Many couples live together without marrying. By not marrying, they avoid numerous legal entanglements such as community property laws and spousal support that come with marriage. But as with most things in life, this arrangement that brings benefits also brings disadvantages.
Often the couple that choses this arrangement will buy a house together, either as joint tenants or tenants in common. They usually agree on how to share the down payment, the monthly payments, and other expenses associated with the house. But they also often fail to put their agreement in writing. In addition, they rarely reach an agreement when buying the house on what will happen if they split up. Here lies a large, dangerous dragon.
If there is not an enforceable written agreement governing what will happen when the couple splits, they are thrown to a dragon in the form of real estate law and the courts to dispose of the parties’ interests in the house. As a general rule, there is no right for one party to exclude the other party from the house until it is sold. There is no automatic right to sell the property. In order for one party to force a sale against a reluctant seller, the party who wants to sell will have to file a partition lawsuit. Those lawsuits can drag on and be expensive. In the meantime, the reluctant seller often remains in the house and does everything possible to delay the actual sale. Emotions and expenses rise as the parties fight in court.
To simplify the real estate process and litigation, the parties should enter into a written co-tenancy agreement before buying the property. The terms of this agreement can be incorporated into a co-habitation agreement, which would deal with other issues also. Regardless of whether the parties enter into a comprehensive co-habitation agreement or just a co-tenancy agreement, the co-tenancy provisions should provide for the following:
· How the costs related to the house will be allocated between the parties and whether there will be any reimbursement for those payments if the house is eventually sold.
· Whether the property will be sold upon the demand of one of the parties.
· The procedure for selling the property, including selecting the real estate broker, fixing the asking price, and adjusting the asking price.
· The procedure for when one party wants to accept an offer and the other party does not.
· Whether one of the parties will remain in the property until it is sold.
· How the carrying costs for the property will be allocated between the parties during the time between the demand for sale and the sale.
· If a party stays in the property until sale, whether that party will pay rental value for that time and how that value will be determined.
· Whether there will be attorney’s fees to the prevailing party in the event of litigation involving the agreement.
· What venue any litigation should be in, which would generally be the county where the property is.
· Whether the parties are entitled to specific performance of the contract.
I cannot assure you that these co-tenancy provisions will slay the legal dragon, but they definitely will confine it to the territory governed by the agreement and reduce the bite the dragon takes out of the parties’ assets.