What Happens When Unmarried People Buy a Home Together…And One of Them Dies
Let’s be honest. No one ever wants to talk about the unthinkable, like getting taken out by a passing meteor storm or being caught up in some freak accident with an overactive squirrel and a loose power line.
While we’re not here to ruin your day with doomsday scenarios, we are committed to bringing you valuable and timely real estate information, even when it’s a little uncomfortable to talk about.
It’s not fun, it’s not romantic, and it definitely doesn’t pair well with a weekend of open house tours. But the intricate issues that come with unmarried couples buying a property together is one of the most avoided conversations in real estate. Failing to give it the serious attention it deserves can cause massive problems down the line.
So, here are five real-world complications that can arise when couples (or friends, siblings, or partners of any kind) buy property together without being married...and without a rock-solid estate plan:
1. The Survivor Might Not Get to Keep the House
Unless the property title is held as joint tenants with rights of survivorship your ownership interest of the property doesn't automatically transfer to the surviving partner. Instead, half of the house could go through probate, and end up in the hands of your family members, not the person you lived with.
That could mean: A grieving partner could be told by a court, (or the partner's family members) that they no longer have a legal right to live in the home.
2. Probate Could Tie Things Up for Months (or Years)
Without the right language in a deed or estate documents, the deceased person’s share of the home goes into probate, a public, sometimes drawn-out legal process. The survivor will, most likely, still be making the mortgage payments, covering the utilities, and mowing the lawn - with zero legal authority to actually make decisions or sell the home.
3. Unintended Heirs Could Inherit Half the Property
Here’s a scenario: one partner passes away without a will and state law (called intestate succession) takes over. Now that person's parents, siblings, or adult children might suddenly own half of the house. If they want their share liquidated, the survivor could be forced to sell, or be faced with buying them out.
4. The Mortgage Company Could Call the Loan
This one surprises people: some lenders include a “due-on-sale” clause. That means when ownership changes (even through death), they could demand full repayment of the loan immediately. With no marriage protection or estate plan in place, the surviving partner could be faced with refinancing or selling the property on less than desirable terms.
5. There's No Clear Plan for Who Pays What Next
If the deceased partner was the primary earner or responsible for major expenses, what happens next? Without legal agreements or estate directives, the surviving partner could face the full burden of taxes, insurance, upkeep, and mortgage…without any legal entitlement or clarity for what may belong to them and what belongs to their partner’s heirs.
So, What’s the Fix?
These situations don’t have to be complicated or scary. Our advice to our clients is to talk to a qualified estate planning attorney before you buy. Even if you’ve already purchased, it’s never too late to set everything right. Whatever the situation, a good estate planning attorney can still create the ownership scenario that protects each partner now, as well as into the future.
Things that need to be reviewed that may be difficult to discuss:
How to take title to the property. (this matters way more than you think)
Whether you each have wills or trusts that reflect your wishes
What your financial contributions look like, and what would happen to an equity position (if anything) if one of you passes away
Whether you need a cohabitation agreement or a property-sharing contract
Here Is The Bottom Line:
Buying a home together as an unmarried couple is a big step, and a beautiful one. Just don’t let the legal side of things stay buried under a stack of home improvement catalogs. A little planning now can save a world of heartache later - and we do mean a WORLD of heartache. (If you think in-laws can be difficult…)
Here is a heartfelt invitation. If you ever want to talk through these issues, or get connected with a legal professional who can truly help you, please reach out to us. We know some of the very best professionals with this specific expertise, and we’ll be happy to point you in the right direction. Furthermore, if you know others that are buying or selling real estate, and they are in this situation, please refer them to us. We’re pretty up to speed with this subject.
One last thought. If you are thinking of selling a property, please reach out to us now. Regardless of what you may be hearing about certain markets around the country, ours is still a strong sellers market and we’d be excited to share how you can benefit from the current conditions.
Until next month, stay safe and keep an eye out for meteors.
Kevin and Scott