Things to Know Before Buying Properties as an Unmarried Couple

Couple buying a property

Unmarried couples owning joint property rights in the Philippines has become more popular in recent years. Instead of allocating their hard-earned money on extravagant weddings, more couples had been exchanging wedding bells for the satisfying jingle of a new set of home keys. Regardless of your marital status, purchasing a property in the Philippines is challenging. But things become especially complicated when you are purchasing from someone to whom you are not legally bound.

Together with the growing number of Filipinos who never marry, there is a decrease in the proportion of legally married people and an increase in the proportion of people who live together or cohabitate. While live-in relationships are comparable to married couples in certain ways, however without the formality, they are nonetheless governed by laws, particularly when it comes to property ownership. As a result, buying a house for not yet married couples may entail a variety of pros and cons that should be evaluated.

Read More: House or Spouse? Which should you have First?

Philippine Laws on Property Co-Ownership

In the Philippines, properties acquired by the parties via labor while living together are subject to co-ownership laws, which mean that the live-in partners own all properties in proportion to their respective efforts in gaining the same.

When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.

Article 147, paragraph 1 of the Family Code

The Family Code clearly recognizes the co-ownership of property rights between unmarried couples in the Philippines. Exclusive with one other, like a husband and wife would, but without the advantage of marriage. It can also be used when the marriage is null and void, such as when it was previously annulled by the court.

Another scope of this law is that the property should have been purchased.  Only the properties gained due to their real joint contribution of money, property, or industry shall be owned in common by them (in proportion to their actual contributions). There is no assumption that the assets were obtained through the collaboration of the parties. Please keep in mind that if you had a past marriage, your share will be lost in favor of that previous marriage (as an aside, the children under the second relationship shall be considered illegitimate).

Read More: Your house, your rules; Advantages of having your own home vs. living with relatives

In line with this law, listed below are the pros and cons of buying a house to that should be considered by couples not married

Pros of investing in a property as an unmarried couple

1. Mortgage approval is likely

One partner may want to purchase a house but does not have excellent credit. A co-signer may make a mortgage lender more inclined to lend money. The usual co-signer choice may be our significant other. Someone who we can trust and be confident with. The bank will feel more comfortable issuing money despite the original poor credit score if a co-signer is used. Whether for financial or social reasons, or to start creating a foundation early, more people than ever before are choosing to buy a property before marriage.

Moreover, this is not limited to couples who are in a relationship. For a variety of reasons, business partners, friends, and coworkers may decide to buy a property jointly. The bank’s major concern is that the loan is secure and that the borrowers will return the principal plus interest. Banks are not intended to assess your relationship or marital status, but rather to examine things from a financial perspective. The fact is that married couples can divorce, which is a risk that banks accept all the time.

2. One Cannot Sell without The Consent of Another

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the other, until after the termination of their cohabitation.

Article 147, paragraph 3 of the Family Code

The live-in couples will share responsibility for property management. Until the end of their cohabitation, neither partner may sell, dispose of, transfer, or assign his or her portion of the co-owned properties to a third party without the approval of the other.

3. Equal Rights to the Property is Presumed

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the former’s efforts consisted in the care and maintenance of the family and of the household.

Article 147, paragraph 2 of the Family Code

Properties obtained during cohabitation are deemed to have been acquired via mutual efforts, work, or industry, and hence are owned equally by the partners. A partner, on the other hand, is still regarded as a co-owner of the property and is judged to have contributed jointly in the acquisition if he or she contributed via activities such as giving care and maintenance to the family and home.

Cons of investing in a property as an unmarried couple

1. Money may Be a Subject of Disagreements

Obtaining a mortgage with your spouse may place a financial strain on the relationship, since money is typically a subject of disagreement. Before combining your funds in this manner, be sure you’ve thoroughly examined your financial habits and money perspectives.

Purchasing a home together can cause relationship issues for a variety of reasons. Increasing electricity costs, for example, might be a source of tension if one spouse consistently switches off the lights while the other never does. Issues may arise if one person feels they are performing an unfair share of the housekeeping.

2. What happens to the house after a breakup?

This is one of the underlying questions that may be viewed as a disadvantage in the event of unmarried couples co-owning property rights in the Philippines. Co-ownership implies you equally share the property acquired throughout your partnership. If you buy a house while living together, the residence is deemed co-owned property regardless of whose name is in the title. As a result, dividing the property will be a challenge.

The two most usual outcomes of this circumstance are: one partner buys out the other partner through a refinancing transaction, or both partners choose to sell the property and walk away. Again, the same considerations apply here, as each party will want to ensure that they receive their fair portion of equity following the sale of the house. Nevertheless, While there may be disagreements in a relationship, one should be able to evaluate whether negative feelings are worth ending a relationship with.

Since co-owning a house in the Philippines has been among young professionals’ goals. Bria Homes met the aspirations of young unmarried couples who wished to own their own house and lot. For years, they had been serving quality real estate at an affordable price. Inquire now.