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Dear Big Move,
My fiancée and I agreed to buy a house that was more than what we expected to pay, but we both liked it.
We agreed that I would make the mortgage payments, and she would pay the taxes every year. When we bought the house, we decided to pay the taxes separately from the mortgage.
As time passed, I asked her if she was putting money away each month so that when the tax bill arrived she would have enough money to pay the taxes. Her answer was: “Don’t worry, I will have money to pay the taxes.”
But when it came time to pay the taxes she didn’t put any money away. She actually told me that as I am the man, I should pay all the bills.
It caused big problems in our relationship even to the point where she moved out for a year. We got back together with the understanding that I would pay the taxes and mortgage. We have been in the house now for four years, and to this day she has not paid anything, not even a utility bill.
Is she entitled to 50% of the proceeds if we sell the home?
She has her own cleaning business, and is well capable of helping to pay the bills. I have proof that she has not given me any money whatsoever to go toward the bills.
The house is located outside of Chicago.
Frustrated
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
Dear Frustrated,
In a relationship, trust is everything. Whether you trust your partner to stay loyal to you, to honor an agreement, even a verbal one about how you were going to pay for the house. It lays the foundation of what will come when you marry — if you do decide to marry.
So before you think about what happens to the house, perhaps spend some time thinking about whether her telling you that you are the “man” that should pay all the bills is a red flag, particularly given that she is a business owner and has her own income.
Being taken advantage of is not a nice feeling when one is dating, but it becomes a more complicated issue when you are married with kids, and facing bigger bills. The takeaway: always get everything in writing. Verbal agreements are rarely honored in the heat of a divorce.
“In general — and in a perfect world — you and your fiancée would have entered into a written agreement about how the mortgage, taxes, insurance, and repairs for this house would be paid before you bought the house,” Karen Covy, a Chicago-based divorce coach, consultant, and attorney, told MarketWatch. “If you have an agreement in writing everything should be clear and enforceable.”
Marital vs. separate property
If her name is on the title, you own the property jointly, but there may be room for maneuver if you are not married. “She’s going to say buying the house was a 50/50 deal and you’re going to say that’s not true,” Covy said, “so you’ll either have to negotiate some sort of deal with her, that is, pay her something, or fight with her in court to prove your case.”
It gets even more problematic if you’re married. If you are married, your new wife has a stronger claim to half of the profits if you sell the house, assuming it’s deemed marital property either because both your names are on the deed or the property was in some way commingled (if, for instance, you paid for the mortgage out of a joint account).
“Illinois is an equitable-distribution state. That means marital property is divided equitably,” Covy said.
“Pre-marital property is property that is acquired by a couple before they are married,” according to Kiswani Law, which has offices in Chicago and Hickory Hills in Illinois. “In Illinois, pre-marital property is not subject to division in a divorce. Instead, each spouse is entitled to keep their pre-marital property separate from the marital property.”
As you bought the house before you both got married, the house is treated as separate property, and you’re seen as essentially two strangers buying a house together. So you’ll have to go through a partition proceeding, if you both split up, and the court will decide how to divide the assets based on your financial contribution.
After you get married, that property becomes marital property, which means it will be divided between the both of you, which can become tricky.
“She’s going to say the house is marital property because it was purchased in anticipation of marriage, and you made payments on the house while you were married, assuming that’s true,” Covy said. “It will be up to you and your divorce lawyer to fight about whether the house was marital, and how much of the proceeds she is entitled to receive.”
This debacle gives you reason — not that you need one — to sign a prenuptial agreement that spells out each individual’s responsibilities before you get married. Without one, once you sign the marriage contract, it will be too late.
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