Pre-Purchase Considerations - Part 2

The Denninger Report  - by Gini Denninger

Those pesky financial questions! Sadly, many of these questions are ignored because of the confidence of the couple in their relationship. This is where the problem lies if they actually do break up. Nothing has been decided before, and in the heat of a break up, it is often too late to expect these questions to be answered amicably. What to do then?

The best thing is to speak to their individual attorneys BEFORE buying the house. This means each party is represented in the transaction. James A. Marino, Esq. of James Marino Law, located on South Washington St. in Rochester, explained that: “Both parties should consult with their own attorney prior to entering into the transaction. Ethically an attorney would, most likely, be prohibited from providing legal counsel to both parties due to conflicts of interest, regardless of the party’s affections for each other.” Is this sounding more like a business deal? It should, because it is. Only in marriage are these issues covered by law. Unmarried couples should have a contract in place between the two of them regarding the property in the case of a split or the death of one of the partners. “However,” Jim concedes, “the reality is that most people do not have, nor do they desire to spend, the money to consult with two different attorneys and have an agreement negotiated.” This is true, since often the couple is working hard to come up with all the expenses (closing and moving costs) they will incur when they buy the house.

What to do in that case? This is the moment of truth for a couple, when they must be able to honestly consider these questions and come to agreement on the answers and write them down. Whatever is agreed upon should be put in writing and signed by both parties. Should it ever land in court, this may go a long way in helping the judge see the situation clearly.

During this session(s), the couple needs to consider their individual current and future financial position. Are they both steadily employed? What if one becomes unemployed? Can one support the property if the other is incapacitated? If not, they should explore options such as insurance covering poor health or death. It’s important to outline both parties expectations. If the property is being bought using one partner’s credit, does that entitle or require them to be the sole owner? Does the other partner have the right to expect money out of the house when it is sold in the future - especially if they contributed to the mortgage payment, regardless of whether the couple is still together? If both are on the mortgage, they need to recognize that they are still responsible for that mortgage and cannot just be taken off, even if they no longer live in the house. If there is a lot of sweat equity in the house, is one person more entitled than the other? An agreement must be made regarding the down payment, including who gets what in the event of a sale. These are the types of questions the couple needs to ask and answer. The idea is to imagine all scenarios, no matter how painful.



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