Unwed homebuyers tie financial knot

Flickr photo by williac.

Jude Galligan and Amber Gugino bought a condo together a year and a half ago, putting them right into the mainstream of American real estate, where signing a real estate contract these days often precedes saying "I do."

What the Austin, Texas, couple did before they got to the closing, however, is unusual -- even though legal experts say it shouldn't be. They put their financial intentions in writing to make sure they were on the same page if life's "what ifs" -- breakup, death, job loss -- were to unfold.

"We're planning to get married," said Galligan. "The biggest piece of insurance for us was the understanding of what would happen (to the property) if the relationship terminated."

Such agreements should be the norm among cohabiting couples, says Frederick Hertz, an Oakland, Calif., real estate lawyer who specializes in advising unwed couples. But he says they're a rarity.

"I'd be surprised if more than 10 or 20 percent of unmarried co-owners have an agreement," said Hertz, who is the co-author of "Living Together: A Legal Guide for Unmarried Couples."

That's a small segment of a big number: Census data suggest that more than 12 million unmarried partners were living together between 2005 and 2007.

Most such couples don't even discuss the prospect of an unhappy ending, Hertz said.  

"I'd say 50 percent never even give it a thought," Hertz said. "In cases where a couple is breaking up, and one of them has been putting more (financial support) into the house, I ask them, 'What did you talk about?' " before moving in together.

"They say, well, we were going to be together forever, so we didn't talk about it," he said. "It's amazing how people can avoid talking about something difficult."

Galligan and Gugino didn't avoid it. They planned for potential breakup, unemployment and death.

"If the relationship ended, then we agreed in writing to sell the property and to split any loss or gain," Galligan said.

Galligan said he took the steps because he's a real estate agent and often writes about condo development at his Downtown Austin Blog. He sees many unwed couples who are purchasing homes in the area -- or are selling because they're breaking up or in financial trouble, he said.

"The most important decision for us was to purchase a condo that either of us could afford if one of us could no longer make the payments" because of the other's death or prolonged job loss, said Galligan. ...CONTINUED

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