If you and your partner are considering whether to finance or buy a house before marriage, it’s important to know that the experts advise against it.
Couples these days are leaving marriage until later in life, so the scenario of getting a mortgage before the knot is tied is becoming increasingly popular.
As Florida Real Estate attorneys, we’ve seen many couples make this mistake. Here’s why we advise against buying a house before marriage:
Why You Shouldn’t Buy or Finance a House With Your Boyfriend, Girlfriend or Finance
Playing the Game of Risk
If you buy a house before marriage, you’ll be playing the game of hoping for the best. That is, buying a home with both your names on the deed, hoping that you won’t break up. And if you do break up, you’ll be able to share the profits easily.
Sadly, in reality, failed relationships rarely break off as cleanly as we hope. Resentment, anger and jealousy can all make this a big risk.
So what happens?
Partition Actions
If an unmarried couple cannot agree on the use, sale or possession of a property, then they’ll need to turn to the court for help through a partition action. But it will take a lot of real estate lawyer fees to get a fair outcome.
A partition action will allow the co-owner to request that the court split the property fairly and justly.
The court will take into account various factors, including how much time and money each person puts into a property.
However, the court will also likely consider income levels and tax consequences.
Partition actions may be the only legal solution when an unmarried couple breaks up after buying a house, but they can be as long and drawn out as regular divorces cases.
Partition actions only work if you have an agreement to sell the property.
What if your partner walks out, wanting nothing to do with the property or the fact you don’t have the money to make mortgage payments alone?
Or what if only the partner’s name is on the deed because you had bad credit? With no legal stake in the house, you could be homeless without a leg to stand on.
Credit Consequences
In these scenarios, you could reduce some of the risks by having both your names on the loan, but what if your partner stops paying the mortgage?
Your credit rating could tank. Your finances would be at risk too, as you have to take legal action to ensure your ex-partner is held accountable for their share of the mortgage.
How to Plan Properly If You Buy a House Before Marriage?
If you are still desperate to buy a house before marriage, then planning for the end at the beginning is the wisest thing to do.
Of course, nobody likes to make arrangements for a failed relationship, but doing so can protect both of you in a worst-case scenario.
You can make preparations for a no-nuptial (a.k.a. A cohabitation agreement). Similar to a prenup, a no-nup covers what would happen to your home if the relationship ends.
By talking to our experienced real estate attorneys, we can advise you and your partner on how to plan effectively in line with Florida state laws.
Whether it’s a property agreement or a cohabitation agreement, doing so can protect you both from unwanted trauma, stress and catastrophic financial scenarios.
Cohabitation Agreements
A cohabitation agreement is a type of document that unmarried couples draft when they buy a home before marriage together.
It effectively treats couples as if they’re married and should determine how a property is shared if the couple breaks up.
A cohabitation agreement should include:
- Property acquired during the relationship
- Property acquired before the relationship
- How expenses will be paid and what happens if one person fails to pay them.
- What will happen if the relationship ends?
- Agreements on how to resolve disputes.
Cohabitation agreements are legally binding documents and should always be reviewed by a real estate attorney to ensure your rights and legal obligations have been met.
Feel free to contact us today for advice regarding real estate ownership decisions.
Tax and Legal Issues When You Buy a House Before Marriage
Unmarried couples also miss out on the usual tax advantages of married couples when buying a house. You also might have issues with:
- Mortgage Interest Deductions
- Ineligible for Joint Returns and Joint Deductions
- Capital Gains on sale of the property and only one person being eligible for capital gains deductions
- Property upkeep and splitting the costs
Buying a House Before Marriage FAQs
Should I Buy a House With My Partner Before We’re Married?
The experts’ advice is no. It is almost always wiser to wait until you’re married. However, if you’ve discussed in detail with the help of a real estate attorney the financial and legal implications, then it can be possible.
You should always sign a legal agreement outlining your responsibilities and what you’ll do if you break up.
What Are The Biggest Risks of Buying a House Before Marriage?
The number one risk when you buy a house before marriage is knowing how to handle the property and situation if the relationship fails.
If one person is the legal owner and the other is not officially, then they will have no input if their partner wants to sell the property.
This can have a devastating impact on credit histories regardless of who was at fault for the foreclosure.
Contact a Real Estate Attorney in Florida for Real Estate Contracts
Free Consultations
If you’re looking to buy a house before marriage, or as a married couple in St Petersburg, Florida then contact us today.
Our attorneys, Howard Ross, Andrew Pardun and Robert Kapusta at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience and will review your circumstances and provide advice on which type of residential real estate contract is best for you, before helping you draft it to protect your future.
Contact us today to schedule a free consultation.
