Buying Property With Someone You’re Not Married To? Why the Deed Alone Isn’t Enough
Buying property with a friend, sibling, significant other, or business partner can be a smart investment, but a deed alone may not address the financial and legal issues that can arise between co-owners.
Buying a home with a friend, sibling, significant other, or business partner can be a great way to achieve ownership of real property and build wealth.
Unfortunately, many people focus on the excitement of the purchase and overlook an important reality: the deed only establishes ownership. It does not answer many of the questions that can create serious disputes later.
Far too often, co-owners assume they will simply “work things out” if problems arise. Unfortunately, disagreements over money, repairs, renovations, or the sale of the property can quickly become expensive legal battles.
Many times, parties will buy property while they are in a relationship. What happens when one party needs to move away due to a job or family obligations? What happens when the relationship sours and one party wants “out” but the other cannot afford to buy them out?
A properly drafted Shared Equity Agreement can help avoid these problems by establishing clear rules before the transaction closes.
The Deed Tells You Who Owns the Property, Not How the Relationship Works
Many unrelated buyers believe that once everyone’s name is on the deed, they are protected. While the deed establishes ownership rights, it generally does not address critical issues such as:
- Who paid the down payment?
- What if one owner contributes more than the other?
- Who is responsible for repairs and maintenance?
- What happens if one owner stops paying expenses?
- Can one owner refinance the property without permission?
- What happens if one owner wants to sell?
- How are proceeds divided after the property is sold?
- What happens if an owner dies?
Without a written agreement, these questions often become sources of conflict precisely when the relationship between the owners is already strained.
Mistake #1: Failing to Document Purchase Contributions
One of the most common disputes occurs when owners contribute different amounts toward the purchase.
For example, one person may contribute $75,000 toward the down payment while another contributes only $10,000. Years later, when the property is sold, both parties may have completely different expectations about how the sale proceeds should be distributed.
A carefully drafted Shared Equity Agreement can specifically identify each owner’s acquisition contributions, including:
- Down payments
- Closing costs
- Inspection costs
- Loan fees
- Other acquisition expenses
Without this documentation, proving who paid what can become difficult and expensive.
Mistake #2: Assuming Everyone Will Pay Their Fair Share
Owning real estate involves much more than making a mortgage payment.
Consider the ongoing costs:
- Property taxes
- Homeowners insurance
- HOA fees
- Maintenance and repairs
- Utilities
- Capital improvements
- Allocation of income for tax purposes
Life circumstances change. One owner may lose a job, relocate, or simply stop contributing. A Shared Equity Agreement establishes each owner’s responsibility and creates a system for documenting contributions and reimbursements before disputes arise.
Mistake #3: Not Having Rules for Repairs and Improvements
Imagine that one owner wants to spend $40,000 remodeling the kitchen while the other disagrees.
What happens next?
Similarly, what if the roof suddenly begins leaking and immediate repairs are needed?
These situations often create significant disagreements among co-owners. A properly drafted agreement distinguishes between:
- Routine maintenance
- Emergency repairs
- Necessary capital improvements
- Optional improvements and renovations
By establishing approval requirements in advance, owners can avoid arguments over authority and reimbursement.
Mistake #4: Allowing One Owner to Bind Everyone Else
Many co-owners never discuss whether one owner can hire contractors, take out loans, enter into agreements, or otherwise create financial obligations affecting the property.
Without clear guidelines, one owner’s actions can create problems for everyone involved.
An attorney-drafted Shared Equity Agreement can restrict the authority of individual owners and require mutual consent before major financial or legal decisions are made.
Mistake #5: Having No Exit Strategy
Perhaps the most overlooked issue is what happens when one owner wants out.
People’s lives change. They get married, move for work, experience financial difficulties, or simply decide they no longer want to own the property.
Without an established procedure, the result is often a stalemate.
A well-designed Shared Equity Agreement can establish:
- A buyout process
- A method for determining fair market value
- Deadlines for making decisions
- Procedures for listing and selling the property
- Rules for distributing sale proceeds
Having a predetermined exit strategy can save thousands of dollars in legal fees and months of frustration.
Mistake #6: Ignoring the Risk of a Partition Lawsuit
When co-owners cannot agree on what to do with a property, one party may seek partition. This is an action filed in the Circuit Court and requests the judge to determine the process for selling the property and distributing the funds. Even if one party wants to retain the property, the Court can require that it be sold.
Partition litigation is often lengthy, expensive, and destructive to relationships. Attorney’s fees, court costs, and delays can significantly reduce the equity available to the parties.
Many sophisticated co-owners use Shared Equity Agreements specifically to establish an alternative sale and buyout process designed to avoid the need for a partition action altogether.
Mistake #7: Failing to Address Death and Estate Planning Issues
What happens if one owner dies unexpectedly?
The answer may depend upon how title is held and whether the owners have addressed survivorship rights in writing. Is the property titled as tenants in common or as joint tenants with right of survivorship?
Without proper planning, surviving owners may suddenly find themselves sharing ownership with heirs, beneficiaries, or other third parties they never anticipated involving in the property.
A Shared Equity Agreement can coordinate ownership rights with broader estate-planning objectives and help prevent unintended consequences.
Mistake #8: Relying on Verbal Agreements
Many disputes begin with the phrase:
Memories fade. Circumstances change. Verbal agreements are frequently interpreted differently by each party.
A comprehensive written agreement removes uncertainty and provides a clear framework for resolving disagreements before they escalate.
Mistake #9: Using a Generic Internet Form
Every co-ownership arrangement is different.
The needs of two siblings buying an investment property are different from those of unmarried partners purchasing a residence. Likewise, a vacation home owned by several friends presents challenges that differ from a two-owner arrangement.
Generic online forms rarely address these complexities and often fail to account for Florida-specific legal issues.
An experienced real estate attorney can tailor an agreement to address:
- Unequal ownership interests
- Unequal financial contributions
- Buyout rights
- Sale procedures
- Maintenance obligations
- Estate-planning concerns
- Dispute-resolution mechanisms
- Protection against future litigation
Protect Your Investment Before Closing
A real estate purchase is often one of the largest financial investments people make. When multiple individuals purchase property together, the potential for disagreement increases substantially.
The best time to address those issues is not after a dispute arises. It is before the closing takes place.
At Barry Miller Law, we help clients throughout Florida create customized Shared Equity Agreements that clearly define ownership rights, financial responsibilities, buyout options, and exit strategies. A carefully drafted agreement can protect your investment, preserve relationships, and provide peace of mind for years to come.
Talk With a Florida Real Estate Attorney
If you are planning to purchase property with a friend, family member, significant other, or business partner, our attorneys can help you put the ownership arrangement in writing before problems arise.
Contact Barry Miller Law to discuss a Shared Equity Agreement tailored to your property and co-ownership arrangement.
