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Drawbacks of buying a house before marriage

California residents looking to buy a home with a partner may benefit from treating it like any other business relationship. This may be true regardless of how close a couple may feel to each other. While dividing assets in a divorce can present its own challenges, trying to untangle finances when a couple is just cohabiting can be even more complicated.

It may be a good idea to have an attorney review a loan or other legal documents before unmarried couples sign a mortgage. This may offer a higher degree of protection after the transaction is completed, and it may also be beneficial to sign a cohabitation agreement. A cohabitation agreement is similar to a prenuptial agreement but for unmarried couples, and it should outline who is responsible for what portion of the loan, the insurance and the upkeep. It should also spell out what happens if the relationship ends.

It may be more beneficial if only one person owns the house while the other pays rent for instance. This may prevent a scenario in which one person makes payments but is then forced to split proceeds with a partner after the house is sold. It also provides protection for both parties if the relationship ends as the renter has been paid a reasonable amount while the other party can make a cleaner break.

If a couple is married, a home or other property acquired after the marriage may generally be considered community property. Therefore, it may be subject to property division laws if the marriage ends. However, those who aren't married may need to create their own agreement to protect themselves if a relationship ends. An attorney may be able to create or review any such agreement to increase the odds that it protects an individual's best interest.

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