owned by
unmarried people is treated differently than real estate owned by
a legal husband and wife. Marital
property can be divided by a court in a divorce action if the
parties separate. If
you are not married and cannot reach an agreement about what will
be done with the property, a lawsuit would need to be filed.
Litigation is expensive and emotionally draining.
To avoid it, you need to have a procedure worked out in
advance to handle the disposition of the property.
You need to treat this like a business transaction.
You also need to anticipate that it could fail.
While this takes some of the enjoyment out of the home
buying experience, it avoids a greater loss of enjoyment down the
road.
The first rule is that all of the terms of any agreement
must be in writing. This
needs to be a formal contract signed by both parties.
It needs to contain all of the provisions of the agreement
and should leave nothing unsaid.
Ideally, each party should have their own lawyer review the
terms before signing. The
document should state specifically that they received legal advice
or were aware that they had the right to do so and waived it.
The written agreement should address all the various
contingencies. For
example, if one person leaves the house, will the remaining owner
pay the entire mortgage? Will the occupant pay rent?
Will there be any credits or debits as a result of payments
made or not made? What
happens with the utilities that may be in both names?
You need to have a mechanism to deal with the property if
the parties cannot continue to live as they did.
Will the property be sold?
Who will be responsible for any repairs that need to be
made to the property? Will
the co-owner have a right of first refusal to buy the property?
How will the price be determined?
How will the real estate agent be selected?
Will alternative dispute resolution be required before
either party can file in court?
The answers to many of these questions may depend on the
financial circumstances and contributions of each party.
The answers may also depend on how the property is titled.
The various types of property ownership vary from state to
state. In Virginia,
property can be owned by unmarried parties as joint tenants with
right of survivorship or as tenants in common.
With the joint tenancy, if one owner dies, the other
automatically inherits that person’s interest in the property.
The joint tenant cannot sell his or her interest in the
property unilaterally. With the tenancy in common, each owner is free to sell his or
her interest in the property or leave it to a third party in a
Will. If the co-owner
dies or sells their interest, you could end up owning the property
with a stranger – or worse.
Also, if you want to get out of the deal, it is not easy to
find buyers for a partial interest in the property.
There also exists a danger that one of the parties could
have liability under a judgment that could attach to and encumber
the real estate. Proceed with caution. Talk to a lawyer before you buy.
by
|
