We Bought a House Together. Three Years Later, We Were Breaking Up.

A composite client story about unmarried partners, unequal contributions, and the agreement that became the exit plan. This story is a composite based on typical client situations. Names and identifying details have been changed.

The situation

Jen and Marcus were ready to buy a home together. Each had kids from prior marriages, and they had no kids together. Jen was recently divorced and planned to put a large part of her settlement toward the down payment. Marcus was bringing significantly less cash, so they agreed he would pay a bigger share of the monthly costs to even things out.

Their agent suggested taking title as joint tenants, because "that's what most people pick."

Before closing, Jen called us with one goal: "I want to protect myself."

What they assumed

Like a lot of couples, they figured it would all be 50/50, in and out, even though real life was telling a different story. Nothing going in was equal, and nothing about the day-to-day expenses was equal. A deed that says 50/50 doesn't record who paid what, and untangling that years later turns into an argument over bank statements and memory.

What was actually at risk

• No exit plan. When unmarried co-owners can't agree on how to divide a property, the fallback is a partition lawsuit. That means a court decides, and it takes time and money that both people would rather keep.

• No paper trail. Without documenting contributions from day one, dividing the equity later gets harder, whether they sell together or split up.

• The "standard" choice would have disinherited their kids. As joint tenants, if one of them died, the other would own the whole house automatically. The children of the partner who died would get nothing from it, no matter what that partner's trust said. Once they understood that, they chose tenants in common instead, so each of them can leave their share to their own children.
  

What we did

We prepared a written co-ownership agreement that spelled out:

• Who owns the property, and the terms of the purchase, including their mortgage

• How much cash each person contributed at purchase

• How the carrying costs are split: mortgage, property taxes, insurance, repairs

• The math for a split: how initial contributions get returned, how remaining equity gets divided, and how the extra monthly payments get credited

Jen went into closing relieved. So did Marcus. Now they both knew what fair looked like.

Three years later

Jen called again. The relationship was over, and she felt stuck. She had forgotten the agreement existed.

It was her way out. They had already agreed on the math while they still liked each other, so the buyout came down to running the numbers instead of fighting over them. Jen bought out Marcus's share, and they stayed on good terms through the whole process which saved them from months of negotiating, a lawsuit, and big legal fees. 

The surprise at closing

To buy Marcus out, Jen had to refinance, which meant a new escrow and a fresh title search. That search turned up judgments against Marcus. They had existed before the original purchase, but they slipped past the title search back then.

They should never have been a surprise. When they bought the house, both Jen and Marcus signed the co-ownership agreement, which stated that neither of them had any active bankruptcy, judgments, or liens. Marcus's statement wasn't accurate.

That's where the agreement really did its job. Recorded judgments attach as liens to a person's interest in real estate the second ownership is acquired. The agreement already fixed how each person's equity was calculated, and Marcus represented in writing that he had no judgments. So the payoff came out of his side of the ledger. The judgments reduced his buyout, and Jen's down payment was untouched.

What's different now

Jen owns the home on her own, held in her new living trust. She walked away from the relationship without walking away from her money. The same word described her both times she called us: relieved.

If this sounds like you

If you're buying with someone you're not married to, and especially if you're putting in different amounts, the best time to agree on the exit is while you still like each other.

This case study does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. Every situation is different.