real estate

Protect yourself in same-sex home purchase

Steve McLindenq_v2.gifDear Real Estate Adviser,
We are a same-sex couple beginning the search for a home. As we cannot legally marry, what kind of contracts do we draw up assuring my partner gets his share back and half of any equity in the event of separation? We will be making a 50-50 joint down payment, with my half coming from savings and his from family. However, the house will be in my name only because my credit score is good and his is not.
-- Nate

a_v2.gifDear Nate,
Kudos on your prudent approach to the joint home purchase. Some folks may opine that it's cold to think about relationships in such pragmatic terms. But creating an exit contingency in any major investment such as a home is always a good risk-management strategy.

In your case, signing a joint tenancy agreement might be the most appropriate vehicle for your home-purchase pact because each of you will own the same percentage of the property. Under joint tenancy, if one of you were to die, the other's property share would be passed to the survivor. It's also an effective way for partners to protect themselves from family members who may try to swoop in to claim an asset that was intended for the survivor. But if you do want your shares to pass to a family member or someone else, you could structure the same 50-50 purchase as a "tenancy-in-common," or TIC, naming that person in the agreement.

By the way, if you end up lending your credit-challenged partner money for his half of the down payment, make sure that it is documented via a promissory note or other written agreement because some states require written agreements before any monies can be disbursed.

However, no matter how you structure your accord, I suggest you do it within the framework of a domestic partnership agreement, if possible. This agreement also will flesh out the details of how the property will be valued, should the relationship end. Additionally, such agreements can serve as proof of your relationship in a variety of scenarios, particularly if domestic-partner benefits offered through an employer to one of you should ever come into question. Such agreements also can be written so either arbitration or mediation is automatically utilized in the event an asset-distribution conflict arises.

However, domestic partnership agreements are interpreted differently from state to state and jurisdiction to jurisdiction, so unfortunately there's still very little consistency in the rights, benefits and responsibilities available to same-sex couples and other unmarried partners. So be sure to study your local and state laws. I'd be remiss if I didn't suggest that you two visit an estate planning lawyer or similarly qualified professional who is experienced with legal issues of domestic partners and who can walk you through such things as powers of attorney and beneficiary designations.

If you want to avoid that expense, Nolo, a publisher of self-help legal forms and information, offers the "Legal Guide for Lesbian and Gay Couples" at www.nolo.com. It contains 35 different forms, covering a wide array of agreements and contingencies.

Good luck with your new home!

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