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Cohabitation agreement?


Achillia
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How would you manage this?

 

I am finally in a position to buy a condo with mostly cash, though I will also have to take out a small mortgage (under 200k-- yes, I live in a HCL part of the country where a condo easily goes for 900K+)

 

My non-marital partner will be living with me and does not have the kind of money I have and will probably never be in a position to own a home, but will be able to contribute 100K or maybe less. I want to honour her contribution, but I feel that since we are not married and it's mostly my money that is making this possible, my name only should be on the deed. She and I could then draw up a legally binding agreement that would lay out her contribution and state clearly that this is an investment, not a gift. I am thinking that if she and I part ways for any reason, I would agree to buy out her share at whatever the market rate is.

 

I would love to hear more about how other people have handled this, what's fair etc. I want to protect myself obviously, but I also want to protect her and be fair. Thoughts? Please don't say "you should get married!" It's not that kind of a relationship.

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The only advice I have to offer is to consult a lawyer.  I'm sure one would prepare to structure an arrangement that meets the desires/interests of both parties.  Were I your partner, I'd feel most secure if the investment were legally documented. 

 

If it's intended that your partner benefit from equity appreciation, then a deed which identifies that ownership and specific rights and limitations (for example, your right to sell of the property without specific partner consent) might be appropriate.  Alternatively, if the investment is intended to take the form of a loan (with accruing interest), then a loan agreement may be appropriate, secured by a subordinate lien on the property.

 

 

 

 

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Really great points! Thank you! Part of what makes this tricky is that a.) we are not a traditional couple at all and neither of us wants marriage, and b.) there is a great disparity in our assets. If we were not together, her future in retirement would be not impossible but pretty spartan, and though I want to make life a lot easier for her, I also don't want her to feel like I'm sugar-daddying her. She wants to put what she can into this property.

 

So, it will not be a loan. My partner is 65, and this is intended to protect both of our assets. I want her to benefit from what I anticipate will be a property that will appreciate considerably in value, and she wants to be able to leave something to her daughters in the end. We are already discussing the various scenarios-- what happens if our relationship goes south or we just don't want to live together? What happens if I predecease her? I want to make sure that if my name is on the deed, she has some sort of lifetime rights to continue living in the place. I am also considering setting up a trust (maybe that is the best way to do this?) and ultimately leaving the place to her daughters once we are both deceased. So many decisions..... so yeah, lawyer.

 

My main reason for posting this is that surely others have done this before. I'd love to hear more about options.

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I happened to discuss this topic with my wife over coffee this morning.

 

Her first take was, don't they trust each other enough to title together?  (just into our first cup, mind you ;) )  I pointed out that deeding the property together is a big deal; without any other restrictions, upon the demise of one party, the title passes to the survivor, without ever going through the estate of the deceased.

 

That's obviously not the desired arrangement if the decease may have intended one or more other relatives to benefit form part/all of the equity.

 

I'm very weak on real estate law (I've had to be held by the hand through every home closing ;) ).  But in the case of an equity split, it seems that some very specific language on either the deed or supplemental documents is necessary to properly establish respective ownership details, as well as to spell out how property expenses will handled, right to sell, conditions for improvements to the property, etc.

 

It's tempting to handle much of this by tacit agreement,  However, subtle differences in how the arrangement is understood can often result in arguments at a later date.  Getting as much down on paper as possible should keep the peace, a priceless thing should an issue arise at an already stressful time.

 

 

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Thanks for the reply!

 

We have all kinds of reasons to not want to title together-- I started to enumerate them in this reply, but let's just say we are both at a certain age and we both have other family members who we want to care for and whose interests we want to protect. I have two beloved nephews who have something at stake in this. I absolutely want to offer something to my partner's daughters, but I want to be fair to everyone and to myself. It will be almost entirely my money and the trust money that makes all of this possible.

 

Also, for the record, my partner does *not* want to title together if we are not contributing equally. She feels *very* strongly about this. If we were to buy a place with both of us contributing equally, we would have to move out of state and find some tiny town where you can get a house for 200k-- neither of us wants that. My money can put us in the ideal LGBTQ-friendly neighborhood that we both already call home and where we have a community. I'd like to find a way to make this work for both of us.

 

I agree with you about tacit agreements though. I want to set up some sort of contract to make sure everyone is recognized and protected. At our age, this can get complicated, but it is a very reasonable thing to do. If we were both 25 and started out on completely equal footing and building an estate together, obviously it would be different.

Edited by Achillia
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4 hours ago, hegemony said:

are you in a CP state and/or common law marriage state?

 

 

We are not. We are also not married, and we have always kept our finances separate. No joint accounts or joint filing. So this would be a big leap for us.

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Based upon the thread traffic to date, I'm going to suggest that no one familiar with this thread has a sufficiently strong foundation in this subject to offer you solid advice.  (Paging "cv" ...)

 

So I'm going to offer up the most basic "stock" response possible:  You want to consult a lawyer to discuss what you want to achieve.  I have no doubt that this can be documented in a solid and reliable fashion.  Ultimately, what you want is going to require a lawyer's craftwork; you might as get one involved early on.

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8 minutes ago, Achillia said:

I'm kind of stunned nobody has a word to say on this subject. This is hardly uncommon. 

 

TBH, this is akin to setting up a trust as well as estate planning and IME such things are highly personalized and a function of your state laws.

 

I assume and recommend that your partner is involved in the process as she or he needs to be protected too as the amount you say he or she can contribute is non-trivial. Doing so will also make everything transparent. I would think one complication is that you may need to deal with percentages and not dollar amounts since the future value of the property is what matters and it sounds like you want the contribution ratio to remain as it is when you enter the agreement.

 

:lol: You could just put a ring on it. As in the words of the 20th Century philosopher Johnnie Taylor, it is cheaper to keep her.

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  • 2 weeks later...

Hi, actually I'm a she, not a he. This is a same sex relationship, and we do not want to get married. We've been together for 25 years and have always been financially separate. It's worked for us. If I ever were to get married it would only be with a very solid prenup.

 

Haven't decided anything yet, other than that this is a matter to take up with a lawyer. And yes obviously any agreement would have to protect both of us-- I wouldn't have it any other way. We aren't in a hurry.

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With that added piece of information, take the hour or so of time to speak with a competent practitioner in the area of family law.  The simple reality is that, even in the wake of Obergefell and other similar cases, estate and probate law is still very messy in these cases.  This is where having the legal Agreement between the parties which addresses disposition in the event of untimely demise will greatly aid the survivor. 

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On 7/23/2022 at 1:27 PM, hegemony said:

 

:lol: You could just put a ring on it. As in the words of the 20th Century philosopher Johnnie Taylor, it is cheaper to keep her.

Both of us were in marriages that ended in painful and brutally expensive divorces, so neither of us believes this.

 

Picture another scenario:  we are two amicable ladies who are great friends, sometimes lovers, but not interested in marriage, who realizes that we could have a very nice life and retirement if we pool our admittedly unequal resources. How does one make such a thing work in a way that is fair and generous to everyone and protects everyone's interests?  Could be a subject for a sitcom!

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5 minutes ago, centex said:

With that added piece of information, take the hour or so of time to speak with a competent practitioner in the area of family law.  The simple reality is that, even in the wake of Obergefell and other similar cases, estate and probate law is still very messy in these cases.  This is where having the legal Agreement between the parties which addresses disposition in the event of untimely demise will greatly aid the survivor. 

Another factor of course is that nobody knows what the future holds. LGBTQ folk have to think about this.

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1 hour ago, Achillia said:

How does one make such a thing work in a way that is fair and generous to everyone and protects everyone's interests?  Could be a subject for a sitcom!

It ain't easy...I found myself in similar situations through the years and, despite how much someone says it does not matter, income disparities DO create issues in a relationship. 

 

 

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On 7/23/2022 at 1:27 PM, hegemony said:

 

:lol: You could just put a ring on it. As in the words of the 20th Century philosopher Johnnie Taylor, it is cheaper to keep her.

 

 

 I replied to this earlier, but I think my reply got eaten.

 

It may be hard for some to understand, but "cheaper to keep her" is something my partner would find degrading beyond words. She's been really clear on this. She does *not* want to be a "kept" woman-- no, not even by another woman. It is an independence and pride thing. She feels very strongly about this. We are both very tough cookies-- I guess it's part of our charm hahahaha. After decades of being poor, I now want to live well. She likes that idea as well but is adamant about not spending my money or being my "cabana boy." It's kind of hilarious really. I'm only half joking about the sitcom idea.

 

In other news, her career just suddenly took off and I am so proud of her. She is a scientist-- her research just delivered big results, and now her part-time gig at a major university is about to become a full-time gig. Her financial wellbeing is looking way more solid. This of course makes both of us even more determined to find a way to live in this HCL town we call home. We both like being here, but now she really needs to stay here.

 

Forgive my digression. Also I think I made some replies without properly logging in. Erghj. Sorry, It's late and I was tired!

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Well we have decided after much haggling and conversation, and figured out how this is going to go: We are going to title together. True, it will be mostly my money paying for this, but the portion my partner can contribute is a non-trivial portion of her net worth.

 

If I predecease her, the house is hers. If she predeceases me, the house is mine. We have agreed that once we are both gone her daughters will inherit the house and everything in it. Since we are looking at a truly badass place in a very tony neighborhood in one of the most LGBTQ friendly cities in the country, we are confident that this place will be a valuable legacy for the girls. 

 

Some of my relatives will grumble because this means the house will not go to my beloved nephews, but I figure they are going to get the rest of my estate and will be very well provided for. Nobody is being deprived.

 

My partner has decided that being my cabana boy is not a bad deal at all, especially since this means she'll be able to ride a bike to her now well-funded new job, and best of all, sock some money away so that her later years will be a bit more reasonable.

 

Here goes.....

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  • 5 weeks later...
  • 9 months later...
38 minutes ago, Achillia said:

Lol well, actually the whole thing just blew up in my face, but at least I tried. And luckily I was on time to back out of this utter folly, so it could have been worse.

sorry to hear but I hope you;re well.

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42 minutes ago, hegemony said:

sorry to hear but I hope you;re well.

 

Thanks! Given that I was right on time to withdraw my bid and get my deposit returned, things couldn't be better. And on the bright side-- at least we are not actually married! This could have been way more painful.

 

Maybe in a year or so, I will get myself a place-- just me this time, a much more modest place at that, with only my cat to please.

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7 hours ago, Achillia said:

Lol well, actually the whole thing just blew up in my face, but at least I tried. And luckily I was on time to back out of this utter folly, so it could have been worse.

 

I'm dreadfully sorry to hear of this.  I have fingers crossed that issues were forced to the surface that had much better be known now than after this heady commitment had been entered into.

 

I'm loathe to contemplate the pain you must be in.  I'm encouraged that you appear extraordinarily sensible and so prospects are that you will come away wiser for it and better prepared to carve out a very satisfying life for yourself!

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