Since I became a Realtor in 1987, I've had probably 10 conversations with clients who've called asking to discuss buying a house with a family member or a friend. The idea was that if you combine two family incomes into one mortgage, the houses you can qualify for will be much bigger and better. That conclusion was correct, yet none of these people proceeded with their idea.
In some cases, with my help, they simply spent a lot of time talking it through and thought better of the idea. They were all very smart people who understood that the arrangement (or contract if you want to call it that) could never contain solutions for the disagreements that will arise on the most personal of levels. Living this closely together is one thing. Being tied to each other by a mortgage and a deed is an entirely different matter. Throw in hundreds of thousands of dollars to the equation and you're really asking for trouble. They came to realize that the simplest conflict, something as innocuous as "who will take out the garbage?" could easily turn into a hurtful encounter which in turn could fester like a bad sore and so on.
On a number of different equations, home owners have called me to help mediate a property separation. Here's what that looked like:
- two brothers owned and profited from a duplex for 20 years. One day, one brother wanted to change careers and wives and needed his equity from the duplex. The other brother needed the income from the duplex to survive and did not want to sell. This did not end well. They brought in a legal team to sort it out and while the duplex did sell, the only party who made money was the lawyer. One more thing, the brothers are no longer speaking to each other.
- Husband and wife want to divorce and this does not go well. It went from amicable to hostile very quickly. They both wanted to buy the matrimonial home but this became personal and both were determined that the other was not to get it. Solution? They put the house on the market and bid against each other (along with three other buyers). One of them won the deal.
- Young newlyweds buy their first house and willingly accept a few hundred thousand dollars from the son's widowed mom as downpayment. Before closing, when they go to her for the money, she asks to be on title with the two of them. What began as a typical and easily managed husband/wife "joint tenancy" ownership, now became a legal contract between husband/wife on one side and the widowed mom on the other...at least that's what the wife thought. Within a fairly short period of time, when repayment terms kicked in, there was a misunderstanding and the son sided with his mom. Oh boy! That was a sign of things to come and neither the marriage or the home ownership arrangement survived.