Caveat Co-Owner

Hispanics, who account for a growing share of the overall population, often buy with members of their extended family to make the loan numbers work, according to Timothy Ready, director of research at the Institute for Latino Studies at the University of Notre Dame. They buy with nonrelatives at about the same rate as non-Hispanics, he said.

People who buy together have often talked through what will happen if one person wants to leave, local real estate lawyers and other experts said. The problem with oral agreements, they said, is that about half of all relationships, like half of all marriages, end badly.

When unmarried co-owners decide to go their separate ways, the same kinds of problems come up as when married co-owners split, Alexandria lawyer James C. "Beau" Brincefield Jr. writes on his Web site. "Unfortunately for unmarried co-owners, however, they don't have the benefit of either the protections provided for married couples by [state law] . . . nor do they have an established body of case law to rely upon as married couples do."

Said Jack M. Guttentag, a mortgage columnist and professor of finance emeritus at the Wharton School of the University of Pennsylvania: "I frequently get letters from people who have bought homes together who are not married -- usually after they decide to split and they find out what a quagmire they're in because they didn't realize that they didn't pin down the details first."

Guttentag said most such purchases he hears about are by people who haven't taken the trip down the aisle, rather than by those who have teamed up solely for financial reasons. He suggests that may be a function of the times. "When I was a young man, nobody did that. It was viewed as shameful. It was viewed as 'shacking up.' . . . Now it's viewed as routine."

It's so routine that Chevy Chase real estate agent Patricia Kennedy has a chapter on "Buying in Sin" in a book she's written and hopes will be published soon. She writes: "It is often easier to get out of a marriage where you don't own a house than a relationship where you do. . . . Marriages in the United States last an average of seven years. When you buy a house, you make a commitment to send huge checks to your mortgage lender every month for the next 30 years."

Kennedy recommends that unmarried couples have one person buy the place if possible. If not, she suggests they sign what she calls a "pre-cohabitation agreement."

Brincefield calls his version of the paperwork "a home-sharing agreement." Settlement lawyer Jenks said, "It's like having a prenup for your house."

Whatever it's called, it lays out who pays what for the down payment, closing costs, mortgage, taxes, insurance, fees, utilities, repairs, improvements and other expenses. And it specifies who decides what needs to be improved or repaired, and when.

It also spells out who signs the note for the loan and is thus obligated to the lender; the circumstances in which one party can sell or transfer interest in the property, force a sale or refinance the property; and how sales proceeds will be divided.

"A big problem that we see a lot," Jenks said, is that "people buy as friends because individually they could not afford to buy. They sign the note together, and then one decides 'I'm going to move.' But you can't just release the loan, you have to refinance" to get a name off the mortgage.

Then the remaining owner "finds that they may not be able to cover the mortgage on their own, or qualify for it."