If you’re considering buying a house with a non-spouse, such as a friend, brother, or even a boyfriend or girlfriend, you’re not alone- a growing number of unmarried people are buying homes with relatives or partners. 25% of now-married couples between the ages of 18 and 34 purchased their first homes together before finalizing their marriages. Some homebuyers, on the other hand, have no plans to marry but want to pool resources together with siblings or parents/children so they can afford the home they’ve always wanted.
Buying a home with someone who isn’t your spouse can be a positive move, depending on your priorities, but it can also be a disaster if not planned the right way. Here are a few pitfalls you can avoid:
Not Planning Ahead
The importance of making a plan before purchasing a home, regardless of who you’re buying it with, can’t be understated. If you and your spouse split up, there’s already a legal framework in place (the divorce process) that will help determine what happens to the home you two own together. If you and your non-spouse split up, however, there’s no process in place to guide you through it. Planning for this type of eventuality will make the process much easier if you and your fellow homeowner do split up and will reduce the stress involved in worrying about such a split tremendously.
Not Having a Contract
Discussing what you plan to do with the home you’ve purchased needs to be done, but getting your plans and preferences down in writing will go a long way towards making sure that your plan is executed in accordance with your wishes. Sitting down with a real estate attorney who can hammer out the details of this arrangement is a necessary part of the process and one that many non-married homebuyers who partner together ignore, much to their detriment.
Not Being Specific in Your Contract
It’s vital that the contract you and your partner settle on describe how the two buyers will handle everything from maintenance and necessary repairs, to how and when they’ll sell the home, to how potential rental incomes should be split up. Making sure that your contract (you did avoid pitfall #2, right?) spells out a clear exit strategy for both partners is crucial to ensuring that things don’t go awry if one of the homebuyers wants out.
Additionally, make sure that both homebuyers have their names on the property’s title. Doing so will ensure that everyone who owns the home is considered a legal owner.
It Can Work
When thinking of the benefits of buying a home with someone, regardless of whether they’re your spouse or not, it’s hard to know where to start. By pooling your money with someone else’s, you can purchase a larger home, move into a more desirable neighborhood, develop an investment property beyond what you could afford on your own, and so on. If you’re going to go through the process of buying a home with a non-spouse, however, be prepared for the possibility that your relationship with your partner could go bad, in which case having a clear, strong contract based on a fleshed out plan will go a long way towards avoiding personal (not to mention financial) disaster.
Source: Smart Asset