Can I Buy a House With My Girlfriend?

It is common for unmarried couples to consider purchasing a home together, a significant financial and personal milestone. This endeavor presents unique considerations compared to married couples, primarily due to the absence of marital property laws that typically govern asset division in a marriage. Clear planning and understanding of co-ownership implications are essential.

Structuring Property Ownership

Unmarried individuals have distinct legal options when holding title to real estate, each with specific implications for ownership, transfer, and inheritance. The choice of ownership structure depends on the couple’s intentions regarding equity, control, and what happens to the property if one partner passes away.

One common arrangement is Tenancy in Common (TIC), which allows co-owners to hold undivided, though not necessarily equal, ownership shares in the property. Each tenant in common possesses the right to independently sell, mortgage, or will their specific share of the property. If one co-owner dies, their share does not automatically transfer to the surviving co-owner(s) but instead passes to their heirs as designated in a will or through intestacy laws. This structure offers flexibility, particularly if partners contribute unequally to the purchase or wish to pass their interest to someone other than their co-owner.

Another primary option is Joint Tenancy with Right of Survivorship (JTWROS), which requires equal ownership shares among all co-owners. This structure is characterized by the “four unities”: unity of possession, interest, time, and title. The crucial aspect of JTWROS is the right of survivorship, where a deceased owner’s share automatically transfers to the surviving joint tenant(s), bypassing the probate process. This automatic transfer can simplify estate planning, but it means a joint tenant cannot will their share to another party.

Financial Contributions and Responsibilities

Purchasing a home involves a range of financial commitments, from initial acquisition costs to ongoing maintenance, all of which require clear agreement between unmarried partners. Establishing how these expenses will be shared is paramount to a stable co-ownership arrangement.

Initial costs include the down payment. Closing costs are fees and expenses required to finalize the mortgage and transfer the property. These can range from 2% to 5% of the home’s purchase price or loan amount, and include items such as loan origination fees, appraisal fees, title insurance, legal fees, and recording fees.

When both partners’ names are on the mortgage, they share joint liability for the debt, meaning each is fully responsible for the entire loan amount if the other cannot pay. Lenders consider both individuals’ credit scores and incomes during the loan application process. Ongoing expenses include property taxes, homeowner’s insurance, utilities, routine maintenance, and potential homeowner association (HOA) fees. Costs for significant home improvements or unexpected repairs should also be addressed, especially if initial contributions were unequal or if the improvements disproportionately benefit one party.

Protecting Individual Interests

A written cohabitation or property agreement is an important tool for unmarried partners owning real estate. This document clarifies expectations and provides a structured framework for managing the joint asset, which helps address potential future disagreements. It also protects each individual’s financial and property interests.

Key provisions within this agreement should detail ownership percentages and outline the breakdown of financial contributions for the down payment, mortgage payments, and other property-related expenses. The agreement should also establish procedures for handling major decisions, such as renovations, refinancing, or selling the property. Clear processes for dispute resolution, conditions for one party buying out the other, and how sale proceeds would be distributed are important inclusions.

If Tenancy in Common is chosen, or to provide additional clarity for Joint Tenancy, the agreement can specify what happens to a party’s share upon death. It is advisable for each party to seek independent legal counsel to draft and review this agreement, ensuring it is legally sound and adequately protects both individuals’ interests.

Navigating Future Changes

The initial decisions regarding property ownership structure and the detailed cohabitation agreement provide a roadmap for managing future changes in the co-ownership arrangement. These foundational documents guide how the property can be altered or concluded.

Should one partner wish to buy out the other’s share, the cohabitation agreement should outline the process. This typically involves determining the property’s current market value, often through a professional appraisal, and then calculating the equity. The buyout amount is usually based on the selling owner’s share of this equity, adjusted for any unequal contributions to the property. Financing options for a buyout may include personal funds, a new loan, or a cash-out refinance by the buying partner.

If both parties agree to sell the property, the cohabitation agreement dictates how the proceeds will be distributed, taking into account initial contributions, shared expenses, and any agreed-upon adjustments. The chosen ownership structure also impacts this process; for instance, a Tenancy in Common allows for more flexibility in distributing proceeds based on ownership percentages. Refinancing the mortgage may become necessary if financial circumstances change or if one partner buys out the other, requiring the remaining owner to qualify for a new loan in their name alone. Establishing initial agreements and selecting an appropriate ownership structure helps navigate these future changes smoothly.