Not every gay couple is a married couple
Buying a home is always a big deal. But for same-sex couples, purchasing a place together is often one of the most defining moments of a relationship. The homebuying process comes with all kinds of fun and exciting decisions—from choosing a neighborhood to figuring out what color to paint your new living room—but it's important not to lose sight of the business aspects of buying property together if you and your partner aren't legally married. Before you start house hunting, read this list of tips from the pros.
1. Talk to your partner. If you're buying a home with a partner, you need to have a mature discussion about how you want to go into ownership together. "Nobody likes to have this conversation because it's so serious, but you need to have the conversation about what happens if you break up," says Julie Nelson, Realtor and owner of The Nelson Project with Keller Williams Realty in Austin, Texas. Although it's a difficult topic to discuss during such an exciting stage of your relationship, take the time to decide what will happen with your property if you and your partner go your separate ways.
2. Get it in writing. Once you've discussed how you want to go into ownership, you need a written agreement to spell out who owns what portion of the home, what expenses each partner is responsible for, and what happens to the property if you split up. "I always suggest that my clients talk to an attorney who can prepare a partnership agreement," says Michael Cornell, owner/broker of Michael Cornell Real Estate Group in Seattle.
3. Decide whose name to put on the loan. Unlike married couples, unmarried couples who apply for a loan are viewed as individuals with separate assets, which can sometimes be an advantage. "When you're married and your finances are tied together, it's hard to avoid one spouse's bad credit, if that exists," says Randy Slovacek, a Realtor with LV Habitats in Las Vegas. If one partner has better credit or steadier income than the other, you may opt to only put that person's name on loan. However, keep in mind this may affect whose name can go on the title, depending on what state you live in. Take a good look at your finances and talk to your lender to decide what makes the most sense for you.
4. Determine how to title the home. When you buy a home with a partner, how you put your names on the title affects your interest in the property and what happens to the home if either partner dies. Laws vary from state to state, but most same-sex couples who aren't legally married have two options: joint tenancy with right of survivorship or tenancy in common. With joint tenancy, two people own a property together, and if one person dies, the property automatically goes to the surviving partner. With tenancy in common, two (or more) people can own unequal shares of a home. If one owner dies, that person's interest in the property is distributed according to his or her will or by state law if there is no will.
"One way isn't better than the other," Slovacek says. "If you're a long-time couple and you feel very comfortable about this, most people go into a property as joint tenants because they want their half to go to their partner. For couples who don't want to mingle their finances -- they're not at that point yet -- they may want to go on title as tenants in common, where they can designate where their half goes if something happens to them."
5. Consult an attorney. Laws are complex and vary from state to state (and even from city to city and county to county in some cases), so it's very important to talk to a real estate attorney when making these critical legal decisions, Cornell says. An attorney who has experience working with same-sex couples is an especially valuable resource.