Navigating Home Purchase for Unmarried Partners: Strategies to Guarantee Stability sans Marriage Certificate
Navigating Property Ownership for Unmarried Couples: Key Considerations
For unmarried couples, owning a property together can be a significant step, but it also comes with unique challenges. Here are some key aspects to consider when it comes to property ownership regulation during separation or death.
Property Ownership Types
- Joint Tenancy: This type of ownership includes the right of survivorship, meaning if one partner dies, the surviving partner automatically inherits the entire property. However, for unmarried couples, specific legal arrangements are required to establish joint tenancy.
- Tenancy in Common: Each partner owns a specific percentage of the property, which can be unequal. Upon death, the deceased's share becomes part of their estate and is distributed according to their will or the laws of intestacy.
Agreements and Planning
- Cohabitation Agreements: These agreements can outline how property is managed and divided in case of separation. They can also specify that contributions to a property do not automatically grant ownership rights.
- Deed of Trust: This document can safeguard each partner's financial contributions to the property, ensuring fair handling of assets and liabilities during the relationship and in case of separation or death.
- Estate Plans and Wills: Since unmarried couples do not have automatic inheritance rights, drafting a will or creating a trust is crucial to ensure that property is passed according to their wishes upon death.
Legal Protections
- Intestate Succession Laws: In most jurisdictions, if an unmarried person dies without a will, their property will pass to biological or legally adopted relatives, bypassing the partner.
- Community Property Laws: These laws apply to married couples and registered domestic partners, offering protections that unmarried couples do not have.
To navigate these complexities effectively, unmarried couples should consult with legal professionals to establish clear ownership terms and ensure their wishes are respected in all scenarios.
Financial Considerations
- Life insurance policies can be taken out by both unmarried partners to cover inheritance tax for the property, pay the compulsory portion of heirs, or cover remaining financing in case of death.
- Both unmarried partners should attend a consultation appointment to understand the terms of the loan agreement, including conditions for opting out, releases from liability, and early repayment charges.
- Banks do not differentiate between married couples and couples without a marriage certificate when assessing creditworthiness.
- For a notarial partnership agreement with a certain amount of partnership assets, including the house of the unmarried couple, accounting must be kept.
Ownership Clarification
- Unmarried couples can document their partnership before buying a property with a notarial partnership agreement or by forming a civil law partnership (GbR). A notarial partnership agreement clarifies the ownership of unmarried partners and can specify contributions, services, furniture ownership, pension payments, and mortgage liabilities.
- If there are no separate arrangements, the house of an unmarried couple belongs to the person registered in the land registry in case of separation. If the deceased is the sole owner of the property according to the land registry, the surviving partner must move out within 30 days if the heirs make a claim.
- If one partner defaults, the other must continue to pay off the loan. If the financing partner stops paying the installments despite an ongoing construction financing contract, the bank can force the sale of the house or apartment.
In most cases, both partners finance the house or apartment with a joint loan. It's important to note that unmarried partners have a tax-free allowance of only 20,000 € in the event of their partner's death, compared to 500,000 € for spouses.
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- Unmarried couples should consider taking out life insurance policies to cover inheritance tax for the property or pay the compulsory portion of heirs in case of death.
- For a clear understanding of partnership and ownership, unmarried couples can document their partnership before buying a property by creating a notarial partnership agreement or forming a civil law partnership (GbR), which can clarify the ownership of unmarried partners and specify contributions, services, furniture ownership, pension payments, and mortgage liabilities.
