Elyce Peters - The Mortgage GirlsSo… your about to buy your first home, or your partner is just about to move into your home, or you have been in a relationship for under 3 years (current legislation)… You need a relationship agreement (also known as: contracting out agreement).

Now I know you’re thinking right now… why? … we’re in love… Its too early or we will never break up…wake up. Speaking from my own experience the money you spend getting this sorted is not just protecting you financially, but emotionally also.

Last year my relationship ended, after nearly 6 years. I had purchased two properties myself, one an investment which I had never lived in, the other was to be what I considered my first home. We had also started two businesses in this time also. I was smart in some ways, I got a contracting out agreement on my investment property, as to me it was an investment and one I needed protecting but for my own home/owner occupied I thought, I don’t need one. There were a few reasons for this;

  1. It was deemed a family home and therefore I understood my partner at the time as we were moving in would have a right to it as relationship property – Turns out in a way this wasn’t the case.
  2. I had no problem giving him half the equity in the home as we lived in it together therefore he was helping pay for the mortgage.
  3. I didn’t think we would ever break up.

What I didn’t consider was that when emotions get involved, not only is it emotionally draining it can have a huge financial impact with lawyers costs stacking up very fast.

In my head it was going to be easy, the investment was protected by the contracting out agreement, we keep our respective businesses so all we would just get a valuation done, take off the money which was owing on it and split the equity down the middle… sounds simple doesn’t it??? It was not at all,  after 9 months of fighting between lawyers, heart break, homelessness, the drain emotionally it takes on you, not to mention the $25,000 between us spent at solicitors it was settled. It wasn’t that I went in there wanting more then I was entitled to, I just wanted to keep my half of the equity I felt I was entitled to… I had in fact brought the home. Now, trying not to get too caught up in the details, the problem we had was the process. This is what the relationship agreement/contracting out agreement would have created. Writing down the PROCESS which is to be followed in case of the unfortunate situation of a split so it was black and white. Then it is the process which just needs to be followed. There needs to be independent advice given to both parties when signed, by two separate lawyers/firms.

All I need to say is don’t make my mistake, get an agreement written up. Hopefully it will never be used, I still believe in love and although it didn’t work this time around, I don’t regret our relationship as there was always good times and gems to be taken from it. The only thing I did regret was not create a process so that it could have ended on much more amicable terms.

Based on a personal experience.