Homebuyers’ Guide to Purchasing Property as an Unmarried Couple
Buying a home with your partner is a thrilling milestone, but for unmarried couples, this decision comes with some unique challenges and additional considerations. Unlike married couples, who often have additional legal protections and explicit default rules, unmarried couples should take extra steps to ensure that their investment is protected. How you approach this process now can make all the difference later, from avoiding unnecessary legal complications to fostering a stronger sense of teamwork as a couple!
Here’s a guide to help you understand what’s at stake and how to prepare for the road ahead.
Why Ownership Structures Matter
When you purchase property with someone you’re not married to, you’ll need to choose how to structure your ownership. Your decision here has long-term implications, especially if the relationship ends, one of you passes away, or one of you becomes incapacitated.
Joint tenancy with right of survivorship: This structure gives each person equal ownership of the home. If one partner passes away, the other automatically inherits their share. While this arrangement seems straightforward, assessing whether equal ownership reflects your individual contributions to the purchase price and mortgage is essential.
Tenancy in common: With this option, ownership shares can be divided into different values, or each could own the property equally. For example, if Partner A could own 60% of the property and Partner B 40%, the Deed would reflect these proportions. If one partner passes away, their share does not automatically transfer to the other co-owner; instead, it goes to their designated heirs, which could result in a co-ownership scenario with family members, even if they are estranged. If the partner who passes has a Will, their share will pass to whomever is named in the Will.
Sole ownership: Occasionally, one partner may take exclusive ownership of the property. This usually happens when only one individual qualifies for the mortgage or funds the down payment. However, this arrangement severely limits the non-owner’s legal rights, including their ability to remain in the home or claim any share of equity in case of a breakup.
Another structure that often happens is when an unmarried couple purchases a property together and only one partner appears on the mortgage documents while they both appear on the deed. This arrangement makes both parties legal owners of the property, but only one partner financially responsible for the mortgage. If they split up, and the partner on the mortgage wants to sell, but the other partner does not or refuses to continue paying, the partner on the mortgage may need to seek a partition action with the Court to have the property sold. If the partner on the mortgage passes away, or becomes incapacitated, the mortgage may need to be refinanced or the balance may fall due. This could result in severe financial hardship for the surviving partner.
Choosing the best ownership structure for your situation isn’t a decision to make lightly. Consulting an attorney will ensure that your chosen structure matches your goals and provides clarity for all parties involved. Having no plan in place could result in significant financial and emotional stress!
The Crucial Role of Property Agreements
When couples think about buying a house, they usually focus on the excitement of the process. They don’t often consider what could happen later if the relationship ends, their financial situation changes, or they face an unexpected event. Unfortunately, without legal protections, disagreements can lead to lengthy and expensive court battles.
This is why signing a Property Ownership Agreement, or Agreement Regarding Future Disposition of Real Property — sometimes compared to a “prenup for real property” — is essential.
Your property agreement should cover key topics, including:
Ownership percentages that reflect your financial contributions, including any down payments.
Financial responsibilities for mortgage payments, taxes, maintenance, and other costs.
Plans for what happens if one partner wants to sell, such as offering the other first refusal to buy out their share.
An exit strategy in case of a breakup, such as dividing proceeds from a sale or refinancing terms to remove one partner from the mortgage.
Plans for the death or other incapacity of one of the partners.
Creating this kind of agreement while you’re on good terms is far easier than trying to negotiate during a breakup or legal dispute. The conversation may feel awkward at first, but it demonstrates a forward-thinking, responsible approach to one of the most significant investments of your life. Being prepared for life’s transitions minimizes the challenges you may face down the road.
To further safeguard your investment, certain legal protections — such as a power of attorney — might make sense. If an accident, illness, or incapacity prevents one partner from managing their share of the property or financial contributions, having the power of attorney in place allows the other (or another designated person) to act on their behalf. This ensures they can handle matters like paying the mortgage or selling the property if needed.
When should you put these agreements and protections in place? Ideally, once you’ve signed a purchase contract, but before the final closing. At this point, you’re firm on your decision to buy, but you haven’t yet taken on the full legal responsibilities of homeownership. Addressing this in advance minimizes the risk of procrastination or of having regrets later. After closing, it’s still possible to draft an agreement, though it’s better to finalize arrangements beforehand.
Professional Guidance Matters
While creating your own contracts or consulting online resources is possible, working with professionals ensures you’re not missing critical elements. An estate planning attorney can tailor a property agreement to your specific needs, while also drafting a will, living trust, or power of attorney that aligns with your unique circumstances.
Additionally, consulting a mortgage expert or financial advisor before purchasing can help you assess how to structure your finances to ensure fairness and reduce stress.
Buying a house as an unmarried couple can be incredibly rewarding — but it’s also a highly complex financial and emotional undertaking. By starting the process with open, honest conversations and seeking professional advice, you’ll ensure your shared dream of homeownership becomes a lasting source of stability and pride.