Paul Masterson, director of Milwaukee Gay Arts Center, has been a homeowner for more than 14 years. While he’s spent more than half of those years in relationships, he says he’s never considered owning a home with a partner. “There’s a risk involved,” Masterson says. “If you trust your partner it’s one thing, but you also have to trust his family. You have to ask yourself how it would play out legally if your partner passed away.”
That fear – that a partner’s passing could result in the loss of one’s home – is at the very core of the marriage argument, Masterson says. “It is one thing to have a document that states your partner will inherit your properties, but it doesn’t safeguard against lawsuits,” he says.
That lack of protection and uncertainty might help explain why homeownership rates among same-sex couples have typically lagged behind those of heterosexual couples. “There are some real financial impacts to owning a home as a couple if you’re not married,” says Brian Moulton, chief legislative council for the Human Rights Council.
However, with same-sex marriage now legal in five states (Connecticut, Massachusetts, Iowa, New Hampshire and Vermont) and Washington, D.C., experts say that gap is beginning to close, as newly married same-sex couples decide to take the real estate plunge as well. “I think (legalized gay marriage) will potentially increase the rate of homeownership among LGBT couples,” Moulton says. “On a broader level, marriage has a stabilizing, formalizing impact on a relationship that encourages people to build permanency in their lives, which includes a home.”
In Milwaukee, some real estate agents say they’ve noticed an increase in LGBT couples buying homes since the state adopted a domestic partnership registry last year. “I’ve been seeing a steady increase in same-sex couple buyers over the past year or so,” says Bay View Homes Realtor® Karen Block.
While LGBT couples share many of the same home-buying concerns as straight couples, they also have unique needs. Here are some things to consider before taking the plunge:
Most real estate agents are gay-friendly, simply because they have to be, says ReMax real estate agent Scott Campbell. “Times have changed,” he says. “Real estate agents now have to follow certain rules and guidelines.”
But which agents can tell same-sex couples what school districts are most welcoming to LGBT families or out-of-towners where the gay bars and gay neighborhoods are? “I think sometimes you just feel more comfortable working with someone who is gay and understands what your needs are,” Campbell says.
For LGBT couples buying real estate today, it’s not so much about buying in the right neighborhood as about buying in the right state.
“State laws determine title and inheritance rights,” Moulton says. “And no state is required to recognize another state’s marriage laws.”
A few states – such as New York and Maryland – do recognize same-sex marriages, even though they don’t grant marriage licenses to same-sex partners. More often, if a legally married same-sex couple buys property in a non-recognition state, they’re bound by the rules of that state.
Some states recognize civil unions or domestic partnerships, but the rights and protections that they offer vary widely. It pays to do your research.
Wisconsin’s domestic partnership law provides registered LGBT couples the right to inherit a partner’s estate in the absence of a will, the right to transfer real estate titles without paying a fee and the presumption of joint tenancy in real estate.
Unmarried couples planning to buy will need to sort out the details of who pays what and who owns what. Partners who have disproportionate incomes may want to contribute unequal portions (80/20 or 60/40), divide the ratio of homeownership accordingly and then draft a legal contract that spells out the agreement.
According to Wells Fargo Home Services Lending mortgage broker Mark Olley, this kind of unequal arrangement only dictates what happens once the property is sold and has nothing to do with purchasing the home. “You’re both equally responsible for the mortgage regardless of what you make,” Olley says.
What’s more, same-sex couples are equally responsible for sourcing half of the down payment or will otherwise be subject to federal gift tax rules. This applies even to couples who are lawfully married under state law, because the federal government does not recognize same-sex marriage and considers the partners to be legal strangers.
Survivorship rights aren’t just a real estate issue for same-sex couples, they’re an equal rights issue.
Rights of survivorship are granted to legally married couples who own real estate together and allow them take title to their home as “tenants in the entirety,” meaning each person is 100 percent owner of the house. Not only does that protect them in the event of death (the house is automatically owned by the survivor), it also protects them from creditors.
One option for same-sex couples who are not legally married is to hold the title in joint tenancy with rights of receivorship, so that if one partner dies, the other becomes owner of the property and takes on the mortgage. According to Olley, most lenders also offer a life insurance policy, so that if one of the partners dies, the other would inherit the property without a mortgage.
Registered domestic partners in Wisconsin have the right to inherit from the estate of a domestic partner who dies without a will, but experts say it’s wise to seek out the advice of an attorney anyway.
“Even under domestic partnership laws, to what extent you have to safeguard through additional legal means is very unclear,” Masterson says. “This is why domestic partnership isn’t adequate and why the community is striving to achieve full equality through gay marriage.”