Cohabitation Agreement

[dinkyface]

The problem with splitting the mortgage is that part of each mortgage payment is directly increasing your equity in the house. So it could be argued that you are benefiting from this arrangement. It would be a bigger issue later on as the interest portion of each payment decreases. But that could be offset by the fact the she is not sharing property taxes.

[dadtotheend]

I think they should split all expenses if there is going to be a buildup of equity. After all she will be contributing and not just in a financial way.

i.e. property taxes, insurance, utilities, repairs and maintnenane, mortage payments could all be split.

That would be the easiest if that's what each of them wanted.

[billiechic]

I was thinking along the same lines as DTTE. You are guaranteed your $60k back, but over time she would "earn" an increasing share of the home. If at some point you marry, then she would be entitled to 50%, minus your original $60k.

You are being very proactive. I hope that it's not because you've been burned before though. Good luck.

[SuperDad300]

Cohab Agreement

Hi Bill,

Yes I learned the hardway been burned huge. I have visited my lawyer but there is no clear cut answer........

Trying to see if someone has done this/gone through........

[SuperDad300]

Cohab Agreement

Hi All,

This has been so stressful. We have come up with a new idea and wanted to get thoughts.

To summarize I pay 1/2 the house now upfront. She is responsible for the mortgage on the other 1/2 the house, they will not give her a mortgage on her own unless I co-sign not because of finances but because we would be joint owners. We would split all household expenses and repairs ect...

Think there is risk? I have been burned in the past but want to be in a healthy relationship....

Thoughts?

[standing on the sidelines]

sounds pretty good to me, but make sure about who pays what for repairs and other household expenses and repairs.

[SuperDad300]

Cohab Agreement

We have in the rough draft of the agreement that we split everything. She is responsible for the entire mortgage which would be half and I am putting my half now. Also we would not put mortgage insurance but in the agreement we both must have life insurance policies. I have 2 kids from a previous marriage so want to make sure if something happens assets are distributed fairly.

[Rioe]

The risk I foresee is what happens if something goes sour and you separate. Then, she gets half a house she hasn't finished paying for yet. If both your names are on the mortgage, I'm not sure you can get away with saying that's her half. And what if you renew in a few years at a higher interest rate; then she might end up paying more overall. And what if house values plummet? Then your half and her half might become kind of unequal. Just stuff to consider.

[SuperDad300]

Cohab Agreement

I have first option to buy her out by neutral appraisers. If the house is 300k, I put 150k nowand lets say she has put 10k down. If neither of us want the home we sell it - lets say the house is now worth 400k. I would get my original 150k + another 50k she would get the 50k + 10k (although not really 10k bcause most of it would be interest on the mortgage.

In essence it's her responibilty to pay the mortgage hower she sees fit.

[InterprovincialParents]

Thanks for the replies.

Does this sound fair for both parties (summary of assets in first thread).

I put approx 20% down and I own the home. She pays approx $900-1k for living expenses and I am responsible for the mortgage. I would own the home outright.

Is this fair to both parties?

It might seem fair, but not to the courts. If you own the home, and she pays 1k per month, the courts will see that as part of the mortgage unless otherwise stipulated. A rental agreement can cover that off, with her paying perhaps for groceries and utilities and you paying the mortgage and taxes. Your best bet is a rental or cohab that stipulates very clearly that her payments are not towards the house upkeep, mortgage, or taxes.

[SuperDad300]

Cohab Agreement

We would plan on being joint owners of the home everything split 50/50. In the cohab agreement we plan on stipulating that I pay my 1/2 the home front and that she will assume the mortgage for the other 1/2 of the home.

I am a little confused in your statement of me owning the home outright.

[InterprovincialParents]

sorry...my own fault for not reading the entire thread...

One thought on your new idea...you pay half upfront, and cosign...you split, she defaults, you are stuck with her mortgage as well, as the co-signee. While I try to remain optimistic, here is the worse case scenario:

You pay 1/2, co-sign other half. 3 months later, you split...she is not to be found...moves, changes jobs...you have no option of finding her to enforce the cohab...do you have a contingency plan for that? And, if you are co-owners, and you die, the home automatically goes to her. There is no option for any equity to children...I had assumed you would pay, and mortgage, with her paying other utilities, etc, to ensure you retained sole ownership.

My apologies.

[SuperDad300]

Cohab Agreement

Great insight. We somewhat thought about this and we will not have mortgage insurance. However we will state in the cohab that we must both have life insurance policies for each other so that the other person can buy that portion of the home. We will clearly state in the cohab that my 1/2 the home goes to my estate and hers goes to her estate.

In essence we would be screwed if someone passes away as the home would be unaffordable but we counter that by having life insurance.

I guess if she splits after a few months she loses 3 months worth of mortgage payments closing costs ect..

Thoughts?

[InterprovincialParents]

Three months worth of closing costs, versus 25 years....hmmm...

If you are co-owners, you can write in your will that your half goes to your estate and not to her, but it can be easily contested, and often is, lasting years...at which point, the life insurance has gone to fight the battle against losing the house...especially if the life insurance lists her as beneficiary...she does not need to, nor is she required to, spend it to pay off your estate if you are co-owners. The house reverts to the living owner should a joint owner die.

I think you would be better getting life insurance listing your children as beneficiary (or in trust). When you die, she can sell the house, taking the profits from the sale, since our real estate market is not crashing anytime soon...

[InterprovincialParents]

Call me a cynic, but I have seen the most reasonable people become greedy materialistic vultures upon separation, divorce, and death.