Real Estate Considerations for Cohabiting Couples
The information provided on this website is for informational purposes only and should not be construed as legal advice.
70% of American couples live together before marriage (source).
For some, this means co-signing a rental lease.
For others, this means one partner owns a home and the other moves in.
For others, it might involve co-buying a home together.
70% of American couples live together before marriage.
Co-Signing a Rental Lease
Jointly and Severally Liable
You’re going to want to know this term, as most leases include “joint and several liability” for tenants and signors.
Joint and several liability is a legal term for a responsibility shared by two or more parties to a lawsuit. A wronged party may sue any or all of them, as well as collect the total damages awarded by a court from any or all of them.
In such cases, responsibility for the total amount awarded would be shared by all. Failure by any of the parties to pay would increase the obligation of the others. (Investopedia)
Consider what it might mean if each signor on the lease can be held responsible for the choices of the other tenants.
Consideration 1: If one roommate violates lease terms, can all the tenants can be kicked out - not just the offending individual?
Consideration 2: If the partners break up and one of them moves out before the lease is over, could this be considered “abandonment” by a tenant and thus a violation of the lease?
Live for the Best. Plan for the worst.
Breakups happen, and having a written agreement in advance can help eliminate difficult decisions down the road when emotions might be escalated.
If your relationship ends before the lease does, consider:
Which partner has priority position to stay in the home, if the landlord allows?
Who is responsible for potential early termination fees?
How will the security deposit be refunded and distributed?
What utilities and accounts are under whose name?
One Partner Owns a Home & their Partner Moves In.
Sign a Lease
“Sign agreements, not for when you agree, but for when you disagree.”
- unknown
A good lease could be inspired by a roommate agreement like this one, or you can find a more robust lease from a local real estate attorney.
Consider including:
Duration - establish an expiration date with opportunity to renew
Rate - monthly rent, deadline for payment, and late fees
Break-Up Clause - if you break up, how long does the non-owner partner have to move out?
Security Deposit - will one be required? (hint: yes)
Utilities - who pays and how much?
Appliances and Furnishings - who pays for them? What if a replacement or upgrade is needed? A new couch? A new tv? Patio furniture? A new stove? A new washer/dryer?
Home Repairs - who pays if the home needs new carpet? A new furnace? What if the non-owner partner accidentally breaks a window?
Insurance - is renter’s insurance required for the non-owner? (hint: it should be)
Other Roommates - who gets to decide if a third, fourth, etc. roommate is allowed to move in?
Property Maintenance - who will shovel the snow? Who mows the lawn? Who cleans the bathrooms?
Non-Married Couples Co-Buying a Home
Marriage is a legally recognized relationship, a legally binding contract that can only be dissolved through the law. In the case of dissolution, next steps may be directed by the court.
If you are not married, the court will generally not get involved in directing requirements for the distribution of jointly held assets, short of a civil lawsuit from one party against the other.
Understand Taking Title
Joint Tenancy - each owner owns an “equal and undivided” interest in the home. If there are two owners, when one dies, the surviving partner assumes sole ownership.
Tenancy in Common - each owner owns a portion of the home, commonly but not always equal to their financial contribution toward ownership. In the event one owner dies, their portion is passed down to someone else, per the directives of their will or a probate court.
In Severalty - this can take the form of one person or a business “taking title” as a single entity.
There are countless considerations when owning property, whether married or not. Speaking with an attorney is always advisable.
Common Law Marriage in Colorado
When choosing to live together before, or with no plans for, marriage, you would be wise to consider the laws of Colorado Common Law Marriage.
According to the Colorado Department of Revenue,
“A common-law marriage in Colorado is valid for all purposes, the same as a ceremonial marriage and it can only be terminated by death or divorce.
To be considered common-law married, the couple must meet all of the following criteria:
Both are free to contract a valid ceremonial marriage (e.g. they are not already married to someone else)
Holds themselves out as spouses
Cohabits - lives together at the same permanent address
Has the reputation in the community as being married
Mutual consent of the couple presently to be spouses” (source)
The Johnson Law Group in Colorado provides this list, stating “evidence of a common law marriage may include, but is not limited to, the following:
Owning joint property
Having joint bank accounts (checking and/or savings)
Making social introductions as spouses (calling each other husband and wife)
Living together (even for a short period of time)
Wearing engagement or wedding rings
Having a ceremony of any kind to celebrate their union
Commitment symbols such as gifts, cards, etc.
Periods of taking financial responsibility for one another
Estate planning measures where the other party is named in documents as an officially sanctioned spouse would be named.” (source)
The information provided on this website is for informational
purposes only and should not be construed as legal advice.
If you have a desire to buy or sell, let’s chat!
Life has a way of keeping us all moving, and I’d love to be your real estate agent.
Contact me here to set up your free and confidential consultation.
Kevin
