What To Know Before Agreeing To Buy A Home With A Partner Or Friend
Owning a home, or any type of real estate, has traditionally been a wise investment for most purchasers. But there are some instances when the act of buying a home can carry real risks that should be carefully considered before the actual purchase takes place. One of these instances is when unmarried people decide to purchase a home or property. Because these types of partnerships will not enjoy the legal protections of a traditional marriage, should the partnership become untenable, it is important for all parties to understand the risks and take steps to minimize them before signing any purchase agreement.
Explore the financial aspects before making any decision to purchase
No matter how much you love or trust the person with whom you are considering purchasing a home, it is important to make sure you have a good understanding of the way in which they handle their financial affairs. This should include checking their credit, verifying their assets, and getting full disclosure regarding their current financial status, including all debts, expenses, income, savings, investments, etc. If the partner is unwilling to disclose this information or is found to have had undisclosed financial difficulties in the past, it could be unwise to consider purchasing a home with them.
Create a binding legal document for all parties to sign
Like a prenuptial agreement, unmarried partners can and should have a document drawn up that spells out how the property's ownership is to handled and how responsibility for paying all costs associated with home ownership will be divided up among all participants in the purchase. In addition, this document should also include specific information about:
- how the mortgage will be handled each month
- how situations in which one party cannot meet their financial or ownership obligations will be handled
- how the cost of repairs and renovations will be handled and how the decision will be made to have this type of work done
- how the property ownership will be handled in the event of divorce or the death or disability of one or both owners
If you are considering the purchase of a home or property with someone that you are not legally married to, it would be wise for both of you to sit down with your real estate professional and discuss the matter candidly. Your agent can help you understand the risks involved and help you find a reputable real estate attorney to draft the necessary documents before you begin to look at homes for sale. By planning ahead, unmarried home buyers are much more likely to find the home of their dreams.