Cohabitation ownership (“co-ownership”) occurs when two or more unmarried people purchase a property together.  Sometimes they are romantically involved while other times they are purely platonic roommates looking for an affordable housing option. One of the key reasons is to better qualify for financing. In 2022, unmarried couples represented 10% of home sales nationally, and 9% in Virginia.

If you have clients who are potential co-owners, how can you, as an agent, better serve them? There is very little case law on the division of property for unmarried owners and Virginia does not recognize common law marriage. While the co-owners’ situation may not be a problem currently, it could certainly become one in the future if there is a falling out or one of the co-owners dies.

Another thing to watch out for is what the type of tenancy the co-owners will take ownership by: will they be joint tenants or tenants in common? This is something which is important if one of the co-owners dies. The co-owners should talk to an attorney about what these tenancies mean and what situation is best for them. It is certainly not to discourage them from buying together, but they should be making an informed decision knowing all the implications.

The parties should hopefully be able to agree on what will happen to the property before they purchase it, because it may be unlikely that they will when things have gone sour. If you have co-owners looking to purchase, please have them consult with an attorney to discuss the implications of title, death, disposition, use, etc. and hopefully draft an agreement. While this is not necessary for them to purchase, it will certainly save them a lot of heartache and money in the future.

Why is having an agreement so important? If the parties do not have an agreement between them as to the use, disposition, or inheritance (among other things) then the judicial system will come into play if there are any issues. A fair warning to the future co-owners should be that if they cannot agree on what should happen with their property now, then a court will for them later, and they may not be satisfied with the results.

To better serve your future co-owner clients, please refer them to an attorney. If you’d like to learn more about cohabitation, you can check out this recent episode of the Caveat REALTOR® podcast.