The situation: two mature friends are discussing moving in together, and how they should handle their living expenses has become a somewhat…divisive…topic. Their current situations:
She is a 58 year old widow living in a ordinary three bedroom house in a nice suburb. She has a fulltime job, though has been thinking of cutting back to part time within a few years, maybe. She thinks she has retirement needs in hand. She has two living children, both married and living independently in other states, all on ordinary good terms. The house is completely paid for (she used some of her husband’s insurance to pay it off) and she pays only utilities, about $4k annual in property taxes, uses a lawn care/snow plowing service, and of course has the usual repair/replacement costs. (Got a new roof two years ago, had some sizeable plumbing stuff done the year before that.) Let’s call her Betty.
Dave is 62, been divorced for more than ten years, has a single son who he’d paid child support for up through college (graduated a few years back, now employed and on his own.) Dave is employed full time, plans to keep working past 65 to bolster his retirement savings, though he has some medical things that could change that. Now he is living in an apartment for $1600/mo.
I don’t know details of eithers current income, but they both seem to have comfortable life styles – no stress over bills, take vacations, some indulgences.
So, the “obvious” plan was for Dave stop renting and move into Betty’s house, and Betty was fine with that; she likes her house and neighborhood and didn’t want the disruption of moving. They quickly agreed that they’d split living costs ‘fairly’ – the ‘problem’ was that it turned out that they had different assumptions on what ‘fairly’ was.
Betty thought that Dave would give her the $1600/mo he was currently paying, and she would continue to pay taxes/repairs/utilities/cable/lawnservice/etc. In addition they would split grocery bills, and each pay their own personal expenses for clothes/hobbies/entertainment/car expenses’ whatever.
Dave thought he would pay half of the on-going bills: groceries/utilities/lawn service/etc. but not ‘significant’ repair/replacement costs. The house is in her name, she plans to leave it to her children in her will, and why should he pay for something like a furnace replacement? She’d had the use of the old one for twenty years or so before they even met and the vast majority of a new furnace’s value would just go to increase the value of what her kids inherit.
Betty thinks he would be sort of free-loading off her if he got the use of her house by paying nothing more than the immediate on-going costs. He thinks she is acting like a landlord, wanting to grub the maximum rental cost even though there is no rent or mortgage to be paid by her. Also, he says, if he moves into her fully furnished house, he will have to do something with his own furniture. Sell or store or give it away, and what if they split up in a year or two? He’d have to replace everything.
I don’t think either is trying to ‘profit’ off the other, they just disagree over what ‘fair’ is.
Both are wrong, Dave shouldn’t be paying 100% of the rent he’d give a private landlord but he should definitely be paying more than just 50% of ongoing expenses. I find both positions selfish.
Something like a token rent, and a slightly higher weighting for ongoing expenses for Dave would be better.
Significant major upgrades to the house should be handled by Betty.
I think there are a lot of subtexts going on here. Are they in a romantic situation, or does one hope so and the other isn’t interested? If the latter, it’s probably not a good idea to move in together; it will not end well.
It might be easier to justify in Dave’s eyes if Betty still had a mortgage. He wouldn’t expect her to pay the mortgage, property taxes, and upkeep costs while he lived there rent-free.
So why then should Betty be penalized if her mortgage is paid off? Dave should still be paying market value or close to market value to live there. And if $1,600/month what he was paying in rent before, that seems like a good starting point to negotiate from.
So Dave pays Betty rent, along with half of the ongoing expenses like utilities and groceries, while Betty pays for upkeep, repairs, and property taxes. (The OP stated that Betty was willing to pay for utilities if he pays rent to her, which seems very generous to me.)
It’s also good to keep in mind that by letting Dave live there, Betty is forgoing having another paying renter instead (i.e. a renter with a lease).
Lastly, if Dave has to rent a storage unit for his stuff, Betty might consider deducting that cost from his rent. Or let him store it in the basement for free.
If they fundamentally disagree on what is fair to this level, they shouldn’t live together at all.
If this doesn’t answer the OP, Dave should pay rent, probably not the entire $1600 but a significant fraction of it like maybe $1200 and half of utilities since utilities will increase. Betty covers property tax and all maintenance. Groceries can be roughly split.
I moved into my partner’s house seven years ago. Coincidentally, my previous rent had been $1600/month, utilities included, so that’s what I paid my partner. We split personal expenses like groceries.
A few months ago, noting that utility costs were going up, I offered to increase my monthly payment to $2200. She was pleased with that.
I wonder if the market conditions in the subject area are a factor. Around here (SF Bay Area), property values have been going up rapidly for decades. Every dollar spent on improvements earn a threefold return, so my partner’s equity is building very substantially.
It sounds like they should not be considering cohabitation.
Our view doesn’t matter of course. But here’s my view. They arrangement should benefit both. Dave should pay a little less than he was paying before, and that amount is more than Betty had before. Both come out ahead by moving in together. Any attempt to work it out to the penny is doomed and counter productive. Assuming they’re in a committed relationship, it should be along the lines of “from each according to their ability…” I’d say roughly $1000 per month and half of the utilities and taxes. Unless those are significant (over $600), then less per month.
Betty’s expectation impresses me as more reasonable than Dave’s. As others have suggested, maybe reduce the rent a bit. But he sure comes across as a freeloader.
I’d strongly favor some sort of standard recurring payment, over trying to split/negotiate each utility/grocery bill. I also would look into what type of “lease” would give Betty the most protection should she eventually wish to “evict” Dave.
I’d ask Dave why it isn’t sufficiently “fair” that he get to pay a reduced rent for a larger nicer place? Looks to me that, instead of fairness, he is looking for a bargain. Betty is not rich, but she does have a significant asset - the paid for house. Why is it not fair that she derive some benefit from that? What is Dave bringing to the table that makes it fair that he benefits from Betty’s lifelong financial habits?
These are just 2 friends - non romantic - who are considering becoming roommates? What do you consider their motivations? Company? Economic? Other?
Amen to this. If they start out with this level of disagreement, how will they deal with the others that come up? For instance, what happens if one of them falls ill? Assuming it’s Dave, is Betty going to take care of him or allow caregivers in her house? If one of them wants a pet and the other one doesn’t?
Also (here in CA at least) tenants have some ironclad rights. If the SHTF, is Dave considered a tenant? If Betty decides she wants him out of there, what hoops does she have to jump through to get it done?
They’d be better off establishing a traditional landlady-tenant relationship with a written, detailed lease.
Dave’s position is completely unreasonable. His contribution is simply half of the monthly bills/taxes/food? If you live there either you pay upkeep or you pay rent so the landlord can pay upkeep. I don’t get the comment about the furnace. What does the old furnace have to do with getting a new one? “I didn’t get to use the old furnace” sounds like weak logic to avoid paying. In any case at 58 and 62 there might not be much furnace value to inherit.
No kidding. Wait until they get to the important stuff like who unloads the dishwasher.
$1600 is what Dave pays for the exclusive occupation of an entire apartment. That’s not what he’s getting here, so there’s no reason why $1600 would be a “fair” contribution from Dave.
It seems clear that this couple are keeping their financial and property affairs separate — Betty owns the house and intends to leave it to her children. Dave is not getting a share in Betty’s house; he is getting accommodation in Betty’s house.
So:
Maintaining the house is Betty’s responsbility; it’s her house. It is unfair to expect Dave to pay for this.
Groceries, power and probably things like cable/streaming services are things they consume jointly and it would be fair to split costs like that 50/50.
The amount Dave should contribute towards his accommodation should be related, not to the cost of renting an apartment, but to the cost someone would pay to live as a boarder renting a room in a house of this kind in this neighbourhood.
I’m going to write my opinion before reading anyone else’s.
First thought: A plague o’ both your houses! Don’t move in together!
Normally landlords make a profit off their rental property, so expecting him to pay the same amount doesn’t seem fair.
I also can’t agree with Dave’s position. He would be getting a free ride by getting the benefit of Betty’s capital investment over the years. He should be paying some additional money per month because the upkeep of a house includes expenses such as furnace replacements.
Fair is somewhere in the middle. Does his current rent include utilities, cable and such?
Yeah, I think both are being a little unreasonable. What Dave is paying now for his apartment is irrelevant. What they should look at is market rent for a similar SF home in this neighborhood. You can look up asking rents on Zillow, or ask a realtor or appraiser friend to determine market rent.
Depending on location, it could be a lot or a little. He should pay half of the going market rent for the house, plus half of utilities, groceries, etc. Taxes and maintenance are Betty’s responsibility.
What Betty could get from rent seems irrelevant, she has shown by the fact she has not done so that she is uninterested in a private tenant, and Dave should not be judged on that scale. Betty’s motivation seems to be having a companion she likes right there for company. Dave has shown he’s willing to pay $1600 to a private landlord, he should pay some percentage of that.
Yes, this. The “fair” arrangement is whatever the two of them mutually agree upon before they enter into the arrangement, and if they can’t agree, then they shouldn’t be moving in together.
If they do agree on it, any arrangement at all can be “fair”. If Betty hates doing the dishes so much that she’s willing to let Dave live in the house in exchange for nothing but doing the dishes, then that’s her choice. If Dave’s so happy to be there that he’s willing to cover 100% of all of the housing-related expenses, then that’s also fair. And if one of them makes a super-generous offer but the other still doesn’t like it anyway and refuses, that refusal is also fair.
That’s actually the crux of it. All of us are in pretty close alignment on what we think is fair but neither of them will be won over by showing them a consensus of a bunch of internet people. They are so far apart on what would make them happy that there will likely always be resentment.
Agreed. But I will say that Betty’s proposal seems a lot closer to a fair solution than Dave’s.
And while I also like @Procrustus’s point above that the arrangement should be structured to benefit both of them, I would hope that they would come to an agreement closer to Betty’s proposal than Dave’s. Dave seems to be completely unreasonable here.
These individuals, while aged, are not mature. IMO, maturity implies a better idea of ‘fairness’ than either of them is displaying. I reject the hypothesis out of hand.