Moving in Together

BCR Wealth Strategies |

More people than ever before are cohabitating outside of marriage, and the number is rising.  The 2010 U.S. Census recorded 7.5 million unmarried, opposite-sex couples living together; a figure that was up from 3.2 million in 1990.  But other than Kurt Russell and Goldie Hawn, it’s hard to think of an example where unmarried couples stay together over the long haul.  Unfortunately, cohabitating couples who break up can find themselves in almost as big a mess as married couples getting a divorce if they move in together without an agreement regarding their shared property, whether it’s rented or purchased.


The “common law” misconception 


Before we get to the main point of this article, it’s important to clear up one frequent misconception.  Many people mistakenly believe that couples who live together seven years are automatically married by common law, but only a handful of states recognize common law statutes, and the laws governing the division of property differ vastly from state to state.  So if you have been together for a long time, don't assume you are a common law spouse and entitled to community property. 


A domestic partnership may give one partner an implied right to share property, depending on whether your partnership is registered and where you live; the laws vary by state, and even by county and city in some cases.



What you should know before you move in together


Bad things can happen when a relationship ends under such circumstances; things like these: 


·         If you rent a home or hold a mortgage jointly and your partner walks out, your credit can be destroyed if you are unable to make the payments on your own. 


·         If only your partner’s name is on the deed to your house, you could wind up homeless after a break-up because you have no legal claim to the property.


·         If both your names are on the deed and you both agree to sell your house, but can’t agree on how to divide the proceeds, you may have to petition the courts for a partition action in which a judge determines how the proceeds will be split between you (and going to court isn’t cheap).



The best way to avoid such nightmare scenarios is to decide what will happen in the event of a breakup before you move in together.



Six questions to answer before you buy a house together


·         What portion is each partner purchasing?  Is it 50/50, 60/40, or something else?


·         Who will pay for repairs or improvements and how will that affect each partner’s proportionate interest? 


·         Under what conditions will the house be sold?


·         Will either partner have the right to buy out the other?  If so, how will you value the interest?


·         Whose name is the mortgage in?  What happens if one partner leaves the home and the remaining partner misses a mortgage payment?


·         Do your wills and life insurance policies enable one partner to continue to live in the house if the other passes away?


Before you make a home purchase, have a real estate attorney in your state draw up a legal document that covers what happens to shared assets if your relationship fails.  The end of a relationship is emotionally traumatic enough without the added stress of unsettled property issues.  You don’t have to plan for your relationship to fail, but don’t fail to plan for what happens if it does.