Purchasing a home with a partner outside of marriage may seem like a logical next step in demonstrating commitment, but it comes with significant legal and financial risks.

Adding a partner’s name to the house’s title without being married—and without a proper contract in place—can introduce risks that cause both parties significant time, money, and additional heartache in the future.

As a litigation attorney, I’ve seen an increase in individuals seeking legal counsel to help navigate the complications of owning a home with an ex-partner. This is likely fueled by the ever-increasing housing costs and undesirable rental markets.

My advice? Don’t let these factors force you into a decision without knowing the risks of co-ownership first.

Risks of co-ownership

In Washington, a married couple that decides to divorce can take advantage of the community property rule concerning property acquired during their marriage. This rule gives each spouse an equal and undivided interest in "community property," or assets acquired during the marriage, regardless of who earned or acquired it. Community property includes income, real estate, and personal property.

Unmarried couples face a murkier situation if the relationship ends. For example, if you and your partner are listed on the property’s title, and that title doesn’t specify the amount of each person’s interest, it is presumed you have equal shares, or 50-50 ownership.

Although a party can challenge this presumption in court by presenting evidence of intended unequal shares, the challenging party might find it difficult and costly to produce admissible evidence to make their case, leading to potential disputes over ownership and equity. Understanding these distinctions and planning accordingly can help prevent disputes and protect individual interests.

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Unmarried couples considering a real estate purchase are advised to learn about the risks of co-ownership before making a final decision. 

Questions to consider include whether you would want to co-own a property with a former romantic partner or sell it. Depending on the answer, it’s worth determining during the buying process who will keep the property, who has to move out, and whether any money has to exchange hands if a breakup occurs.

If you and your partner agree that selling would be the best path forward, you’d still need to agree on a sale price and how much each of you would receive from the sale proceeds. If the parties can’t work it out, legal intervention is required to resolve the stalemate, which can be emotionally and financially draining for all parties involved.

The best time to make these decisions is at the onset, prior to a potentially messy break up.

Refinancing impacts

Adding a partner's name to a home’s title also has significant financial implications, particularly when it comes to refinancing the property. Removing an individual from the title or mortgage in the future may require refinancing the property under one person's name. Refinancing involves various costs, including application fees, appraisal fees, and closing costs, which can add up to thousands of dollars and a potential increase in the mortgage interest rate.

The refi process also hinges on an individual's ability to qualify for a mortgage independently. This may not be feasible for everyone, especially if their financial circumstances have changed.

Alternatives, precautions

For couples considering purchasing a home together before marriage, there are safer alternatives than adding both names to the title. One option is for a person to hold the title alone, with a legal agreement outlining both parties' financial contributions and what would happen to the property if the relationship ends.

Another approach is to create a legal entity, such as an LLC, to hold the property and in which both individuals are members. But don’t forget to draft an operating agreement, too, which would head off issues in case of a breakup.

Recognizing the potential complications and exploring safer alternatives can help protect both parties' interests well before the emotional stress of a breakup impacts clear decision making. Ultimately, if you are planning on marriage, it’s far simpler to add a spouse to your property title if your relationship succeeds than to remove an ex-partner after a breakup. Or, if marriage doesn’t interest you, consider a legal agreement or LLC. There’s no such thing as a clean break when you are trapped in a battle involving co-ownership of real property.

Katie Daniel is an experienced attorney at Coeur d’Alene-based Smith + Malek PLLC. She’s licensed to practice in Washington and Idaho, specializing in contract and business litigation.