Are You Thinking About Buying a Home With a Friend, Relative, or Significant Other?

Are You Thinking About Buying a Home With a Friend, Relative, or Significant Other?

While 63% of home buyers are married couples, according to the National Association of Realtors, a growing number of single buyers are entering the market. High housing costs and the challenge of saving for a down payment have led many to consider joint purchases with friends, relatives, or partners. This approach is especially common for vacation homes, where shared ownership can split costs and create shared memories. However, co-buying requires careful planning to avoid disputes over finances, ownership, and long-term commitments.

Key Issues to Address Before Co-Buying

1. Financing the Purchase

Most buyers finance their purchase with a mortgage. When unmarried parties apply together, lenders evaluate their combined income, assets, and credit scores. Unlike married couples, co-buyers often have divergent financial profiles, which can complicate approval.

“If you sign the mortgage note, you’re 100% liable for payments—there’s no splitting responsibility,” warns Bill Banfield, executive vice president of capital markets at Quicken Loans. “Late payments hurt both parties’ credit, and a breakup or default could leave one person liable for the entire debt.”

2. Holding Title to the Property

Unmarried co-buyers must decide how to legally hold ownership:

• Joint Tenants with Right of Survivorship: The surviving owner inherits the property if one dies.
• Tenants in Common: Each owner’s share passes to their heirs upon death.

For added flexibility, some opt for a Limited Liability Company (LLC). An LLC’s operating agreement can outline ownership percentages, usage rules, and exit strategies.

“An LLC defines each party’s interest and accounts for scenarios like death or a sale,” explains real estate attorney Neil Narut. “This prevents disputes down the line.”

3. Managing the Property

A written agreement is critical to address:

• Expenses: Mortgage payments, taxes, repairs, and utilities.
• Usage: Scheduling for vacation homes or shared residences.
• Exit Strategy: Procedures for selling the property or buying out a co-owner.

“Life changes—new jobs, marriages, or disagreements—can force a sale,” says Banfield. “Without a plan, co-owners risk being stuck in a financial bind.”

The Importance of Legal Guidance

Consulting separate attorneys ensures each party’s interests are protected. Legal agreements help:

• Clarify responsibilities and expectations.
• Minimize emotional conflicts.
• Provide enforceable solutions for disputes.

By addressing these issues upfront, co-buyers can protect their investment—and their relationships.