Buying Real Estate with Someone you LOVE, but not Married to?

Mistake # 21: Buying property based on “I Love You”

Let’s talk about these two important points now. This topic, difficult though it may be, needs to be covered. We have seen many unmarried couples who, based on their plans to get married or move in together, purchase real estate together. This can sometimes be a huge mistake! People in love and planning to get married don’t like to think about what seems impossible – that they won’t actually get married. Yet so many things can get in the way of a couple actually walking down the aisle. This is just too big of a problem to sort out if the wedding doesn’t happen. The real problem is when the marriage doesn’t happen and only one person has signed his or her name on the mortgage loan, yet both people have legal ownership in the property.
Real Story (name changed to protect the innocent :-))     Henry and Sharon were in love and were planning their wedding. Neither of them could imagine one without the other. They found the perfect home, and because Henry had the stronger income and better credit score, they took out the mortgage loan in his name. Sharon wasn’t working at the time and couldn’t contribute financially. Henry paid the down payment and all closing costs, yet the ownership title was in both their names.

Before they married, Henry decided he preferred life as a bachelor. He broke up with Sharon, who was – naturally – upset. Henry wanted to sell the house. Sharon was upset about the break up and told him he could sell it only if he agreed to pay her $20,000 from the profits and equity of the property. Henry needed her signature in order to sell it, so he agreed.

Consequently, Henry has spent $20,000 (the amount he paid Sharon), the down payment, and the closing costs on the loan when he purchased the property. We can only hope that the property gained value while he owned it, and he was able to sell it at a price high enough to recoup the money he put into it. Sharon, on the other hand, has a broken heart – and $20,000 in cash.

Real estate is a serious commitment and investment. You should view it in terms of a business arrangement. Do not allow emotions to interfere with your decisions unless you have money to lose. Better yet, decide upfront how you will handle the sale of the property if the marriage does not take place. To read more on the various forms of ownership you should consider go to www.MakeNoMistakes.com or contact Melissa Walters for more information.