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# 503 Living together: Buying a house

mp3 #503 Living Together (mp3 file)

Family Law matters are very complex. Many who try to handle these matters on their own quickly find themselves overwhelmed and out of favor with the courts. Often times costs are cited as the reason for self representation. However, most people with assets and retirement plans stand to lose significant amounts of money, or worse, lose custody of their children if they are not properly represented. Continue here to be referred to an experienced and insured Family Law attorney:

Increasing numbers of people in California are living together without being married. They may be people of the opposite sex, or people of the same sex. They may be having a sexual relationship while living together, or they may be living together mainly to save money, or for companionship and mutual protection.

If you and your friend decide to buy a house, a cooperative apartment, or a condominium, like most people you will probably need to borrow money to make the purchase. In the past it has been difficult for unmarried couples to get mortgage loans from banks and other lending institutions; usually the income of only one partner would be considered. But today, many more unmarried couples are buying a place to live, and they are protected by the federal equal credit opportunity act, which forbids credit discrimination based on your sex or marital status. Banks must now treat unmarried couples the same as married couples, and banks must take both incomes into consideration if two unmarried people are buying a house together. The FHA or Federal Housing Administration, also treats unmarried couples the same as married couples, by counting the incomes of both persons when determining financial ability to buy the house.

When two people get a mortgage loan or trust deed, they are each personally responsible to repay the full amount of the loan. One partner may not refuse to pay because the other partner has not paid his or her share.

There are several different ways in which you may hold title to a house. You may take title as joint tenants if you and your partner each hold equal shares of the property and you wish to have the property become the property of the surviving joint tenant in the event of your death. Joint tenancy has the automatic right of survivorship, meaning the living one-half owner takes entire title upon death of a partner. This is not true of property held as tenants in common. Such property passes to the heirs of the deceased tenant in accordance with the provisions of his or her will or according to the laws of interstate succession if there is no will.

It is especially important for unmarried couples to have written agreements or contracts between each other, when you buy a house together. Samples of such agreements may be found in low cost books about living together, written by California attorneys. Such books may be found at your local bookstore, or at your library.

Written agreements are important because thorny questions can arise which need solutions that are fair to both partners. Consider the following questions:

1-Who keeps the house, if you spilt up and you both want the house?

2-How do you decide on the value of the house if you spilt up?

3-If you spilt up and you agree that one of you will keep the house and buy out the other partner, how do you work out the transfer?

4-If one of you invests more money in the house than the other partner, how are the unequal shares handled in the contract?

5-If one of you moves into a house already owned by the other partner, what can you do to legally protect both of you?

There are several alternative contract clauses for you to choose, in drawing up a house purchase contract between you and your partner. For example, your written agreement could say that if you decide to separate, one or the other of you will keep the house and pay the other person the fair market value of his or her share within 60 days of your decision to separate or the house will be listed for sale, and the proceeds equally divided between the two of you. Or an arbitrator will be given authority to decide who will buy the house or the house can be auctioned to the partner who is willing to pay the highest price for same. There are other possibilities.

The value of the house may be decided by written mutual agreement at any time, or a licensed property appraiser may be employed to determine the fair market value of the house.

The transfer of the house to one partner, may be accomplished by one person refinancing the house with a larger mortgage, to obtain enough ready money to buy the other person out, whereupon the remaining partner receives a deed to the property in his or her name alone. There are numerous other alternatives available as well.

If one partner invests more money in the house than the other partner, either in the down payment or the monthly payments, or both, this can be handled by one person buying the house in his or her name alone, and the other person paying rent. Or the person contributing more can make a gift of half of the investment to the other person, and then both may take title as joint tenants.

If one person moves into a house already owned by the other person, the non-owner might merely pay rent to the owner. Or the person moving in might be able to pay the owner half the value of his or her equity in the house, in exchange for a new deed naming both persons as joint tenants. Or the non-owner's monthly contributions could gradually build up an increasing share in the value of the house, as a tenant in common on the deed.

These questions and others are best resolved by a written agreement between the people who are living together. The best time to draw up a written agreement about buying a house is before you make the purchase. Do not wait until problems or disagreements arise. And do not rely on an oral agreement. Put it in writing. You may find an attorney will be able to offer you valuable assistance in drawing up such an agreement, or reviewing an agreement which you yourselves have drawn up.

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