We want to buy a home, but we aren’t married
Question of the week: We want to buy a home, but we aren’t married.
Answer: Read the above with upspeak on “married” so it is a question.
As much as you may love your partner today, and as much as s/he loves you, not all relationships last.
Disposition of property when a married couple separates can get a bit complicated, disposition of property when an unmarried property separates, can get very complicated, and very sticky.
California is a community property state, when a couple gets married, unless explicitly agreed upon in writing, property becomes communal. In February of 1994 I purchased a home as a single man. In September 1994 Leslie and I were married and out home became community property, even though the title was in my name. If I got hit by a bus before we created a trust and put the home in it, or before I signed a quit claim deed transferring my interest in the home as community property with right of survivorship to Leslie and I as husband and wife, the home would have become Leslie’s, as an unmarried woman.
If we were to separate the property we purchased in 1998 after we sold our first home, would be divided equally as part of any settlement, along with other assets.
When unmarried couples purchase a home together transfer of the property due to death or separation is not as clear cut under California law as with married couples. Primarily, unmarried couples, absent any agreement, are not entitled to the property, any inheritance, or spousal support benefits.
Because of this, it is very important for unmarried couples purchasing property have an agreement, preferable prepared by an attorney, as to the disposition of the property in the occurrence of death or separation.
Taking Leslie and I as an example. Had Leslie moved into our home and we did not get married, and my name was the only name on the property, had I passed away she would have no rights to the property. Having no children, the home would have passed to my siblings. Had we separated after several years, and during the time we were together I made all the house payments from my separate account, Leslie would have diminished equity rights since the home was in my name, I used my assets to purchase the home, and my assets to pay for the home.
It is not uncommon for us to see a couple purchasing a home with only one partner being on the loan for qualifying purposes. At closing, until the purchasing partner quit claims title to him/herself and his/her partner, the purchasing partner owns all property rights, the right to bequeath to anyone s/he wishes; and depending on financial contributions by either/both parties to the payment of the mortgage and other housing expenses, may retain 100% ownership if they partnership dissolves.
Regardless of how long you have been a couple, how strongly you feel about each other, if you are purchasing property with a partner to whom you are not married, have an agreement as to the disposition of the property should there be a separation or death, and put both parties on title.
There are other instances when unmarried people purchase, or own, property together. A common instance is a cabin in the mountains or condo in the desert, purchased with siblings or friends. In these instances, it is important to have a plan should one of the partners wants out of the property, or passes away.
Phil and Jim are brothers purchase a home at PGA West on one of the golf courses. They deed the property so each owns 50% as tenants in common. Phil’s is divorced and has an adult son, Phil, Junior, who is in need of a significant increase in maturity and responsibility. Jim is married to Amber, and they two children in college. Phil has no estate plan, or will. Jim and his wife have an estate plan and have transferred Jim’s interest in the property to their family trust.
After three years of joint ownership, and Phil Junior having a few legal issues crop up, including one paternity suit, with one pending, Phil Senior hits a 6-iron on the 4th hole at the Pete Dye Stadium Course for his first hole in one. Reaching the green, after he pulls the ball out of the hole, his heart cannot take the excitement and he dies of a heart attack.
Since the brothers never had any written agreement as to the disposition of the property should one of the brothers pass away, Jim and Amber are now partners with Junior. Because he has an outstanding paternity suit for back child support, Junior’s portion of the property is subject to a lien for the back support. As well, since Junior has been floating from apartment to apartment, he moves into the property and has a legal right to live in the property due to his ownership.
Had the brothers had an agreement that if one party dies the other has the right to buy out the other party’s heirs, or if unable or unwilling to buy out the other party, enable the heirs to buy out the surviving brother, and if that is not to occur and agreement the property would be sold.
The above scenario can occur if siblings purchased a condo together while working their first jobs, or in a few instances we have had, when they are widowed and living together. Partnerships in investment property, sharing a duplex, even boat slips, can all lead to major headaches and legal costs in the future absent spending some money at the beginning of the joint ownership on agreements on the disposition of the property in the future.
Always have a plan, have an agreement, and review and renew the agreement as long as unmarried partners co-own property.
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Wall Street was holding its collective breath earlier this week in anticipation of Consumer Price Index data from the U.S. Bureau of Statistics. Following last week’s very strong job’s report for June, a bump in the CPI higher than expectations could stampede sellers to financial markets, dumping stock and bond prices (lower prices higher rates).
Wall Street was forecasting a 0.3% increase in CPI in the month of June. The Bureau of Statistics data showed prices increased a moderate 0.2% in June, and the rate of inflation slowed to its lowest level since March 2021. Annual inflation dropped from 4.00% in May to 3.00% in June. Around every silver lining a cloud must be wrapped, in this case was the data on the “core” rate of inflation (stripping food and energy prices), which remains stubbornly high, dropping to 4.8% from June 2022.
As can be seen by the difference in the core and total CPI rates, consumers have benefited from slowing prices for food and energy this past year. Pulling CPI down were dropping prices for airline tickets (8.1%) and used cars (down 5% in past year). The biggest component of CPI is housing, and it is the primary element keeping inflation from dropping to the Fed’s 2% target rate. Rents are up 8.3% for the year, with some indication of slowing in the sector.
Rates for Friday July 14, 2023 With the positive CPI news, rates have their biggest Friday to Friday decline since November, both conforming and hi-balance 30-year fixed rates drop three-eighths of one-percent (0.375%) for the week.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.625% Down 0.375%
30-year high-balance conforming 7.500% Down 0.375%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
I was grumbling through April, May, June about the weather and how cool (cold many days) it was. This week, summer weather and temperatures have arrived in Southern California. I’m not alone here, talking about the weather, the past few days I’ve heard, “it’s going to be hot…it looks like it won’t cool down until maybe next week…I hope the weather isn’t this hot all summer….”
Going back several millennia, I’m supposing conversations were, “Togur, have you been going through as much wood for the fire as we have? Our cave has been so cold lately when it should be warm…Nomak, we need to move to those caves by the river, it’s too hot here and I think it will last a while.”
Weather, the perfect conversation starter as long a humans have been able to communicate with each other!
Have a great week. Oh, and stay cool!
Dennis
Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog
