Condos Between Friends

Patrick O'Connor
Express
Friday, March 18, 2005 10:40 AM

Faced with the same sticker shock that overwhelms many first-time homebuyers, Ddeniz Alpsar decided to partner with a college friend to buy his first condominium.

Now, after a brief search, Alpsar and his friend, Masato Nakagawa, are about to close on a two-bedroom unit in Columbia Heights.

With the sale, Alpsar and Nakagawa will join a small cross-section of Washington-area residents who have chosen to partner with friends or co-workers to buy homes in order to split the costs involved and, in turn, get a little more for their money.

"I would rather go in with a friend and live somewhere I want to live," Alpsar said of his decision.

The region's soaring home values have made it much harder for many younger residents to afford their first home. Buying with a friend or co-worker gives single people an easier way to manage the costs of property ownership without compromising on space or location -- and without pairing off with a significant other.

Real-estate agents in the District and Northern Virginia suggest this is still a relatively new trend, but that it promises to expand if home prices continue to rise at their current pace.

Blake Gwinn, an agent with Long and Foster's Friendship Heights office, said it is very common for unmarried couples to buy together, but he has yet to see any friends make that commitment.

"People are more apt to do it as a romantic couple," Gwinn said. "It's ironic because friends are sometimes more stable than romantic couples."

Joining Up. Mark Sapnar and Mike Trupiano, two friends from college, moved down to the Washington area from Boston about a year and a half ago with the intention of starting a small business together. They were looking for an apartment that could serve as both a home and an office space, and immediately decided to buy after discovering the region's high rental prices.

The two young business partners looked at properties throughout Virginia before eventually settling on a townhome in Tysons Ccorner that was still under construction. They quickly discovered that buying with each other had definite benefits.

"It certainly afforded us a nicer place than we could buy on our own," Sapnar said. "I don't think either of us could have afforded to live in a nice, new place."

In addition, going in on a house together made the mortgage process much easier for both of them, Sapnar and Trupiano said, because they were able to secure more loan money together than they could have alone. "As long as someone doesn't have negative credit, it really helps," Sapnar said.

The sensitivity of that financial disclosure process, though, is exactly why both men recommend that only good friends purchase together.

While the decision has obvious economic advantages, buying with a friend, co-worker or romantic partner presents some legal questions that are unique to unmarried condo buyers, questions that should be sorted out before the move-in date.

"The most important advice I have is that you should put together some sort of [legal] agreement," said Debra Neiman, a financial planner and the co-author of "Money Without Matrimony: The Unmarried Couples Guide to Financial Security."

"You want to do this when there's no animosity and everyone likes each other."

Because most people who buy together put both of their names on the mortgage, these buyers should decide in advance how to divide the property if one party decides to move or sell.

"For two unmarried people, the relationship is more like a business partnership," Neiman said. "To the government, you're legally strangers."

Those legal details may seem trivial to some buyers, especially younger buyers who intend to sell the property within a few years, but Dan Withers, a real-estate lawyer with Brennan Title in McLean, Va., recommends that all buyers at least take the time to figure out how to transfer the property in the event that one party should pass away.

Withers advised that any groups buying property as a sole residence should list themselves as "joint tenants with the right of survivorship," which passes the property entirely over to the other partners should one owner die. "Joint tenants" is the most straightforward option for unmarried partners, he said, because it clearly defines how the property is transferred and it protects the other owners if one party is sued or goes bankrupt, for example.

Withers and Neiman both recommend that all home buyers meet with a real-estate lawyer prior to closing and draft a brief agreement about how to divide the property in the event of a falling out or some other unforeseeable complication.

"Any relationship, whether you're a couple or not, is a daily compromise," said Greg Zehnacker, who has shared a condo in the District with his domestic partner since 2000. "All relationships can change."

Splitting Up. For many of these unmarried friends, romantic connections inevitably become the reason for one to move out.

Josh Chambers and Glen Seidlitz had been friends for about five years when they bought a two-story rowhouse in Washington's Petworth neighborhood in 2004 with the intention of renovating it in their spare time.

One year later, the house is as much a work-in-progress as it is a livable home, but they have made great strides despite the frequent inconvenience -- they were forced to do dishes in a laundry-room sink in the basement for three months when the kitchen was out of commission, for example.

Now, Seidlitz is planning to move out of the house he shares with Chambers and move into a home his girlfriend just bought in the District. Because they are joint owners, Seidlitz said he remains committed to finishing work on the place he bought with Chambers as quickly as possible. It's in his best interest to ensure the property will be a desirable place for him to rent, or potentially sell his stake in, so that he'll be able to recoup his investments of money, time and hard work.

The two have just started working out the details of his departure, which almost every pair interviewed said was the hardest part of any joint-ownership agreement, whether the parties are friends, married or complete strangers.

For some homebuyers, the investment comes first. Chambers and Seidlitz, on the other hand, have given their friendship top priority.

"There's no point letting the money and the responsibility get in the way of the friendship," Seidlitz said.

Working It Out. Despite those occasionally tricky details, real estate agents and mortgage brokers suggested that young singles don't have to wait for marriage to look at buying a home.

"Everyone has it in their mindset that that is how people settle down," said Gwinn, the Long and Foster agent, of buying only after marriage.

"I think a lot of people assume they can't afford it," Gwinn said. "People who need a friend to help them afford it probably don't even think it's possible."

He said there were a number of financing vehicles to help prospective buyers of every age and financial background purchase their first home.

Alpsar and Nakagawa see their condo as a long-term investment, even if both move out within a few years.

They said they're hoping to hold on to the apartment as a rental unit once both have moved out.

While the overall process was easier than both expected, there were still a few stressful moments.

"We had some pretty healthy battles about the size [of the apartments] and the areas we wanted to look for," Nakagawa said.

Those squabbles were just part of the process, they agreed. But if friends can't work out their differences during the buying process, then the partnership could be headed for failure, Nakagawa said.

Eventually, the other person makes all the difference between a good investment and an unworkable living arrangement.

"When you're looking, you'll find out if it will work," Nakagawa said. "Deniz is the only person I would do this with."

This article originally appeared in the Express on March 18, 2005.

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