Q: My domestic partner of 11 1/2 years and I have split up. We purchased a house in 1999. While I am on the deed, I am not on the mortgage but have been contributing towards the monthly payments the entire time we’ve owned the property.
She wants me to sign a quit claim so that she can refinance the mortgage in order to get a more affordable payment for herself. Am I entitled to anything? Will she have to buy my half of the ownership? Thank you for your assistance.
A: I’m assuming that you and your domestic partner didn’t take the basic, but savvy, step of preparing a business partnership agreement that outlined your financial responsibilities and ownership interests in your real estate property.
While I’m sure you thought your relationship would last forever (who doesn’t think that?), the reality is about 50 percent of marriages end in divorce and it’s likely that domestic partnerships are at least as susceptible to break-ups as traditional marriages.
If you had a partnership agreement, it would have outlined what each of you brought to the purchase of the property, who contributed what, what percentage of the property each of you owned, and what would happen if you broke up or dissolved your partnership down the line. When non-married partners purchase property, I strongly suggest that they invest a few hundred dollars in a partnership agreement that covers all of these issues.
From what you’ve told me, it sounds as though you’re in a pretty good position. You’re listed on the deed, but you’re not responsible for the mortgage. I would suggest that if your partner wants you off the deed, you and she should have to agree on some sort of financial sum that represents your share of the equity in the property.
If you own the property equally, you can ask a real estate agent to give you an estimate of what the property would sell for in the current market. You can even hire an independent appraiser (cost: around $250 to $350) to appraise the property.
Then, subtract the mortgage from the value of the property and include those costs that you would have had to have paid if you and your partner had sold the home. The costs of the sale might include real estate brokerage commissions, transfer taxes, and other fees that a seller ordinarily pays to sell a home. What’s left is a number that you can either split that number in half (or nearly in half, depending if you are factoring in the other costs of sale), or you can subtract the cash that each of you put down on the property and then divide the equity that remains.
This may not be an easy conversation for you and your ex-partner to have, but it’s a necessary one. You should also discuss how the transfer of ownership will take place. I suggest that it happen at the refinancing table. You can find a mortgage lender who will work with you and arrange to have your share of the equity paid to you at the closing, which is where you will sign away your ownership interests in the property.
While you likely didn’t work with a real estate attorney when you purchased the house (that’s the person who would’ve drawn up the partnership agreement), you should consult with one now to make sure that this process goes smoothly and you wind up with everything you’re owed.
May 1, 2008.