ways that unmarried couples handle "one living with the other, in his/her house" financially?

In My Humble Opinion
1

This situation doesn’t pertain to me personally, but in my circle of friends I have two different couples who are doing this, and in neither case do I feel that it’s any of my business to ask how they handle the finances. That’s where you all come in :stuck_out_tongue:

So, suppose Jack and Jill are both in their late 30’s, both gainfully employed, have been dating for about six months, and with things going great between them, Jack lets his apartment lease run out, and he moves into Jill’s house (which she has owned for five years, and pays a mortgage of $1,000/month).

It only seems fair that Jack would pay something towards the mortgage payment - maybe even his $500/month share.

From day one, what should Jack’s expectation be (if any), with regard to building “equity” in the house, or getting some portion of his money back, if the relationship goes to shit, later on down the line?

A) does Jack pay his $500/month, and then if a year later they go their separate ways, he loses his $6k, and considers it a year’s worth of rent?

B) does Jack pay a token amount (say, $300/month), with the understanding that if the relationship ends after a year, then there will be some arrangement whereby Jill repays Jack his $3,600?

C) Other / something in between?

I know there’s no clearcut black/white, right/wrong answer to this. Just curious if you (or friends of yours) have been in this same sort of situation before, and what “arrangement” may (or may not) have existed.

2

Choice A I am anti-liability

3

8 years living in his house.

I pay nothing to live there, however I buy the groceries and do all the housework; I actually like housework. And I eat the food too. So sue me.

We do not co-mingle our finances at all.

My financial responsibility is paying for vacations. Flights, hotels etc. We’re don’t travel lavishly, and I do like to travel, probably more so than him, so it’s not a burden.

However, that said, we are both legally trusted to each other in the form of living trusts, with each other named as beneficiary, is that the correct term? And that was done mainly for the purposes of medical sorts of things, as I am a widow, and know how that can be important.

4

I haven’t been in the situation but I’d think usually half and half when both people are earning similar amounts and contributing equally in other ways. But if she lived in a big house or just a house in an expensive area and her mortgage was much higher than he would be paying in rent if he didn’t live with her (say he doesn’t care what neighborhood he lives in or about having a big fancy house) then I don’t see why he should pay half. Probably not much more than he would reasonably expect to pay for his own apartment if he had one. Maybe a little more because he does get to enjoy a nicer house even if it’s not that big of a deal to him.

5

I would go with paying 100% of my own mortgage and him paying the utilities. Any maintenance, improvements, or repairs would be paid by me.

6

There should only be an expectation of equity/getting money back if they purchase the house together (or a specific big ticket item–furniture, TV…)

7

In Australia you are considered defacto married after a period of time living together so any capital gain during that period would be shared if you broke up, taking into consideration how much you paid, how much you earned, are there kids etc.

8

I think that period is six months.

9

I think it depends on if J&J see living together as a relatively short phase in which they explore compatibility in preparation for marriage, or if they don’t see this as a permanent relationship at all but living together is easier for now, or if they see living-together-but-not-marrying as the final, stable phase of a likely-permanent relationship.

If they are living together but will either marry or break up within three years-ish, he should just basically pay her rent. It should be some approximation of what renting out a room would cost if they were not romantically involved. They should split living expenses the way roommates would. She should pay 100% of any repairs, upgrades, etc to the house, along with taxes and all that. Within a few years they will either marry or break up, so the amount of actual potential equity isn’t worth the headache, and it’s not like he was building equity before. He can put whatever savings are created by the drop in rent into whatever form he wants.

If this is not at all a permanent sort of thing, they should have the same set-up, because she IS renting him a room.

If they see this is a new, stable long-term thing, that’s different, and really would have to be talked out by the couple. That kind of thing probably needs a lawyer and an explicit agreement.

10

If I were in that situation I’d consider the money well spent. Unless you are getting a contract in writing that your money will be paid back, never go into a situation expecting to be paid back. Even with a contract you may not get your money back anyway.

I’d consider it both “rent” and “price for being with a lovely partner” and if everything went to shit in a year and a half I’d cut my losses and think fondly of the good times.

Also, $500 is a great “rent” for what I presume to be a nice house and a lovely living partner, so there’s literally nothing to complain about in the money department to me.

Paying half per person is what I consider the default “fair”. Anything else must be discussed - “$300 and all the housework” for instance. I’d probably default to the owner paying for house repairs, asking for help if needed.

Really, all money problems in life should be judged by “is it ok if I lose everything I put into this, regardless of what anybody says about getting it back?”. If it’s ok with you, do it.

11

I can tell you how my fiance and I do it:

When we met, he owned a house. I didn’t, but was looking to buy one. When we decided we wanted to live together, it made sense to move into his house. We agreed it was not fair for me to pay half the mortgage payment when he is the one building equity, so I pay $300/month on the mortgage/property tax/insurance bill, and he pays the other $800. We each pay half the utilities, but when repairs and improvements are needed, he pays for the materials (although I often do half the work required, like painting or planting).

We also agreed that this was a temporary situation. We agreed that once we had lived together for 6 months, we would discuss a new arrangement. That date came and went in April. At that point, we agreed we wanted to get married, and that we would refinance the house so that it belongs to both of us by the end of 2013. When we refi, I will pay in an amount that is equal to what equity he already has in the house, and we will own it jointly.

I made it very clear from the outset that I could not indefinitely live in and contribute toward a place where I could not have an ownership stake. Women in non-marriage domestic relationships often end up getting the short end of the stick that way. But it didn’t make sense for us to immediately own a place together, because we moved in together pretty quickly, and wanted to be prudent about premature financial entanglements. The compromise we struck has worked out very well for us both.

We are both 36, both have significant assets of our own.

12

The parties involved just have to be sure the terms are clearly understood, preferably written down. This situation is the source of a high proportion of “Judge Judy” episodes. :slight_smile:

13

I work for a family law attorney, and I have seen this kind of situation play out when there’s a broken engagement or breakup. People often get screwed out of money they contributed towards a mortgage, and it can be very difficult to get it back through the legal system. I personally wouldn’t go into that kind of situation without getting my name on the deed or some kind of written agreement in case the relationship goes south.

14

I am a lawyer and used to do family law. I knew that it would be a royal PITA, even with a written agreement, to get back “my share” of money paid toward a house solely in his name. After all, it costs money to hire a lawyer and go to court to enforce such an agreement. Furthermore, I knew it would be a not-insignificant hardship for him to come up with the money in cash. This is why we compromised, and I paid less than half of the cost of the mortgage, etc. in “rent.” The discount was in exchange for me releasing him from any future claim. It worked well as a short-term solution, until we were sure we wanted to own property jointly.

15

We are still working it out. So far I write her a check each month and we split some if the expenses. It was her house and she makes more than me.

16

I’ve never been in this situation, but my dad was in a similar situation for a while.

I figure that a relationship before marriage is just a trial, and really finances are separate things. Any amount of money you give to another person for whatever reason, while in a relationship, should be considered a gift or whatever. Basically, you aren’t entitled to anything.

Once married, and possibly engaged, I think that finances intrinsically become entangled and people have a right to get back what they’ve put into the marriage under most circumstances. So if people get a divorce after a year or two together, things should get split up, someone might owe someone else money etc. But if it is just dating, then no I don’t think its fair to expect (or even want) your money back that you paid to live with someone or any other money paid.

17

I think that choice A is the only sane one.

My husband and I did cohabit before marriage, but we were engaged and had a wedding date and took it for granted that our finances would soon be completely commingled, so we didn’t sweat the details. He moved into my house and I paid the bills there, while he renovated his house for us to eventually move into.

18

Given the outline of the OP: option A. Someone is a homeowner, the other is a boarder who carries none of the risks of home ownership and thus is entitled to none of the benefits.

Now, that’s not at all how things went down for me and mine. I had an apartment, she was moving back to her mom’s for financial reasons. Since I had the means to pay for the apartment and originally intended to live on my own anyway, she and her son started out as occasional overnight guests (my kids were there sometimes too) and eventually morphed into permanent guests. We ended up married before stocking the kitchen became a potential concern. I can’t imagine being in a live-in relationship with someone for more than a year without things moving toward breakup or marriage. I’m sure lots of people manage it, but personally I need more definition than that.