If you caught the April 29 episode of Mad Men, in one of the climatic scenes, Peggy’s very Catholic mother admonishes her daughter after Peggy announces that she’s moving in with her boyfriend, Abe. “You are selling yourself short,” Mrs. Olsen says, explaining her anger. “This boy, he will use you for practice until he decides to get married and have a family. And he will, believe me.” Watch the first two minutes of the clip below for an inside look at this story line!
The show takes place in 1965, so Mrs. Olsen’s reaction may seem quite old-fashioned when viewed through the lens of today’s “anything goes” culture. But was Peggy’s mom on to something?
A recent must-read column in the New York Times suggests that she was. According to the article, while two-thirds of 20-somethings say that moving in together is a good way to test the waters before marriage, and therefore avoid divorce, research shows that couples who live together before marriage (and especially before an engagement or an otherwise clear commitment) “tend to be less satisfied with their marriages — and more likely to divorce — than couples who do not.”
Why is this? Meg Jay, a clinical psychologist and author of the column, describes a phenomenon called “sliding before deciding.” You’re together all the time, you sleep over frequently and then voila—you’re living together, more for reasons of convenience and finance than real commitment. And once this arrangement begins, it’s hard to get out of, especially if you buy furniture, a pet or even a home together. Jay compares it to opting in for a credit card with zero percent interest for the first year. After 12 months, the interest shoots up to 23 percent; you haven’t paid off the balance and, whoa—you’re locked in.
I do tend to be of the conservative persuasion, like Mrs. Olsen. In addition to the social implications of the living-together-before-marriage trend, which I find fascinating, I of course am interested in the real estate implications. After all, nearly 40 percent of all closings that I attend are for non-traditional buyers, and statistics show that more than eight percent of all owner-occupied homes in the U.S. are owned by unmarried couples.
Before you get into what could turn out to be a bad situation (some say a breakup between two unmarried people who own property together can be worse than a divorce), here are some big issues you should take into consideration:
- What if you buy a house together and you eventually break up? This is a significant consideration given that almost half of unmarried couples break up within five years, and unmarried couples do not have the benefit of legal protections that married couples enjoy. To protect yourself, it’s of utmost importance to put the answer to this question in writing. Work with an attorney to draw up a Home Sharing Agreement, which will spell out your individual rights and responsibilities with respect to the property as you purchase your new home and on an ongoing basis.
- What if one of us doesn’t want to sell the home after a break up? If there is no Home Sharing Agreement and you break up, you can mutually decide what happens to the home. If the house has no mortgage, then one party can simply sign a quit-claim deed and remove all rights to the home. This makes sense if the home has little or no equity. However, if there is a mortgage on the property in both names, you cannot simply quit-claim your interest and walk away. That mortgage and debt impact will influence your credit (and buying potential) until the home is eventually sold or refinanced. Therefore, it’s critical that if a partner is keeping the house, he MUST refinance the loan into just his name. If the remaining partner cannot get approved for the loan solo, then the property must be sold to protect the displaced mate’s credit and financial responsibility for the home.
- What if you move in to a home that your partner already owns and you then break up? It doesn’t matter how much money you put toward maintenance, improvements and other expenses. The home is in your partner’s name, which means you will have no legal recourse should you break up.
- What if one person owns the house and there is a death? Because of this possibility, it’s important to write the deed in both of the couple’s names with “rights of survivorship,” even if only one person is financially responsible on the mortgage. If the title is NOT set up this way, the house will go to the next of kin of the “owner.”
Although many unmarried couples slip into their living arrangements because of convenience, living together brings up all kinds of legal considerations, especially when an unmarried couple buys a home together. Although you may think that you don’t need a piece of paper to prove your love, you should at the very least have a home sharing agreement to protect your interests. Marriage shouldn’t be entered into lightly, and neither should living together. To echo Peggy’s mom, don’t sell yourself short.