Buying Real Estate with your partner, particularly if it’s your first home, can be an exciting time. However, it is also a very large commitment and comes with significant financial and legal ramifications. It also raises a number of questions for you as a couple that not everyone takes the time to sit down and discuss. If you want to avoid ending up in Family Court fighting over the house, you need to get advice before you buy.
Some of the things you should be considering and discussing with
your partner include:
- how much money are you each putting in?
- who is paying the legal fees, stamp duty and other expenses?
- will the house be in both your names or just one name?
- if you both own it, do you want it to be as joint tenants or tenants in common?
- In what shares will you pay the mortgage?
- Are either of you entitled to concessions?
- How will you share other costs like rates, water, repairs, body corporate fees, insurance, utilities etc?
- If one of you becomes ill and can’t work, how will the mortgage be paid?
- What will happen to the property if one of you dies?
- What will happen if you separate? How do you decide who keeps the house and who will move out?
- What happens if you separate and then sell the home? How do you decide how the proceeds of sale are divided? Should you divide the profit (or loss) equally? Should you be reimbursed for what you contributed?
- What if you separate and you want to keep the house? How much will you have to pay the other person?
- Do you plan to have children? And if so, does that change how you think the property should be treated in the event of separation?
Your conveyancing solicitor will usually not be able to cover all of these areas, particularly if they are representing both you and your partner in relation to the purchase.
You need to seek expert advice from a family lawyer regarding your circumstances and such advice needs to be given independently from your partner. In particular, you should explore whether a Binding Financial Agreement (pre-nup) would be appropriate. These agreements set out what happens if you separate in the future.
You should also discuss your will and estate plan with your lawyer to determine what would happen in the event of your death. It is also highly recommended to seek advice from financial experts, including regarding your borrowing capacity and adequate income protection insurance.
Buying property is a significant decision and one of the biggest financial investment decisions most people will make. The information can seem overwhelming, but it is well worth putting in the time to do your research before you bid at auction or make an offer.
Before you take the plunge, make sure you:
- obtain all of the information and expert advice you can so that you are making an informed decision; and
- discuss these issues in depth with your partner so that you are both on the same page.