UNMARRIED PARTIES BUYING A HOME TOGETHER

 When unmarried people buy a home together several issue tend to arise.

1. How to Take Title at Purchase. Most married people take title as Joint Tenants with Right of Survivorship so that if one spouse dies, the surviving spouse owns the home.  Unmarried people can do the same, or they can hold title in the default way for unmarried people, which is Tenants in Common.  That means each can pass their undivided one half interest to their heirs (which may or may not be their Partner).  Unmarried people may also choose to take title in some other percentage other than 50/50 such as 60/40 to account for unequal contributions to mortgage payments and/or down payment.

2.  Changing Title After Purchase.  Parties can record a Quitclaim Deed to themselves or their Trusts or LLC's or others after purchase.  Typically, no Real Estate Excise Tax is due for doing so because no payments are being made.  **WARNING** Changes in title do not affect Promissory Note obligations.  Doing so requires a refinance or sale.  This can create a risk if the relationship ends and one party signs and records a Quitclaim Deed to the other.  If both Parties signed the Promissory Note, then a Default occurring years in the future will be entered on the credit reports of both Parties even if one Party hasn't owned the property for a decade or more.

2. How to Address Unequal Down Payment Contributions.  A Promissory Note and Deed of Trust can be signed in favor of one party who contributes more down payment than the other.  Interest is permitted, but not required.  The balance needs to be paid if the property is refinanced or sold.  Then the net proceeds are divided according to the percentage ownership of those on title to the property.

3. Agreements Regarding the Purchase.  Agreements regarding property purchases are subordinate to other aspects of the transaction such as how title is taken, promissory notes, and deeds of trust.  Such agreements also typically include language regarding rights if one party passes away or if the relationship ends.  Because of this, I have found that by far the best and most complete way to address the issues is within the context of estate planning for both parties.  

4. Estate Planning & Home Buying.  Buying a home and estate planning go hand in glove and are frequently paired.  One reason is that a Transfer on Death Deed for the home is part of the Estate Plan.  Another part is the Powers of Attorney for Health and Living Wills, which are especially important for unmarried Parties who otherwise may not be able to talk with doctors about each other's care.

Conclusion.  By doing an Estate Plan for each Party and understanding what public records cannot be altered by private agreements, the Parties can get a much richer understanding of what they are doing and hopefully avoid pitfalls and disputes.