Avoid misunderstandings: Here's how to buy property as an unmarried couple – and here's what happens if you split up

Buying a property together is a big step that can pose challenges for both married and unmarried couples. Especially for unmarried couples, there are specific legal and financial aspects that need to be taken into account in order to avoid problems later.

Ownership and sharing of the purchase price

Before unmarried couples take the important step of purchasing real estate, they should carefully consider the issue of ownership and the distribution of the purchase price. “Fractional ownership” is an approach in which each partner is assigned a clearly defined share of ownership, as Capital reports in an article.

The respective ownership shares can be determined in two ways. The first option would be an equal share, in which the two partners would each own half of the property – a solution which would make sense if both partners contribute equally to financing the purchase.

Alternatively, the property may be divided based on the financial contributions each partner makes towards the purchase price of the property. This means that a partner who provides more financial resources could also receive a larger share of ownership. This is often advantageous in situations where one partner has more financial resources or contributes a larger share of the funding.

Financing and loans

There are several aspects to consider when financing a real estate purchase. For unmarried couples, one of the questions that arises is whether a loan is necessary and how much should it be. If the couple does not have sufficient equity to cover the costs of purchasing and then maintaining the property, a loan will be necessary.

It should be noted, however, that banks often consider both partners as joint debtors when granting loans. This means that in the event of late payment, both partners are responsible for repaying the loan in full, as the savings bank reports in an online article, regardless of the cause of the late payment.

To minimize this potential burden and prevent potential conflicts, it is advisable to have a written agreement in place. This determines who will repay which parts of the loan.

Insurance in the event of death

Unmarried couples face a particular challenge when a partner dies. Unlike married couples, they do not automatically inherit, but legal succession applies, as vergleich.de reports in an article. This stipulates that inheritance goes to close relatives such as children or parents. If a partner dies and no clear arrangement has been made, the share of the property could pass to those relatives, even if they had nothing to do with the purchase or financing.

To prevent these possible complications, precautions should be taken in the event of death. One possibility is to draw up a will, as vergleich.de explains. This specifies who inherits the property and under what conditions this occurs. Another option, even more restrictive, is to conclude an inheritance contract. This binds partners throughout their lives and cannot be easily changed. Both options provide greater security for the remaining partner and avoid unwanted inheritance constellations.

This agreement provides both partners with clarity and certainty regarding their financial obligations and helps avoid future misunderstandings or disputes.

Settlement in the event of separation

Relationships can end and this can have significant financial consequences, particularly when it comes to shared assets like real estate. To avoid future uncertainty, it makes sense to create a plan for possible separation scenarios. This could be recorded in a partnership agreement in which it is clearly and legally agreed how assets will be treated in the event of a separation, as Hermoney reports in an online article.

Such an arrangement could, for example, require one partner to pay the other in order to obtain full ownership. Another approach would be to sell the property and split the profits. Details such as the valuation of the property, the amount to be paid or the distribution of the sale proceeds must be clarified in advance.

The scenario where neither partner can pay the other or the property cannot be sold should also be considered. One solution could be to rent the property and share the rental income until a final solution is found.

Notarized contract and property registration

Purchasing real estate in Germany, even by unmarried couples, includes legalization and registration of the property. These legally required steps are essential to the legal certainty and transparency of the purchase.

As part of the legalization, a purchase contract is drawn up and certified by a notary. This legally binding document contains all relevant aspects of the purchasing process, including the purchase price, financing terms and division of ownership. The notary, acting in a neutral manner and representing the interests of all parties, verifies the identity of the buyers and ensures that they understand the terms of the contract.

After legalization, the property is registered in the land register. This public register documents all land and real estate ownership in Germany. Registration in the land register finalizes the purchase of the property and makes the ownership structure publicly visible and verifiable.

If the financing of the property is shared by both partners, it is essential that both partners are registered in the land register, as reported by vergleich.de. As an unmarried couple who contribute different amounts of equity to the purchase of the property, it is possible to indicate the ownership shares accordingly in the land register. This means that the ownership relationship can be flexible depending on your mutual agreement – so it could be a 50/50 split, or another split, for example 30 to 70 percent.

Editorial team finanzen.net

Leave a Comment