When you need to divorce your boyfriend (or girlfriend)…

Millennials and later generations are not getting married at anywhere near the same rate as previous generations. But that doesn’t mean they don’t do almost everything that a married couple may do, including having children and buying property. While our firm does not handle the custody aspects of these issues, we do sometimes lend an assist to family law attorneys for handling the real estate aspects of separation. In Washington, if you’ve been with your person for long enough and meet a few other conditions, your relationship may qualify as a committed intimate relationship (“CIR”), and there are rules associated with such status. I recently gave some advice to a potential new client, and I’m going to copy it in large part here (without mention of any names), as I believe it can assist others in similar situations:

So presuming you two own the property as joint tenants, that means that each of you owns an undivided 50% interest in the property (which just means that each of you owns the whole property, not like a line down the middle of it, but only a 50% interest in its value). If either of you died, their share would go to their next of kin. So if your partner/person/boyfriend/girlfriend (henceforth “partner” to mean all of the above) had a current spouse, it would go to their spouse (unless your partner had kids from a prior marriage, in which case it would go half to their current spouse and half to the kids from a prior marriage). If your partner had a child or children but no spouse, your partner’s interest in your shared property would go to their children. If there’s neither a spouse nor children, then your partner’s share would go to their parents, then to more distant relatives. The only way you would inherit your partner’s half interest in your shared property is if they either left you their half in a last will and testament or if you two created a new deed and added “joint tenants with right of survivorship.”   

At present, if y’all were to break up, hopefully you’d work something out to a) create a partnership agreement for joint ownership as an investment of your shared property OR b) one of you would buy the other one out of the property OR c) you two would agree to sell the jointly held property.

A partnership agreement could provide that one of you can stay in the property but the other one is not abandoning the property and whoever stays with the property agrees that paying the mortgage (if there is one) is sufficient as rent but that the one who leaves keeps 50% interest in the property over time, which would allow you both to build equity even if one of you leaves. If you don’t have that in writing, the law would presume that the interest of whomever moves out basically freezes at the time they move out and any equity that builds in the future goes to the one who stays in the home.

This presumption can create big headaches in terms of proving what your interest is/was worth, especially if you let the property sit for years (and especially especially if your partner continues to pay the mortgage for years and you do not). If there’s no agreement that your share persists and mortgage=rent, they’ll get credit for paying your half of the mortgage which will then come out of your share at the end, and the court generally will NOT offset that with them basically paying “rent” for living in the shared home. In other words, the law DOES NOT impose any obligation for an owner to pay a joint/co-owner rent even if only one of the owners gets to use the property to the exclusion of the other. It doesn’t feel fair or just, but that’s the law, so be careful!

A buyout agreement just means that you two agree on the value of the home and who is buying whom out of the property, and in that case, you REALLY SHOULD get any shared mortgage refinanced to remove the leaving party off of any mortgage loan. So if the property is hypothetically worth $400K, you owe $200K remaining on your mortgage, you could agree that one or the other of you will do a cash-out refinance to remove the other off of the loan and deed, and pay the one who is removed from the property their $100K of equity in exchange for a quitclaim deed removing the leaving partner from title to the property; each side would then get something of equal value (one gets cash equity, the other gets the home, but it’s then encumbered by a higher mortgage). In other words, the remaining owner would have a $300K mortgage (up from the previous $200K mortgage) and sole title to the property after buyout, and the party leaving gets $100K cash.

Note:  the buyout should apply any LARGE contributions made by only one of you to that person’s share. So for a hypothetical example, using the same values as above, if your partner paid a $50k down payment when you bought the home but is the one leaving, when you refinance, it would need to be for $325K (not $300K), and your partner would get $125K of the $200K in equity because they would be entitled to $50K more than you were from the equity.  On the other hand, if your partner gave that $50K deposit and was the one who stayed and bought you out, your partner would need to refi for $275K (not $300K) and pay you $75K on the hypothetical facts above. Thus, you would pull the excess payment off the top of the equity, and then divide the [equity minus prior contribution] evenly.

Sale is really simple. Just split sale proceeds down the middle minus any LARGE contributions made by only one of you. So for a hypothetical example, using the same values as above, but again your partner paid a $50K down payment when you bought the home. In that case, when you sell for $400K, your $200K mortgage would be paid from the proceeds and there would be a net of $200K to divide between you and your partner. Then your partner would get $50K of the remaining $200k as reimbursement for the down payment, and then you two would split the remaining $150k in half, so your partner would get $125K from that sale, and you’d get $75K.

The law does allow for partition which is basically a way to force one of the unmarried cotenants to buy the other one out of the home OR force a sale of the property to allow division of the value of the home if the parties can’t agree about price or who gets to buy the other out. Partition is a court lawsuit and it’s required that the parties pay for an appraisal to determine the value of the property. Once that’s done, if neither party agrees to buy out or let the other buy them out, then the court will order a sheriff’s sale of the property. This is the worst of all options because your shared property is auctioned on the courthouse steps along with foreclosures, and will therefore be treated like a distressed property. Auctioning property off usually brings lower prices, as buyers at these sales are looking for a deal and expect to pay less than the market value of the home because they don’t get any time to investigate condition.

My advice: I highly recommend that y’all decide who gets to keep the property or both agree to sell it before getting the courts involved. While a partition lawsuit is ultimately effective at yanking your interest out of a shared property. Often times breakups make people less rational and even vindictive against their former partners, but the more you both can come at this situation with a fair eye for what ultimately WILL happen and how to make it the best outcome for all involved, the better off all of you will be.