Mortgage sans marriage

by Kerrie Kennedy

Chicago real estate agent Tony Mattar knows all about nontraditional homebuyers. Four years ago, he was one of them. “When I was 25, I purchased a condo with my [then] boyfriend,” said Mattar, now 29 and managing broker and co-founder of the newly launched HomeCo Chicago. “Neither of us were in the financial position to buy a place on our own, so we decided to pool our resources and buy a place together. The relationship didn’t last, but the best part of the breakup was that we both ended up making a lot of money after selling the condo.”

Mattar, a new agent at the time, knew enough to have a separate agreement drawn up by an attorney. “We didn’t want to end up in a situation where we were fighting over the property if things didn’t work out,” he said. “In a nontraditional buying arrangement, it’s important to decide ahead of time what’s going to happen if things don’t work out. Is one person going to buy out the other person? Are you going to sell it? How do you determine who pays for the appraisal?”

Cory Tanzer, an agent with Option Realty Group, recently helped an unmarried-but-dating couple find and close on a condo they purchased together — with the financial assistance of their respective parents. “One of the buyers had just started working at his first job, the other was in medical school,” Tanzer said. Besides dealing with the dynamics of both sets of parents involved in the decision-making and approval process, Tanzer had to help the couple iron out some of the what ifs. For that, he turned to a real estate attorney.

While most married couples hold property as tenants in the entirety, nonmarried couples might choose to hold property as tenants in common or joint tenants with rights of survivorship, according to Chicago real estate lawyer Adam Wilde, of Wilde Law Group. “Beyond that, we usually also suggest they enter into a joint partnership agreement with one another,” he told Chicago Agent. “It protects them and sets forth an agreement if one of them wants to get out. It also outlines who’s responsible for what — utilities, renovation, mortgage payments and so on.”

In a case where parents are providing a down payment for their adult children, often those funds must be characterized as a gift versus a loan; otherwise it can complicate the buyer’s ability to obtain an additional loan, according to Wilde.

When it comes to adult children and parent buyers, it’s especially important for agents to be on the same page with all the parties. “In an effort to save time and the headaches that can come with too many cooks in the kitchen, you also really need to figure out who’s the decision maker,” Mattar said. “Does the parent have veto power? It’s important to know.”

But no matter what the combination — parent and adult child, unmarried but dating, friends only — it’s crucial for nontraditional buyers to enter into a legal agreement. “When you say ‘I don’t like you anymore,’ you want to spell out exactly what’s going to happen,” Wilde says. “You need to have an exit plan.”

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