A property agreement is a legally binding agreement which spells out who owns what during the duration of a couple’s relationship. It also divides the couple’s assets in the event that the couple separates. Such agreements may also be known as a “Living Together Agreement” or “Non Marital Agreement.”
Unmarried couples often buy property, mix assets, and invest together. Sometimes couples who separate without an agreement can mutually agree upon how the assets are divided in a cooperative way. However, more often than not, break-ups are not amicable and figuring out who walks away with what becomes contentious.
The longer that unmarried couples live together, the more property they tend to accumulate together. Since such relationships may not always last forever, it is a good idea for cohabitating couples to write out a property agreement. It should describe who owns what in the relationship and should determine how property will be divided in the event the couple separates.
No. It is advisable that property agreements be written so there is no ambiguity as to who owns what. However, in some states, a formal written agreement does not need to be created. In those situations, so long as the couple acts as though an agreement exists, the court will enforce it.
For example, if one party buys a car during the relationship and is the sole user of the car, the court will usually acknowledge that party as the owner of the vehicle.
In general, agreements between unmarried couples are enforceable as long as they cover:
- Property (both real property and personal property);
- Payment in exchange for someone giving something up (such as one spouse quitting school to support the other spouse who’s in medical school); and
- Payment for services (excluding sex).
There is really no set format or requirement for what a property agreement should include. However, most property agreements include the following:
- How specific assets are owned;
- Whether or not income and expenses are shared;
- Any newly acquired assets or property and how they are owned;
- What will happen to the property if one party in the couple dies;
- A list of basic expenses, such as food, utilities and housing;
- Description of property and finances, including property that each person had before the relationship began as well as property accumulated during the relationship; and
- How to distribute assets in the event of separation, or in the alternative, a plan for dividing up assets (such as mediation, arbitration, etc.).
It’s always a good idea to have a written property agreement drafted if you decide to buy real property with your significant other. Buying a house is one of the biggest financial commitments a person can make; for this reason, it is especially important that a well-crafted property agreement be created.
A property agreement coverint real estate purchases should include the following:
- How the Property is Held on the Deed of the House: Real property can be held in many ways, including as joint tenants with right of survivorship, tenants in common, community property (in community property states), etc.
- How Much Each Partner Owns: A good property agreement should include not only how much of the property each party owns during the initial ownership, but also how ownership can be transferred.
- For example, if one party can acquire ownership by paying the property taxes each year, that information and related details should be included.
- How One Party can Buyout the Other: Including a provision like this can avoid the headache of trying to figure out what is required if one party wants to buy out the other, especially if the couple has separated and tensions are high.
Lastly, the property agreement should include a clause regarding property rights in the event of a break-up. If there are any other provisions or specific items that need to be addressed, these should be included as well.
If there are any questions about what the agreement should include, then it is extremely helpful to enlist the services of a lawyer. A lawyer can provide advice on what a real estate agreement (or any other specific agreement) can do for unmarried couples.
A property agreement can be complicated, especially if you are unmarried and own many assets. A good family lawyer can help you draft a comprehensive property agreement so that it is legally enforceable. Moreover, if you have a property agreement in place, and you feel that it is not being followed, you should contact a skilled attorney to help you enforce the agreement.