Shacking Up … Tips For Non-married Persons Buying a House Together in Texas: Some Things You Should Know

September 15, 2009 at 1:49 pm 9 comments

(Due to popular demand, this is a re-post of an earlier blog.)

Gay or straight, doesn’t matter.  Two “non-married” persons purchasing a property together in Texas need to know a few things about owning that love shack (or investment shack).  Primarily, co-ownership does not necessarily convey the same rights as with a married couple.  Many of these rights should be specifically created at the time of purchase of the home or shortly thereafter with appropriate legal documents such as a will.

This article is not intended to scare but it is scary how many non-married couples own property together without the appropriate legal documents in place to protect themselves in the case of death, disability or separation.  Lovely topic, we know.

Did you know that if you own property with your friend, steady, lover, partner, college roommate, whatever non-married person you like and he or she dies without the appropriate and challenge-proof legal documents in place, that you now, more or less, own half of that property with their heirs?  Oh joy.  You may love the family to pieces but do you want to be in a business relationship with them?

What are your intentions if one person wants out?  One person needs to move out of state for a new job?  You break up?  Or there is a death or disability.  In the case of partners, is it the intention for the surviving person to keep the house, take over the full responsibility of the loan or does the deceased’s heirs now own half the house?

You could end up putting yourself in a position where you may have to refinance to buy out the other person’s family at today’s market value and mortgage conditions or be forced to sell the home if you do not qualify for the new loan?

If you assume ownership of the property upon the death of the other co-owner, you may potentially have to address probate, inheritance challenges, inheritance taxes or risk the mortgage being called due.  We recommend legal counsel at the time of purchase or shortly thereafter to help you avoid these possibilities.

So a little advice when purchasing property:

  • Talk.  Talk about wills and estates and what-ifs.  Call it a pre-nup if you wish, but have an understanding and, best, an actual agreement in writing.
  • Ask your agent to put you both on the contract even if just one of you is on the note. It will help get the ball rolling in the right direction.  Some lenders will allow this, some will not.  Consult with your lender and Realtor to assess your best approach.
  • Ask your lender and title company about Joint Tenancy With Rights of Survivorship (JTWROS). Many lenders will not permit them, especially if just one of the partners is on the Note.   Sometimes you’ll have a choice, sometimes not but you should ask.
  • On tax benefits and who takes what, part or whole, talk to a good CPA for guidance.

We recommend working with Realtors, lenders, attorneys, tax advisors and title companies who are well-versed on working with non-traditional couples, non-married persons as this information is commonplace for them.  A professional who is not may not understand these nuances and may waive them off as not important.

Let’s take care of ourselves and our relationships.  Legally sound home ownership is sound business.

Our annual legal seminar on the topic is scheduled for October 16, 6:30-8 pm.  RSVP here.

 

 

Disclaimer:  As licensed Realtors, financial advisors, mortgage brokers, we cannot give legal advice.  We encourage you to discuss the details of your situation with appropriately licensed attorneys, financial and tax advisors.

© Julie Nelson and The Nelson Project at Keller Williams Realty, 2011-2013. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

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Entry filed under: Smart Real Estate. Tags: , , , , .

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9 Comments Add your own

  • […] Go here to read the rest: Shacking Up … Tips For Non-married Persons Buying a House Together in Texas: Some Things You Shoul… […]

    Reply
  • 2. Boston Real Estate  |  September 15, 2009 at 4:50 pm

    Great Article and very useful for the reader who does not know a lot about this topic.

    Best,
    Jim

    Reply
  • 4. Martin  |  March 18, 2010 at 10:21 am

    Very helpful article. If you are planning to buy a house or planning your estate this is information yo SHOULD know.
    I contacted them via email with some questions related to the article and they were more than helpful.
    Thanks!!
    Martin

    Reply
  • 5. kevin - moncton realtor  |  July 20, 2010 at 6:34 am

    Your advice is great! I agree that purchasing a house together with someone whom you won’t spend your whole life with is like taking a risk of owning the expense of everything. I know that this article might scare those “non-married persons” who want to buy their own house together but still it is very important for them to be informed of the possibilities that would happen in the future. Also it is important for them to undergo the little advice that you listed regarding the purchasing of property. Having a REALTOR® and a lawyer could really help them in dealing with this kind of situation. It would be better for them to be well advised by experts before they decide to buy a house for their own. Thank You very much for this post!

    Reply
  • 6. Tanya Busch, MaineHomeExpert  |  January 5, 2012 at 10:22 am

    Great article Julie! The tax consequences are another issue but we need to make EVERYONE (gay, straight, and legally married) aware of the current federal laws that impact our financial welfare as well as the social implications. Even taking property as joint tenants could force someone to have to sell their home because one would pay capital gains tax on 100% of the property (not half) if their marriage is not recognized by the feds and they hit that threshold. Who could possibly think that is right or fair?

    Reply
    • 7. nelsonproject  |  January 5, 2012 at 12:43 pm

      Right on. Because of that (& other reasons), I have a life insurance policy so if I leave this planet, Kay can afford to keep the house. Play fair.

      Reply
  • 8. nelsonproject  |  February 8, 2012 at 4:06 pm

    We had 40 people in attendance last night with requests for us to do another one soon & double the attendance. Sounds like a great idea.

    Reply
  • […] article is a follow-up to our Shacking Up / Not Married & Owning Property in TX article.  We consider this a must-read topic for 2 non-married TX peeps buying or owning property […]

    Reply

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© Julie Nelson and The Nelson Project at Keller Williams Reatly, 2008-2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

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