Best/fairest/easiest way to handle this new living situation?
June 18, 2013 2:10 PM Subscribe
Seeking advice for a friend on safe and fair way to handle living arrangement.
Asking for a friend:
My friend put a down payment on a new (to be built) condo a year or year and a half ago. Since then, maybe 8 months ago, he met a lovely girl and talk of co-habitation has naturally come up.
Currently they both rent separate places. His salary is probably double hers and he assumes he will pay a higher portion of the mortgage/costs if/when she moves in.
Currently the relationship is sunshine and lollypops and he doesn't want to send the wrong message but also wants to protect himself in case of complications down the road. Is there a normal way to handle this? If things go badly do they sell and each receive back the same percentage as what they have been paying? Should he pay the whole shot if he can and call it even? I think he's really just looking for experience and advice on how others would handle it.
Asking for a friend:
My friend put a down payment on a new (to be built) condo a year or year and a half ago. Since then, maybe 8 months ago, he met a lovely girl and talk of co-habitation has naturally come up.
Currently they both rent separate places. His salary is probably double hers and he assumes he will pay a higher portion of the mortgage/costs if/when she moves in.
Currently the relationship is sunshine and lollypops and he doesn't want to send the wrong message but also wants to protect himself in case of complications down the road. Is there a normal way to handle this? If things go badly do they sell and each receive back the same percentage as what they have been paying? Should he pay the whole shot if he can and call it even? I think he's really just looking for experience and advice on how others would handle it.
I don't understand the question. Her name isn't on the lease. She pays rent to him. (Like Ruthless Bunny says).
posted by roomthreeseventeen at 2:18 PM on June 18, 2013 [1 favorite]
posted by roomthreeseventeen at 2:18 PM on June 18, 2013 [1 favorite]
yea, I know several people who have done this and the nonowner rented from the owner.
posted by sweetkid at 2:21 PM on June 18, 2013
posted by sweetkid at 2:21 PM on June 18, 2013
Ruthless has it exactly right. He should buy the place and she should rent from him at terms they feel are fair. A rental agreement would also be a good idea (and don't make it for a renewable term of over a month! If they break up she should have time to move out, but it's a Bad Thing if she can stay for another year).
posted by craven_morhead at 2:21 PM on June 18, 2013 [1 favorite]
posted by craven_morhead at 2:21 PM on June 18, 2013 [1 favorite]
Also, you should be careful - in many states, you need to explicitly structure the payments as rent (they go to him, not directly to the mortgage holder; she pays monthly; there is a lease).
Without these, and possibly other, formalities, she can end up as a partial owner, even if that wasn't intended.
This is very state-specific.
IANYL, TINLA.
posted by mercredi at 2:22 PM on June 18, 2013 [7 favorites]
Without these, and possibly other, formalities, she can end up as a partial owner, even if that wasn't intended.
This is very state-specific.
IANYL, TINLA.
posted by mercredi at 2:22 PM on June 18, 2013 [7 favorites]
A friend did the same, and when she moved out her ex paid her back for the rent she paid so she wouldn't have a claim on his condo. (I assume he paid back the principal and not the mortgage.) This was probably only an issue since they lived together for over a year and were therefore common-law, but it's worth looking into the details in your friend's jurisdiction.
posted by jeather at 2:22 PM on June 18, 2013
posted by jeather at 2:22 PM on June 18, 2013
If her name isn't on the mortgage or the deed, then she has no interest in the place. If things get more serious down the line, they can always refinance into both of their names. But until then, she rents from him with an official lease and everything,
posted by KathrynT at 2:22 PM on June 18, 2013
posted by KathrynT at 2:22 PM on June 18, 2013
I don't see it as as cut-and-dried as the other posters see it. It's a relationship, not a business arrangement. They can handle it any way they want. She might resent paying a portion of the mortgage without getting any benefit if the apartment is sold. He might also want to avoid that ambiguity and future entanglement. If either is the case, his paying all apartment costs might be the way to go if he doesn't mind supporting that aspect of the expenses.
Because he's her lover, not her landlord.
posted by DMelanogaster at 2:22 PM on June 18, 2013 [2 favorites]
Because he's her lover, not her landlord.
posted by DMelanogaster at 2:22 PM on June 18, 2013 [2 favorites]
It really depends on the situation and location. In many countries they would be considered common-law after a year and she could have claim to part of the property.
posted by barnone at 2:28 PM on June 18, 2013 [3 favorites]
posted by barnone at 2:28 PM on June 18, 2013 [3 favorites]
It's a relationship, not a business arrangement.
Bullshit. Unless they are married and mingling finances, this aspect of the arrangement is NOTHING but business.
Contract Law was invented by real estate. The best thing for this guy to do is to draw up a rental agreement, have her pay him rent monthly. If it works out and they decide to make it permanant, it's easy enough to either refinance, or marry or impose a legal ownership deal.
If it doesn't work out, then she's off to another rental and he has one less headache.
The relationship is a relationship. Real Estate is forever.
posted by Ruthless Bunny at 2:28 PM on June 18, 2013 [10 favorites]
Bullshit. Unless they are married and mingling finances, this aspect of the arrangement is NOTHING but business.
Contract Law was invented by real estate. The best thing for this guy to do is to draw up a rental agreement, have her pay him rent monthly. If it works out and they decide to make it permanant, it's easy enough to either refinance, or marry or impose a legal ownership deal.
If it doesn't work out, then she's off to another rental and he has one less headache.
The relationship is a relationship. Real Estate is forever.
posted by Ruthless Bunny at 2:28 PM on June 18, 2013 [10 favorites]
If they move in together he should retain sole ownership of his apartment and she should pay him rent. There is no reason any kind of mortgage or deed holding should happen unless they are filing taxes together. Enjoyably rubbing your genitals against someone else's is not a good reason to preemptively mingle financial responsibilities.
posted by elizardbits at 2:30 PM on June 18, 2013 [3 favorites]
posted by elizardbits at 2:30 PM on June 18, 2013 [3 favorites]
(As other commenters have noted, cohabitation and property requirements/laws may differ from state to state and your friend should find out what his options and rights are wherever he lives.)
posted by elizardbits at 2:31 PM on June 18, 2013 [1 favorite]
posted by elizardbits at 2:31 PM on June 18, 2013 [1 favorite]
Response by poster: He knows the laws here: Cohabitation for 24 consecutive months entitles both parties to 50% of all assets.
posted by Cosine at 2:31 PM on June 18, 2013
posted by Cosine at 2:31 PM on June 18, 2013
He needs to deal with this through a lawyer. There is nobody here who can answer all of his known questions, much less the questions he should be asking but doesn't know are even on the radar.
posted by bilabial at 2:35 PM on June 18, 2013 [2 favorites]
posted by bilabial at 2:35 PM on June 18, 2013 [2 favorites]
Mod note: Folks, focus on constructive and try to keep it cool in here.
posted by cortex (staff) at 2:38 PM on June 18, 2013
posted by cortex (staff) at 2:38 PM on June 18, 2013
The amount paid by each party should be tied to their income and there should be a lease (drafted by a lawyer who is aware of the owner's concerns re: ownership) that shows an explicit renting arrangement with her payments paid to him.
posted by quince at 2:38 PM on June 18, 2013
posted by quince at 2:38 PM on June 18, 2013
He should rent out the condo and they should split rent (fairly, probably by income) on a different place, that keeps everything clear in case things fall apart in under a year.
posted by meepmeow at 3:09 PM on June 18, 2013 [1 favorite]
posted by meepmeow at 3:09 PM on June 18, 2013 [1 favorite]
It's a relationship, not a business arrangement.
Avoiding what the specifics of the business side of things will be tends to lead to a lot of arguments in relationships.
Unless they have a shortage of arguments and need more, put things in writing.
Cohabitation for 24 consecutive months entitles both parties to 50% of all assets.
Consider seeing a lawyer for, er, not a prenuptial agreeement -- a precohab?
posted by yohko at 3:25 PM on June 18, 2013
Avoiding what the specifics of the business side of things will be tends to lead to a lot of arguments in relationships.
Unless they have a shortage of arguments and need more, put things in writing.
Cohabitation for 24 consecutive months entitles both parties to 50% of all assets.
Consider seeing a lawyer for, er, not a prenuptial agreeement -- a precohab?
posted by yohko at 3:25 PM on June 18, 2013
yohko (and others:) I didn't suggest they ignore the business side of things: in fact I talked about two scenarios. I was pointing out, however, that lovers are not engaged in a business, so all the responses about "have her pay you rent -- case closed" seemed a bit "off" to me. And the bit about "rubbing genitals" , well...makes my point.
posted by DMelanogaster at 3:58 PM on June 18, 2013
posted by DMelanogaster at 3:58 PM on June 18, 2013
Cohabitation for 24 consecutive months entitles both parties to 50% of all assets.
Then the important thing here is what "cohabitation" and "consecutive" mean, legally. The safest thing should be to speak with a real estate lawyer, so he can ensure that legal consecutive cohabitation is not what they're doing until they're ready to be in the kind of relationship that includes concern for such things.
posted by davejay at 4:03 PM on June 18, 2013
Then the important thing here is what "cohabitation" and "consecutive" mean, legally. The safest thing should be to speak with a real estate lawyer, so he can ensure that legal consecutive cohabitation is not what they're doing until they're ready to be in the kind of relationship that includes concern for such things.
posted by davejay at 4:03 PM on June 18, 2013
OP, given your update, speaking with a lawyer is the safe way to go -- I can't speak to the laws in this unknown jurisdiction, but I would be very surprised if they both signed a contract saying "This is Friend's condo and Girlfriend will pay $x rent every month" that she would own half the place two years later. Either way, tell your friend to pay a real estate attorney $150 and get the answer right.
posted by craven_morhead at 4:23 PM on June 18, 2013
posted by craven_morhead at 4:23 PM on June 18, 2013
Why is she paying rent?
Does he need the money to be able to afford the place (in which case she's being used, even if it is inadvertent on his part!)
He owns it. I assume/hope he can afford it without a roommate.
In terms of living together and the laws in their jurisdiction..... LAWYER.
I think the solution might be (as per a LAWYER) that she should maintain a rented room in a shared apartment elsewhere. Most of her stuff is kept at her apartment, her mail goes to her place, etc. Basically, she doesn't legally live in the condo, she doesn't pay him rent, they continue to date.
Is there some particular reason they have to live together? This seems ugly and complicated, I think it is going to harm the relationship.
He should move into his place and live there alone until he's ready to marry. And talk to a lawyer in the meantime.
She should NOT pay a portion of his mortgage, it's not her investment. He should not be her landlord or accept rent payments from her.
posted by jbenben at 4:39 PM on June 18, 2013
Does he need the money to be able to afford the place (in which case she's being used, even if it is inadvertent on his part!)
He owns it. I assume/hope he can afford it without a roommate.
In terms of living together and the laws in their jurisdiction..... LAWYER.
I think the solution might be (as per a LAWYER) that she should maintain a rented room in a shared apartment elsewhere. Most of her stuff is kept at her apartment, her mail goes to her place, etc. Basically, she doesn't legally live in the condo, she doesn't pay him rent, they continue to date.
Is there some particular reason they have to live together? This seems ugly and complicated, I think it is going to harm the relationship.
He should move into his place and live there alone until he's ready to marry. And talk to a lawyer in the meantime.
She should NOT pay a portion of his mortgage, it's not her investment. He should not be her landlord or accept rent payments from her.
posted by jbenben at 4:39 PM on June 18, 2013
If she pays him rent he needs to be sure to declare this as rental income on his taxes. If things get ugly she could use it against him if he doesn't declare it.
If she wants the money she spends on housing to build some equity -which is what you're suggesting with her getting some kind of payment when she moves out- then she should buy her own place. If these two people really want to live together she can rent her place out to random stranger tenant or another friend.
I am real curious about the whereabouts, cohabitation doesn't generally bring about ownership, in my experience.
posted by mareli at 5:17 AM on June 19, 2013
If she wants the money she spends on housing to build some equity -which is what you're suggesting with her getting some kind of payment when she moves out- then she should buy her own place. If these two people really want to live together she can rent her place out to random stranger tenant or another friend.
I am real curious about the whereabouts, cohabitation doesn't generally bring about ownership, in my experience.
posted by mareli at 5:17 AM on June 19, 2013
Mareli: In many countries, cohabitation for a certain period of time leads to common-law marriage which, upon dissolution, leads to a division of assets.
OP: as you can see, there are a million ways to organize this set-up. Each method has its pros and cons. She could:
- Pay nothing
- Pay the equivalent of what she is paying now, in rent, directly to him
- Cover certain utility bills or food bills instead
- Pay the percentage of the mortgage of their respective salaries. In this scenario, she'd be paying roughly 1/3 and he'd be paying 2/3. But if that 1/3 is more than she'd usually pay for rent, this division isn't equitable in the same way.
- Etc.
If it's stressful to figure out an agreement, many therapists or couples counsellors will do a few sessions to walk you through the options.
posted by barnone at 6:25 AM on June 19, 2013
OP: as you can see, there are a million ways to organize this set-up. Each method has its pros and cons. She could:
- Pay nothing
- Pay the equivalent of what she is paying now, in rent, directly to him
- Cover certain utility bills or food bills instead
- Pay the percentage of the mortgage of their respective salaries. In this scenario, she'd be paying roughly 1/3 and he'd be paying 2/3. But if that 1/3 is more than she'd usually pay for rent, this division isn't equitable in the same way.
- Etc.
If it's stressful to figure out an agreement, many therapists or couples counsellors will do a few sessions to walk you through the options.
posted by barnone at 6:25 AM on June 19, 2013
This is very much a situation where a short consultation with a lawyer is in order. I believe the law in your area has recently changed so that any assets that are brought into the relationship can be maintained on it's demise.
If your friend gets some legal advice now, he can ascertain for example, whether it is beneficial to complete the sale on his own before they move in together. In that case I think that she would only be entitled to 50% of the appreciation of the asset during the time they co-habitate.
I am not a lawyer. He should consult one.
posted by lunaazul at 10:50 PM on June 19, 2013
If your friend gets some legal advice now, he can ascertain for example, whether it is beneficial to complete the sale on his own before they move in together. In that case I think that she would only be entitled to 50% of the appreciation of the asset during the time they co-habitate.
I am not a lawyer. He should consult one.
posted by lunaazul at 10:50 PM on June 19, 2013
I didn't suggest they ignore the business side of things: in fact I talked about two scenarios. I was pointing out, however, that lovers are not engaged in a business
When people refer to the "business side of things" or "business and personal life" they are not referring to an actual business as such. It has nothing at all to do with whether they have an actual business together or separately.
"Business" in these usages simply means "things having to do with money such as but not limited to: coins, bills, negotiable instruments, financial instruments, loans, investments, promises to pay, possible financial liability, taxes, gold, silver, platinum, stock, mutual funds, futures, options, commodities, currency exchange rates, rent, utility bills, real estate, fines, late charges, life insurance, cosigning loans, etc."
Avoiding what the specifics of the things-having-to-do-with-money side of things will be tends to lead to a lot of arguments in relationships. It is good to have agreements around things-having-to-do-with-money type arrangements, to make sure everyone involved understands the details of what amounts of money or other assets will be exchanged, what they will be exchanged for, when this will happen, and who will bear risks of these things being different than what was planned for.
Cohabitation for 24 consecutive months entitles both parties to 50% of all assets.
Your friend might want to find out if this is just assets gained during the period of cohabitation, if retirement accounts are included, what exactly is considered to be an asset, if there are no assets how debts are split, and any number of other things.
posted by yohko at 12:11 AM on June 21, 2013
When people refer to the "business side of things" or "business and personal life" they are not referring to an actual business as such. It has nothing at all to do with whether they have an actual business together or separately.
"Business" in these usages simply means "things having to do with money such as but not limited to: coins, bills, negotiable instruments, financial instruments, loans, investments, promises to pay, possible financial liability, taxes, gold, silver, platinum, stock, mutual funds, futures, options, commodities, currency exchange rates, rent, utility bills, real estate, fines, late charges, life insurance, cosigning loans, etc."
Avoiding what the specifics of the things-having-to-do-with-money side of things will be tends to lead to a lot of arguments in relationships. It is good to have agreements around things-having-to-do-with-money type arrangements, to make sure everyone involved understands the details of what amounts of money or other assets will be exchanged, what they will be exchanged for, when this will happen, and who will bear risks of these things being different than what was planned for.
Cohabitation for 24 consecutive months entitles both parties to 50% of all assets.
Your friend might want to find out if this is just assets gained during the period of cohabitation, if retirement accounts are included, what exactly is considered to be an asset, if there are no assets how debts are split, and any number of other things.
posted by yohko at 12:11 AM on June 21, 2013
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posted by Ruthless Bunny at 2:15 PM on June 18, 2013 [30 favorites]