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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Sunday, January 18, 2009 Plan for the worst when buying with a friend By Steve Tytler Question: I bought a home with my then boyfriend. He was living in it, but not paying any of the mortgage payments. I pay them. He is on the deed, but not on the mortgage. He is letting kids live in it free and I am stuck paying the mortgage payments. I tried to get in to the house and the police told me that I would be arrested if I did. These kids are dope addicts and my ex's kids. Is this legal for him to have this power over the property? Answer: I'm very sorry to hear about your predicament. This is a classic illustration of why it's dangerous to buy property with a partner, especially if you are not both on the mortgage. As I have explained in previous columns concerning quitclaim deeds, it is possible to add somebody to the title of a property without having them also be on the mortgage secured by the property, but that puts the person on the mortgage in a very bad situation, as your letter vividly shows. Your problem is that your ex-boyfriend is a legal owner of the property because his name is on the deed. That's why you can't legally kick him or his kids out of the house. And he doesn't care about the mortgage payments because his name is not on the loan. If you let the mortgage go into foreclosure, your credit rating would be severely damaged but his credit would not be affected at all. At this point, your only legal recourse would be hire an attorney and sue your ex-boyfriend for what's called partition of the property. That means the court would order that the property be sold and the proceeds would be divided between you and your ex-boyfriend. The good news is that in a partition suit between two unmarried people, the court will typically look at the amount of money that each party contributed to the property and divide the sales proceeds accordingly. That means that you would likely get most, if not all, of the proceeds from the sale of the property and your ex would get little, if anything. Of course, attorney fees and the court costs of the partition suit would eat into your home sale profits. For readers who may find themselves in a similar partnership home purchase situation in the future, always draw up a legal property ownership agreement before the deal is closed. The agreement should specify how the property will be divided if you decide to go your separate ways. For example, the agreement should include a buyout clause that specifies how the property would be valued and how the sale would be handled if one partner wants to buy out the other. And if both parties want to buy the property, how do you decide who gets it? All of those kinds of potential problems should be discussed and resolved in advance. As I like to say, in any real estate transaction you should hope for the best but plan for the worst. In any partnership purchase, both parties should be on the mortgage to prevent the kind of financial power imbalance that happens when both of you have an ownership interest in the house, but only one of you is responsible for the mortgage payments. It's unfortunate, but just as many marriages end in divorce, many real estate partnerships end in failure for a variety of reasons. If you know that going in, and plan for an equitable resolution to an unhappy outcome, it can make the split a little less painful. Mail your real estate questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206, or e-mail him at economy@heraldnet.com. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. To read other terms and conditions, click here. Log out

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