I put $200,000 toward a down payment for a condo unit with my boyfriend. He is on the title, but not on the mortgage. How do I protect my equity investment now?

Dear Quentin,

I recently sold my apartment and put the equity earned (over $200,000) toward a new condo unit I own with my partner. My partner — we are not married — is on title, but not on the mortgage. He pays half of all expenses monthly without fail. What would be the best way to document and protect my equity in the event that we split up?

Sincerely,

Complicated

Dear Complicated,

File this under “R” for “real estate” or “R” for “ruh-roh.”

If he is on the title, he should be on the mortgage. It creates an imbalance of power within the property ownership agreement. Not only have you invested $200,000, but you are shouldering all of the risk. If your relationship with this man sours, and he walks away, you will be left to make the payments to avoid losing your home and damaging your credit rating, not him. 

What’s more, if you pay the mortgage off, he will still be entitled to his 50% share of the property should you sell it. It’s a win-win for him. You also took $200,000 of your own money and commingled it in a shared asset. It’s a cautionary tale and a textbook example of what to avoid when buying a property with a partner, particularly one to whom you are not married.

I’m assuming your partner had a lower salary and/or credit rating and, for that reason, you decided to put your own name on the mortgage. It’s an unusual arrangement, but one that should — while your relationship is healthy and strong — be addressed. If you put him on the mortgage, you would have to refinance, and rates have likely risen since your purchase.

A cohabitation agreement is a wise move for unmarried couples, especially those who own a home. It is a contract — a de facto prenuptial agreement. You both agree to the terms and conditions: What happens to the house if you split up or one of you predeceases the other? Do you sell the property and split the proceeds 50/50?  Who, for instance, is your healthcare proxy?

You should specify in that agreement that you both get back what you invested in the home, if your boyfriend has not contributed to the down payment. You can frame the conversation about the cohabitation agreement around your living situation, and include your position on the property you jointly own. As always, have an attorney review anything before you sign.

I wish you many happy years — together — in your new home.

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