It has become much more common for unmarried couples to purchase a house together. Whether you plan to remain unmarried, or you intend to get married in the near future, there are a few things you should know, or think about, when buying a house with your girlfriend or boyfriend:
How You Hold Title
In North Carolina, married couples who purchase a home will generally hold title as tenants by the entirety. This means that, under the law, they are treated as one person, and if one spouse dies the other spouse will automatically be the sole owner. Unmarried couples who purchase a home can hold title as tenants in common or joint with rights of survivorship. Under each of those options, each person owns 50% of the property. However, by holding title as joint with rights of survivorship, if one owner dies the other person will automatically own 100% the property. As tenants in common, there are no survivorship benefits, and each person’s 50% interest will pass on to his or her estate upon death.
When a married couple owns property as tenants by the entirety it can offer a variety of protections. For example, if one person has a judgment, the judgment cannot attach to the property. Whereas, when a couple owns property as tenants in common or joint with rights of survivorship, one person’s judgment will attach to his or her 50% interest.
When a married couple decides to get divorced, they have protections under the law, via equitable distribution, to divide the equity in the house. Further, in North Carolina, one person cannot sell the property without the other person’s consent. Unmarried couples do not have this same protection. Theoretically, one person can sell his or her 50% interest to someone else, and the other owner does not have to consent. There is no protection under the law to “equally divide” the equity in the home, and if the parties are uncooperative in selling the home, then the only remedy is a partition. This is a special proceeding that can force the sale of the home. You typically will not receive the full value and you may not get as much of the proceeds as you hope.
Often when unmarried couples purchase a home, only one of them is on the loan with the bank. This means that only one owner is responsible for making the payment, and only one owner will be affected if he/she makes late payments or defaults on the loan. This often creates issues when the couple breaks up, because the non-borrowing owner may be on the deed, and therefore has an interest in the home despite not being on the loan. Sometimes, the non-borrowing owner is in possession of the home, for one reason or another, but is not responsible for making the loan payment. The borrowing owner then worries whether the home is being properly maintained by the non-borrowing owner.
It can be very risky to purchase a home with your boyfriend or girlfriend. You don’t have the same protections under the law that a married couple has, you open your property to liability, and it can be difficult to come to an agreement on dividing equity or selling the home if you breakup with your boyfriend or girlfriend.
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