Financial Opinion wanted

8/29/2009 5:12:28 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	I have a friend who recently moved in with her boyfriend. He wants her to pay half of the living expenses: utilities, food, mortgage. She asked my opinion. My first words were, "You need a cohabitation agreement... to protect both your assets and establish financial responsibilities." She pressed for what I thought was fair. I replied that ongoing expenses: water, cable, electricity, gas, should probably be split 50/50: on the assumption that neither uses an excessive proportion. But, the mortgage is another issue. See, my friend would not participate in equity changes as she is not on title. Even if their cohabitation agreement would have her share in equity changes, she could not recover any profit until the property is sold. Sucks if she moves out. OTOH, living there free isn't fair to him. I've suggested that, until she is on title, she contribute half the interest expense as "fair". What do others think? My personal view is a bit different: the house costs me the same whether I have a room mate or not, and I participate fully in equity changes. Additional utility expenses are minor. I would not expect anything, but expect my home not be trashed. IOW, she'd pick up after herself. Of course, I'd expect to be able to kick her out on two weeks notice if things don't work out, and allow an additional two weeks to remove her stuff. After one or two years of positive cohabitation, a modification would be called for, or a marriage contract if we were marrying which would readdress who contributes what and who shares in what.
8/29/2009 5:23:56 PM	Financial Opinion wanted
rcpilgrim Gulf Shores, AL age: 36	Olde School, If two people move in together then they should split the bills. Whoever owns the house gets the advantage of positive equity. It's their house! If you have to sign a "Cohabitation Agreement" something is wrong with the relationship. It's not a prenup, you're not married, you're just boyfriend/girlfriend living together with each other's furniture. It's not a rental contract either. Where is the love for each other in this arrangement?
8/29/2009 5:25:40 PM	Financial Opinion wanted
lovethelake17 Henderson, NV age: 50	No, Oldeschool is right. If she gets no gain from paying half the mortgage, it is unfair to do so. She should pay him rent, in which case, he has to show it as income on his taxes. As for half of everything else, that makes sense. Although I do wonder, if they're in a relationship, then perhaps the more fair thing to do is to do it by percentage. I assume there is income disparity. edit to add: so then, what you're saying, oldeschool, is that she should not pay half the mortgage, but a percentage? [Edited 8/29/2009 5:30:58 PM PST]
8/29/2009 5:27:28 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	Quote from rcpilgrim: Olde School, If two people move in together then they should split the bills. Whoever owns the house gets the advantage of positive equity. It's their house! If you have to sign a "Cohabitation Agreement" something is wrong with the relationship. It's not a prenup, you're not married, you're just boyfriend/girlfriend living together with each other's furniture. It's not a rental contract either. Where is the love for each other in this arrangement? Well, in Washington State, you are considered married if you live together, and it's a community property state, AND stuff you had before you met can STILL be assigned to the other party in a breakup, so... The problem I have with a "significant other" contributing toward equity in a home she does not have an ownership interest in is that it's like "renting to your wife, and gaining the benefits of ownership" -- it's not fair. If the "significant other" contributes toward housing, she should only contribute toward that part that does not increase equity for the owner... otherwise it's too much like landlord/tennant -- a non-equitable relationship.
8/29/2009 5:31:29 PM	Financial Opinion wanted
wolfmanart Minneapolis, MN age: 59 online now!	I think what she should do is charge a flat rate amount monthly and retain her rights. That way everything is settled upfront and all is fair. However if they decided to get married then that may be different. I would think 30 days notice would be more reasonable
8/29/2009 5:32:38 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	Quote from lovethelake17: No, Oldeschool is right. If she gets no gain from paying half the mortgage, it is unfair to do so. She should pay him rent, in which case, he has to show it as income on his taxes. As for half of everything else, that makes sense. Although I do wonder, if they're in a relationship, then perhaps the more fair thing to do is to do it by percentage. I assume there is income disparity. Yes, but not the way you think: she has almost sold a home she can't afford, but collects blended spousal/child support, and us barely employed. He has high earning power, but is currently underemployed and burning through savings. I dunno about expenses split according to income... if assets are split 50/50, expenses should be split 50/50. If expenses are not split 50/50, then neither should assets if they split up. Of course, the only asset is the house, and it's only in his name.
8/29/2009 5:36:13 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	Quote from wolfmanart: I think what she should do is charge a flat rate amount monthly and retain her rights. That way everything is settled upfront and all is fair. However if they decided to get married then that may be different. I would think 30 days notice would be more reasonable Yeah, but it makes a "significant other" a tennant... hardly a "trusting, loving" relationship. I'd not charge anything, encourage her to build up some emergency savings, and agree to revisit the contribution ratio in a year or two, or if they get engaged. I would be guided by having my significant other move toward the same kind of short-term financial stability I have, before expecting her to contribute much toward non-equity building expenses. There's a significant fixed cost to utilities, and an additional person doesn't suddenly double their expense. IOW, if she wasn't there, he'd have to pay the same anyway, so why "nickel and dime"? House equity, and what builds it, is a different story.
8/29/2009 5:37:17 PM	Financial Opinion wanted
lovethelake17 Henderson, NV age: 50	True, assets should not be split 50/50 in that case. So not only are they living together because they're together, but they both need the financial assistance each can give the other. That might make it a bit messy. I think everything but the mortgage is as you suggest. But the mortgage thing is problematic. She won't get any gain and if things go bad, she may feel really bitter about that. good point, oldeschool. Revisit it if it becomes more serious. And it would be more usual to pool their incomes together if they become that serious. It becomes what 'we' make, rather than what each of us makes. [Edited 8/29/2009 5:39:31 PM PST]
8/29/2009 5:37:53 PM	Financial Opinion wanted
rcpilgrim Gulf Shores, AL age: 36	Quote from oldeschoolcharm: Well, in Washington State, you are considered married if you live together, and it's a community property state, AND stuff you had before you met can STILL be assigned to the other party in a breakup, so... The problem I have with a "significant other" contributing toward equity in a home she does not have an ownership interest in is that it's like "renting to your wife, and gaining the benefits of ownership" -- it's not fair. If the "significant other" contributes toward housing, she should only contribute toward that part that does not increase equity for the owner... otherwise it's too much like landlord/tennant -- a non-equitable relationship. This is pretty much what I was intending to get across. If she wants to financially gain through the mortgage she needs to be entitled on the mortgage. I own my own home and don't know if that situation came up how I would handle it. I already have a considerable amount invested and have built up even more in equity. I'm not sure what laws cover that. Where I live we have very different "Common Law" laws.
8/29/2009 7:08:46 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	Quote from rcpilgrim:"This is pretty much what I was intending to get across. If she wants to financially gain through the mortgage she needs to be entitled on the mortgage. I own my own home and don't know if that situation came up how I would handle it. I already have a considerable amount invested and have built up even more in equity. I'm not sure what laws cover that. Where I live we have very different "Common Law" laws." Here, if she moves in, half of everything you own is hers unless you have an agreement that spells out who's is who's and it's worded properly and a judge agrees when you split. Oh, and if she doesn't work, when you split, you will pay her lawyer as well as yours. Oh, and a judge can award her stuff that was yours before you met anyway. So, here, a co-habitation, or prenuptial agreement isn't a guarantee. It's a "maybe". Many men here are very, very gun-shy about any sense of permanence in a relationship if they have significantly more than their partner. [Edited 8/29/2009 7:08:57 PM PST]
8/29/2009 7:30:39 PM	Financial Opinion wanted
thedetoxnurse Sanford, FL age: 51	If you let someone live in your house, and he picks up residency for over 30 days, if he doesn't pay his part of the bills, it doesn't matter to the courts, and you have to go through the process of evicting him which takes time, so forget it, I wait till I get married again before I live with someone else, and then he can be the provider and pay all the bills.
8/29/2009 7:56:32 PM	Financial Opinion wanted
tryagaindj68 Evansville, IN age: 41	If she was paying $500 a month for her place before they moved in together, it stands to reason she could afford that much toward his mortgage. It's sad to think that people have to protect themselves from those who claim to love them, but I guess that's life nowadays. If I didn't feel I could trust someone, I wouldn't marry them.
8/29/2009 7:58:50 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	Quote from thedetoxnurse:"If you let someone live in your house, and he picks up residency for over 30 days, if he doesn't pay his part of the bills, it doesn't matter to the courts, and you have to go through the process of evicting him which takes time, so forget it, I wait till I get married again before I live with someone else, and then he can be the provider and pay all the bills." Unless you have a cohabitation agreement or lease. Which is why they are important to protect the owner. I know of a family who returned from a 5 or 6 week vacation to find someone had broken into their house, was living there, and they couldn't get rid of them without formal eviction proceedings!
8/29/2009 8:07:15 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	Quote from tryagaindj68:"If she was paying $500 a month for her place before they moved in together, it stands to reason she could afford that much toward his mortgage. It's sad to think that people have to protect themselves from those who claim to love them, but I guess that's life nowadays. If I didn't feel I could trust someone, I wouldn't marry them." It is sad. I had a marriage contract which had us separate as to property and that the household expenses would be divided proportionately according to income. If one party did not work they could discharge their responsibility in the home. Well, my then-wife never lifted a finger. I accepted this, cooked, cleaned, ran the errands as well as worked. Eventually, with two kids, she was "overwhelmed", so I hired a maid/nanny -- I was making good money. My then wife then started actively destroying the house and would not correct the kids when they followed her lead.] That's when I said "No more!" and made it clear there would be no sex until she cleaned up her act and stop trashing things. Well, she didn't, so "we didn't", she cheated, I filed for divorce. I hoped I could get an offset for her not honoring the marriage contract since I could not afford to buy out her half of the house for the kids, but the court would not recognize it. I lost the house to her, and most of my retirement fund suing her to pay the mortgage she was ordered to pay. Eventually, I forced sale of the house. I will accept a lot, and contribute more than half, but I do not take kindly to being shafted, especially when the law supports the one doing the shafting, despite clear contracts as to responsibilities. IOW, I'dve accepted a 50/50 split as fair even if she never did any housework. But for her to actively destroy what I provide, and me not get redress was over the top for me.
8/30/2009 4:15:29 AM	Financial Opinion wanted
itsclear Minot, ND age: 47	I would say she asked the wrong person for their opinion you carry way to many issues from your life forward If she is not willing to split expenses thus reducing HER cost of living Then Why should he split his equity? he has been building that long before she showed up Life is about trust, relationships are not contracts!
8/30/2009 6:09:40 AM	Financial Opinion wanted
susansheart839 Port Saint Lucie, FL age: 61	Having just gone through this, here is what happened to me in divorce court. A little history beforehand, though: I sold my home in Los Angeles and bought a home (cash outright) here in Florida. The agreement was that the home would always be mine and would stay under my name only. Within one year of moving to Florida, we got married. Fade out ... and five years later, he is demanding that I give him the house because he is disabled (is being an almost functioning alcoholic considered disabled???) My instincts were right when I told him I would not do a mutually agreed upon divorce settlement without advice from counsel. I got the biggest shark female attorney I could and because of that, I was able to keep my only asset (house). If your friend is moving into her boyfriend's house at his insistance, I believe she should not have to pay any rent. He had the mortgage and associated costs before knowing her. An agreement should definitely be made up before she moves in stating that she will not claim on his house if they should break up or if he should die while they are together. Also, she should not have to pay insurance or property taxes or upkeep and maintenance costs on the house. All other bills should be paid by the percentage of income received by each party, not 50/50. If she makes more salary than he does, then she should pay more and vice versa. Bank accounts should NEVER be jointly shared and what's his is his and what's hers is hers until the day they get married, after which it's a 50/50 split. P.S. Don't get an animal (dog or cat), it's hard to split them down the middle!! Ain't love grand???
8/30/2009 8:07:46 AM	Financial Opinion wanted
wolfi Albuquerque, NM age: 44 online now!	Quote from rcpilgrim: Olde School, If two people move in together then they should split the bills. Whoever owns the house gets the advantage of positive equity. It's their house! If you have to sign a "Cohabitation Agreement" something is wrong with the relationship. It's not a prenup, you're not married, you're just boyfriend/girlfriend living together with each other's furniture. It's not a rental contract either. Where is the love for each other in this arrangement?
8/30/2009 8:17:13 AM	Financial Opinion wanted
aeacus Dundalk, MD age: 45	Quote from rcpilgrim: Olde School, If two people move in together then they should split the bills. Whoever owns the house gets the advantage of positive equity. It's their house! If you have to sign a "Cohabitation Agreement" something is wrong with the relationship. It's not a prenup, you're not married, you're just boyfriend/girlfriend living together with each other's furniture. It's not a rental contract either. Where is the love for each other in this arrangement? Yep, Yep...I concur.. People always say things are/should be 50/50...
8/30/2009 1:37:58 PM	Financial Opinion wanted
oldeschoolcharm Monroe, WA age: 47	Quote from itsclear: I would say she asked the wrong person for their opinion you carry way to many issues from your life forward If she is not willing to split expenses thus reducing HER cost of living Then Why should he split his equity? he has been building that long before she showed up Life is about trust, relationships are not contracts! 1. She would not be reducing her cost of living: his mortgage alone is almost double her's, which she really can't afford. 2. Unfortunately, in WA, once assets are commingled, they are split equitably, which generally means equally. It is not in his best interests. Even if they have a cohabitation agreement, he is at risk for losing half the equity in his home: she has kids, and they need support, and so "the kids best interests" and all that. Ideally what's his remains his until she contributes toward it (which is fair, but counter to WA law), and she should not contribute toward it until her financial stability matches his: the problem is that she needs liquidity and not ill-liquid equity in property. As for ongoing expenses, splitting them 50/50 is fair (and in her budget). That can include part or all of the mortgage interest, but no gain in equity. Personally, I would not expect her to pay more than the incremental increase in costs and not share in any equity change. If she desires to share in the house equity, but retain liquidity, what they should agree is for her to set aside funds toward it, but keep them liquid. At such time when they decide to make the relationship permanent, with equity sharing, she should transfer those funds to him and share proportionately in the equity change since she moved in based on that contribution. That way if the house value drops she has not put her liquid funds at risk, if it goes up, she shares in the gain with him. Basically, if the relationship proves stable, she can back date her contribution toward shared equity. Further, if she does not make that contribution despite a fall in equity, she demonstrates that she is not willing to endure bad times with him. The risk to him is her keeping her money, then sharing in the equity increase, and cashing it in by dumping him. No worse than her contributing toward the mortgage from day 1. The risk to her is him dumping her if she doesn't share in the equity decrease. Seems fair to me. The problem here is the law: in WA, if she lives with him, she gets an "equitable" share of commingled asset, regardless of her contribution, where "equitable" is determined by need and not contribution. A cohabitation agreement that is fair and trumps the law would be difficult to come up with, though.

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