Why unmarried couples who buy a home need a legal agreement

On Behalf of | Jan 4, 2023 | Prenuptial Agreements

Many California couples remain together for decades if not their entire lives without ever feeling the need to get married. If your lives are intertwined financially, however, it’s crucial to protect your financial interests. 

Community property laws don’t apply to unmarried couples – no matter how long they’ve been together. Just as you should include each other in your wills so that you have an inheritance if your partner predeceases you, you also want to protect yourselves financially if you end the relationship.

Often, couples will draw up a cohabitation agreement, which is essentially the same as a prenuptial or postnuptial agreement, only for unmarried people. It designates things like property division, support (once referred to as “palimony,”) and more.

What if you’re planning to get married, at least at some point, but in the meantime, you’ve found the perfect home? Given LA’s real estate prices, the only way you can afford the down payment is to pool your resources, and the only way to qualify for a mortgage is with both your incomes.

Protecting your financial interest in this asset

How do you protect your financial interest in the home since you’re not married and therefore it’s not going to be community property? First, if you’re a co-borrower on the mortgage, you need to make sure you’re also on the title. If you have responsibility for the mortgage, you should share ownership of the home.

It’s wise to put an agreement in place specifying other things, such as whether taxes, homeowners’ association (HOA) dues, maintenance, repair costs and other expenses will be paid from a joint account or from each person’s individual accounts (and if so, whether the contributions be equal). You’ll also want to detail how the down payment and other purchase expenses will be divided as well as how profits or losses will be split if you sell the home. There’s a lot to think about. 

However, considering what a large expenditure a home is in this area, it’s crucial that you don’t leave important issues like these and others to be addressed at a time when neither of you may have kind feelings toward the other. It’s a good idea for each of you to have separate legal guidance as you work out this and any other agreements.