Husband, Wife, Partner, Significant Other: Risks Of Home Buying As An Unmarried Couple

Lasher Holzapfel Sperry & Ebberson PLLC
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The real estate market in Seattle is notoriously expensive and competitive and everyone seems to be looking for more space as we enter the second year of a pandemic.  There is also a rise in nontraditional partners buying houses together.  If you are considering buying a house with a partner to whom you are not married, – or already have – there are some risks of which you should be aware, and some steps you can take to help mitigate these risks.
 

First, if your house-buying partner is also your romantic partner, you should be aware of the doctrine of committed intimate relationships in Washington State.  This doctrine allows Washington courts to award equitable rights in a long-term partner’s joint assets (such as a house).  The court considers numerous factors, which include whether the two partners pooled resources to buy property together.[1]  Consequently, if you want to buy a house with your romantic partner, but do not wish to create community property that may be divided upon a break-up, buying a house together can create issues.  However, you can enter into a cohabitation agreement, essentially a prenuptial agreement for unmarried partners that establishes each partner’s ownership rights to the house and also memorializes you and your partner’s decision not to create community property.

You do not have to be in a romantic relationship to enter into an agreement that establishes your ownership rights when buying a house together.  It is equally advisable for non-romantic partners buying a house together to draft a contract establishing their attendant ownership rights to a property.  The contract should be individualized to each situation, but at a basic level the contract must specify the ownership percentages, what happens if one party dies, what happens if one partner wants to sell the house while the other does not, how the proceeds are split if the house is sold, and who is responsible for upkeep and various utilities.  Ideally, this agreement should be finalized before the sale of the house is closed, but can be done after closing.

Another issue unmarried partners, romantic and platonic alike, should consider when purchasing a house together is how to take title.  In Washington, the default is tenants-in-common.  Under tenancies-in-common, the partners are co-owners with undivided one-half interests.  There is no right to survivorship, so if one partner dies, that partner’s heirs would inherit his or her ownership interest in the property.  Another ownership option is a joint tenancy.  Under joint tenancies, like tenancies-in-common, each partner has an equal one-half interest.  However, joint-tenancies have a right-of-survivorship – if one partner dies, the other partner immediately assumes their ownership rights.  If two partners hold a property as joint tenants, their individual interests in the property cannot be disposed of by execution of a last will and testament.

What happens if you co-own a property with an unmarried partner without a contract and the relationship dissolves?  If the property cannot be sold or the parties cannot agree on the disposition of the property, then either party can file a partition action, which petitions the court to divide the property.  Historically, partition actions involved the courts physically dividing plots of land.  This was a practice more suitable to large tracts of land such as farms, and is rarely ordered for partitioning single-family homes on smaller plots.  The more common method is partition by sale, wherein the court orders the property sold and then divides the proceeds between the parties.  A partition is an equitable action, and consequently the court has a lot of discretion to decide what is fair.  This introduces significant uncertainty about the ultimate resolution of any partition action.

[1] The other factors often include length of the relationship, continuity of cohabitation, purpose of the relationship, intent of the parties, existence of joint bank accounts, how the couple presented itself publicly, and whether the partners are named in each other’s estate planning documents.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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