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Why cohabiting couples should avoid mortgages

Minnesota couples who are living together but aren't married may want to reconsider buying a house together. While it may be seen as a step on the road to marriage, the law treats a couple differently when they aren't actually husband and wife. For instance, if the house is sold, both parties may be entitled to an even split of the proceeds even if only one person actually makes payments.

Those who study the issue say that it may be easier if one person is on the mortgage and the other pays rent. If the couple gets married, the money goes to the same place, and if the relationship ends, whoever keeps the house has the benefit of being paid market value rent by a tenant. Regardless of what a couple decides to do, it may be best to treat the transaction like any other business arrangement.

This may mean drawing up a cohabitation agreement that spells out the rights and responsibilities of each party. A cohabitation agreement is much like a prenuptial agreement except it is for those who aren't married. Having such a pact may make it easier for both parties to untangle their financial and other ties if the relationship were to end.

Whenever a relationship ends, it may cause emotional stress that could make it harder to come to a resolution as it relates to property division. If a couple has a cohabitation agreement or something similar, an attorney may be able to review that agreement to determine its validity. Assuming that it is valid, it will spell out who gets a house or other property when the relationship is over. However, if there is no such agreement, an attorney may use existing state law to help an individual obtain a resolution.

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