5 Reasons to Avoid Mortgage Before Marriage

November 23, 2015

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Founder of Hilary Hendershott Financial. Empowering one million women to become millionaires.


According to the Washington Post, this year, marriage rates per capita have declined about 35 percent since the 1980s. But even though the tradition of marriage is no longer a foregone conclusion for many, it turns out home ownership is still the American dream. According to Zillow, both married and single millennials are slightly more likely, on a per capita basis, to own a home than their counterparts in the ‘70s, ‘80s, and ‘90s. And Time’s MONEY recently found that 40 percent of millennials actually think it’s a good idea for couples to buy real estate together before they marry.

Is it possible, though, that inexperienced couples are simply staking this claim to make sense of simultaneously bucking the tradition of marriage and embracing the tradition of home ownership? Truth be told, buying a house with someone you aren’t married to is a very bad idea. Here are five reasons to avoid it:

1. Nobody likes lawyers.

Most people don’t realize that a civil marriage is little more than a contract that establishes both obligations and rights. One of the most time-consuming and detailed aspects of adequate contracts is that they guide the handling and disposition of property in cases of likely and unlikely outcomes. The marriage contract does this very nicely without the parties having to foresee and negotiate every potential turn of events.

Many issues raised by an unmarried real estate partnership can be avoided by hiring two attorneys (yes, you both should have your own attorney) to draft a cohabitation agreement. The cohabitation agreement protects both parties from unnecessary costs and litigation if your cohabitation breaks down for any reason. The major issue here is that lawyers are expensive. For example, you can get married in most county courthouses for less than $100, but a good and airtight cohabitation agreement can cost anywhere from $5,000 to $10,000 or more.

2. You could break up.

The most obvious potential trigger that could turn the real estate purchase sour is if you decide to go your separate ways. If a breakup becomes unavoidable, who stays in the house? What if neither of you can afford the full mortgage? Does the person who stays rent out a room? For how much? And if the rent doesn’t cover costs like utilities and taxes, who pays the remaining?

Will you sell the house? Who pays for the water heater that explodes the week after you move out? What if you want to sell and your former partner doesn’t? While these questions aren’t fun to think about, they’ll be less fun to deal with should you go through the unfortunate situation of splitting up.

3. There could be titling issues.

Did you know that how you title the property dictates what happens to your share of the home, not only at the time you sell it, but also in the case of your untimely death? This titling occurs the day you sign the paperwork and the house becomes legally yours, and it’s important that you do your research beforehand, because the escrow officer will not act as your attorney or advise you of your rights.

For example, if you sign as Joint Tenants with Rights of Survivorship, each of you owns exactly 50 percent of the property, regardless of what financial resources were brought to the table. In this arrangement, if you die, your half of the property automatically becomes your partner’s. In other words, you don’t have the option to leave your equity to your parents, siblings, nieces, or other heirs.

If for some reason the property ends up in one person’s name only, the other person has no legal rights to anything.

If you take title as Tenants in Common, you can stipulate that someone owns a larger share of the property, and this is really the only arrangement that allows you to leave your portion of the ownership to someone other than your partner.

You can title the property to a living trust, but again, drafting that document requires an attorney.

Titling is very complex, varies by state, and its impacts shouldn’t be underestimated. It affects taxes, distributions, payments, and your rights. Again, titling is handled for you if you are married, where each partner’s rights in the transaction are clear.

4. You might have to think about injuries and illnesses.

Should you or your partner become unable to work, who would continue to pay the bills? If the disabled partner is still living in the house, it’s unlikely that rental income could be generated to cover the shortfall. While the well partner might be willing to pay the medical and mortgage bills, when will those expenses become overwhelming? Injuries and illnesses can be extremely expensive, and if you aren’t married, you might not even have a say in your partner’s medical care and rights. This can turn what is already an emotional situation into a financially devastating one.

5. In the unfortunate case of death, things can get pretty complicated.

Say you contributed 70 percent of the down payment and will pay 30 percent of the mortgage, so you take title as Tenants in Common in a 70/30 arrangement. If your partner dies, and left his 30 percent to his parents, life will get pretty complicated for you. Not only have you just lost your partner, but you’ve also lost 30 percent of your cash flow, making money very tight.

Did you purchase life insurance? (Most people don’t.) Do you have joint bank accounts, and therefore access to your partner’s money or savings? Emotions run high, and to make matters worse, 30 percent of your home now belongs to the parents of your recently deceased partner. How well do you know them? Will they pay? Will they want to sell? Will they want you to buy them out? Can you even afford to do so?

You can see how these scenarios get complicated quickly when everything doesn’t go according to plan.

If you and your partner have been considering buying a home before getting married, take a look at this article together, and discuss the option of rearranging things. If your relationship is solid, get married first. And if you’re really not going to get married, but still want to buy a home together, just think of all the money you’re saving by not hosting a wedding and go get yourselves a good cohabitation agreement.

Hilary Hendershott is a member of the DailyWorth Connect program. Read more about the program here.