Cohabitation/Co-ownership Agreements

Issues facing unmarried individuals owning homes together

This week’s feature is about protecting couples who choose to buy homes together while unmarried.  Who contributes to the mortgage, taxes, utilities and insurance?  Who contributes to improvements and repairs?  What legal obligations exist if the couple separates?  What if one party wants to sell and the other wants to stay in the home?  All good questions that should be addressed PRIOR to the purchase.  A co-ownership agreement executed prior to the purchase can address all of these issues so there are no surprises along the way.  Your finances and your credit score may depend on it.

According to the United States Census Bureau, there were more than 8 million unmarried households in 2015, 3 times as many as in 1996.   The law encourages couples to get married and there are legal safeguards and tax benefits in place that married couples can rely upon throughout their union and in divorce as well.  These same safeguards do not exist for unmarried persons living together.  For those couples living together in homes owned by one of them or both, the results can be very unwanted.  Steps can be taken to legally protect the rights of all.

With the trend of the cohabitation of unmarried couples on the rise, it is important to note that Connecticut does not recognize Common Law marriage. Regardless of how long a couple has lived together and/or if they have children, they will not establish a legal relationship unless they are married.  Cohabitating couples are not automatically entitled to inherit each other’s property or make medical decisions in an emergency.

Therefore, cohabitating couples should work with an attorney to take preventative measures to protect their property and finances. When it comes to owning real estate jointly, this can easily be achieved through a formal Co-Ownership Agreement. The Agreement will give you the opportunity to decide, in advance, many important issues.  The preparation of the Agreement will cause the parties to address many difficult issues and arrive at conclusions.  Co-Ownership Agreements frequently address the following:

  1. The contributions of each person to the monthly household expenses;
  2. The contributions of each person to repairs and capital improvements;
  3. What if one party stops paying for good or no good reason;
  4. In the event of a separation or one party wishes to sell, is the property sold (and when) or retained by one of the parties;
  5. If sold, how are the gains or losses shared by the parties;
  6. If retained by one of the parties, how much money, if any, is the departing party entitled to receive; and
  7. If retained by one of the parties, should there be a required refinance to remove the other party from the mortgage obligation.

Many other issues can be considered and discussed.  The Agreement functions like a contract and can be enforced in court if necessary.

Moving in together is an exciting time for couples and many don’t want to consider a future breakup. Nevertheless, without an agreement, there could be expensive and time-consuming legal issues in the future. These can be avoided by entering into a legal agreement that both parties consent to, while the relationship is sound.

If you have any questions about Co-Ownership Agreements in Connecticut, or if you are ready to create your Co-Ownership Agreement, we are here to help. Contact one of our experienced attorneys at Rome Clifford Katz & Koerner, (860) 527-7044.

Written by:
Steven L. Katz, Esq. , Partner, Rome Clifford Katz & Koerner, LLP

Melissa Gagne, Legal Intern, Rome Clifford Katz & Koerner, LLP