In this blog, we'll explore important considerations including how to handle the house title, and the importance of hiring separate real estate lawyers or realtors. We’ll also delve into what happens if one partner already owns the house or if marriage comes into the picture after moving in.
House Title Considerations for Unmarried Couples
Deciding how to hold the home title to the property is a crucial when buying a house together. Unmarried couples buying a house must not assume their legal rights are similar to those of married couples. Failing to plan ahead will likely lead to unforeseen economic consequences. Pennsylvania law allows specific options for title to real estate owned by an unmarried couples:
- Joint Tenancy with Right of Survivorship: This form of co-ownership grants equal shares to both partners, and if one partner passes away, the total ownership automatically passes to the surviving owner without going through probate. Therefore the couple should be aware that the survivor will retain full value and ownership. The heirs of the deceased owner cannot successfully gain a share of the value.
- Tenants in Common: With this title, each partner can hold a specific percentage of ownership, which may or may not reflect their respective financial contributions. In the event of one partner's death, their percentage share will pass to their heirs or beneficiaries as directed by their will or Pennsylvania probate & estate laws. When the co-owners sell the property, if they have a disagreement, the proceeds will be divided by the percentage regardless of certain excess contributions.
- Co-ownership Agreement: Drafting a co-ownership agreement is highly advisable, as it can clarify each partner's rights and responsibilities related to the property, including financial contributions and a clear plan for financial true-up (the process of correcting estimated or inaccurate amounts with actual up-to-date figures) and departure in the event of a breakup. This should be a detailed document tailored to the distinct expectations of each owner. By planning in advance, there is less likelihood of disputes later.
Separate Advisors to Protect Individual Interests
To protect each person's interests, it is wise for unmarried couples to consider hiring separate real estate lawyers. While it may seem convenient to use one legal advisor or realtor to buy the home, having independent advice ensures that each person's interests are adequately safeguarded.
Separate real estate lawyers can provide unbiased advice and negotiation strategies, reducing the potential for conflicts and misunderstandings between partners. If separate realtors are consulted a realtor may not be well versed in the legal consequences of the type of ownership selected.
One Partner Already Owns a House and the Other Moves In
If a person already owns a house and a partner moves in, there are a few considerations to keep in mind. Seeking counsel from a family lawyer is strongly advised.
Cohabitation Agreement: Creating a cohabitation agreement is a practical tool in this scenario. This document can outline the expectations and contributions of both partners during the period of cohabitation. The couple should discuss and agree on how expenses, such as mortgage payments, taxes, utilities, and maintenance costs, will be handled during the period of cohabitation.
If they each have personal property, they can address consequences in case of a breakup. The cohabitant- should be aware if there is no expectation of acquiring an interest in the real estate.
Getting Married After Moving Into the House
If a couple decides to get married after moving into the house, they should get advice before signing a new deed transferring a separately owned house to joint names. This will change ownership from pre-marital to marital property. This will impact how the property is divided in the event of a divorce. If they had a joint property before marriage, they should get advice about updating the ownership or their co-ownership agreement.
To address this situation, consider the following:
a. Prenuptial Agreement: Couples can create a prenuptial agreement to enter marriage based on communication and planning jointly for success. This legal document can specify how the property will be divided in the event of all future events such as sale, disability, death, divorce, to protect the interests of each person as well as other potential heirs.
b. Update Home Title and Ownership: After marriage, you may choose to update the title to reflect the change in circumstances and ownership as noted above. Advice about the consequences will avoid misunderstanding.
Consult with a family attorney to consider your best options
Buying a house together as an unmarried couple in Pennsylvania is an exciting venture, but it comes with its own set of considerations and potential conflicts. Many couples know that a married couple may ask for equitable distribution of the value of jointly owned property if they decide to split up. This will not apply to the unmarried couple.
By carefully deciding on the title, considering separate lawyers or realtors for each partner, and addressing scenarios like one partner already owning a house or getting married after moving in, you can lay a solid foundation for a successful homeownership journey.
To navigate these complexities and protect your individual interests, it is important to consult with an experienced family attorney familiar with real estate and consequences if the couple separates. The legal advisor can guide you through the legal aspects and tailor solutions that best suit your unique circumstances.
Our law firm has offices in Doylestown, Norristown, and Wayne, PA. We have the experience to help you with familial real estate concerns.