My fiancé and I bought a home together. The mortgage is in my name only. The title is in both of our names showing us as a married couple though we are not. The application for the deed showed us as each being single. We didn't pay it any attention b/c we expected to get married. She came to the table with $10,000 and I did as well. My $10,000 went into closing costs and some renovations on the home. Her $10,000 went towards furniture and some renovations on the home. Her parents gave her $20,000 of which she gifted to me and had to sign a gift letter addendum. We used the $20,000 as a down payment. We did not originate any contracts between us as we expected to be married very soon. Things don't seem to be working out. If I chose to leave her the house, what am I entitled to? Vice versa?
Under Michigan Land Title Standard 6.2, what you appear to have at this time is a tenancy in common. That means that, if either one of you die, then property would need to pass through probate to your devisees under a Will, or to your heirs under the intestate code, if you do not have a Will. That means that in the event of a death, you would likely not own half of your house.
You have a bit of a legal mess, and a large part of that is of your own making. I am not sure what you do with the $20,000 from her parents, but I would say that, taking that out of the equation, you each would be entitled to a 1/2 interest in the home. The equities of the situation would appear to be in her favor, in light of the gift. But that is if this were to go to a court to straighten out. It is not in either one of your interests for that to happen.
Because your name is the only one on the mortgage, if your "partner" buys you out, then you are still liable on the debt, and it could effect your credit rating if she ever defaults on payments. In either event, it would be considered part of your debt and would count against you in terms of securing additional financing. If you buy out your "partner," then you would eliminate that concern, and your biggest issue would be arriving at a fair price.
I would suggest that the renovations on the home boosted the value, so in a sense, if you buy her out, the higher purchase price would reflect the value (or at least 1/2 of the money that was "invested" by her parents.) If she got the furniture as well, that would probably be a very reasonable compromise.
If you want OUT of the house, then I would make it easier for her to buy you out, but I would insist on her refinancing, so you are not stuck with the debt and negative credit effects.
This would need to be handled VERY delicately. An attorney might be able to help if you both agree on having someone assist you in resolving this. If you cannot agree, however, you would probably both need your own attorney.
This is probably a good lesson to you on how NOT to do things, in the future.
James Frederick
