Unmarried couples must adhere to certain rules as co-ownersResale Homes Report

Q: I have been living with my significant other for a long time and we are considering buying a house together. Since we are not married, how does that affect my rights as a co-owner? What should I be aware of before we buy the house? And what happens if we break up? -- Matthew P., Las Vegas

A: I like your question. This brings up a trend we're seeing in Southern Nevada, and across the country. Housing prices appreciated rapidly earlier in this decade, rising faster than wages. It has unfortunately become more difficult for many people, especially younger and single people to buy a home.

One logical way to achieve the American dream of owning your own home is to share a home and expenses with a roommate. This can be a boyfriend or girlfriend, or even a parent, adult child, friend or relative.

Living with a roommate can make good financial sense. It can be a viable option if you want to move faster on the road to homeownership. Of course, two incomes can afford a larger or better home than one person can alone.

That being said, let's look at the financial issues to consider when buying a home together:

Down payment and closing costs

First of all, depending on the loan program available to you, expect to contribute anywhere from 3 percent to 20 percent of the purchase price for the down payment.

Splitting it would certainly be the easiest, but in most circumstances, one person often has more available cash than the other. Decide how this will be handled upon a sale, maybe paying it back first in the same amount that was paid originally.

Monthly payments

Again, it is typical that the person with the higher income is likely to pay more on a monthly basis. Assuming the two of you are likely to continue sharing the master bedroom, that's no problem. But in roommate situations, consider an equitable split of your housing costs that takes into account which person uses the master bedroom versus secondary bedrooms.

Equity

As your home builds equity over time, determine who will own that equity. Again, splitting it down the middle is always easiest, but if you feel that one person is paying more and therefore owns more, it is important to spell that out ahead of time.

Owning the loan

Although it is typical that those named on the loan are also those named on the title, that does not always have to be the case. I have seen many instances where one party has poor credit and is not a party to the loan. However, interest in the property is deeded to them. The important point that I am emphasizing here is that those named on the loan are responsible for paying it back.

Now let's look at some other issues in making sure both people are protected when buying a home together:

State laws

Note that there is no common law marriage situation in Nevada, though the state recognizes common law marriages from other states. That means laws governing how assets are divided after a marriage don't necessarily apply to unmarried couples who live together for an extended period of time.

Get it in writing

Specify who legally owns the home, either one or both of the people living there; how payments are divided and handled; and how the equity and value of the home will be shared should one or both people move or want to sell the home.

Seek legal advice

As always, my best advice in order to fully explore the legal issues involved is to consult an attorney.

Devin Reiss is the president of the Greater Las Vegas Association of Realtors. To ask Reiss a question, e-mail him at ask@glvar.org. All questions to Reiss may be shortened and are subject to editing.