It should come as no surprise that unwed, same-sex couples face a different set of legal circumstances when buying a home together. What’s more, the law isn’t often clear on the rights of unwed partners, especially when it comes to same-sex couples. Of course, things aren’t the same for married couples of opposite sex, but they too, can find difficulty in protecting their property should their marriage dissolve.
When you’re ready to buy a home with your partner, both of you should think about the future, not unlike having life insurance, a living will, and a last will and testament. It might be a bit of an inconvenience now, and hopefully not ever of use, but should something unplanned happen, it’s going to be a real life saver.
Avoiding Home Buying Pitfalls for Same-Sex Couples
The trick is to plan for different scenarios and that can be done by putting a few things in writing. You and your partner should be able to do this on your own, but can consult with a real estate attorney to ensure that the document is legally sufficient.
“Sometimes, a couple that jointly owns a house is tempted to put only one name on the deed to save on taxes, avoid creditors, or for some other reason. The tax savings can be attractive if one of your incomes is very high and the other’s is very low, because it allows the high-income person to take all the house-related tax deductions. Or, if one person’s credit is terrible, it may seem like a good idea not to mention his or her interest in the property in order to get a loan to buy the house.” —Nolo.com
First and foremost, you and your partner should spell out the percentage each will contribute to the down payment. Then, include which partner or the percent each of you will pay for the monthly mortgage installment, along with insurance and taxes, such as private mortgage insurance, homeowner’s insurance, and property taxes. In addition, assign a percentage or name the partner who will pay things like utilities and maintenance.
Document Each Partner’s Share
That will take care of the time you are in the home together; but, you should also include terms If the relationship dissolves. If one of you moves out of the home, does that person have a stake in the ownership of the property? Make sure that question is addressed and include the option for one partner to buy out the other, as well as setting terms if one person moves out does he or she still have to contribute to the mortgage?
Should you and your partner decide to sell the home, assign a percentage to each of the proceeds. Speaking of selling, you’ll first have to buy a home, which means qualifying for a mortgage. For same-sex couples, lenders will typically want to qualify both partners; so, each of you should take a look at your credit reports, which can be ordered free of charge once a year at Annual Credit Report.com. Dispute each inaccuracy separately, by mail, not online and at the same time, start paying down any outstanding debt.