Co-Owner's Debt May Hurt Homeowner
Ask the Real Estate Lawyer: Real Estate Law Q&A
By Ilyce R. Glink and Samuel J. Tamkin
Summary: A homeowner is concerned about thier
partners debt. Because they are not married, the co-owner is not responsible
for the debt but their equity in the home may be at risk.
Q: My best friend recently purchased a home with her boyfriend. In that same
week he was diagnosed with terminal cancer. The house was paid for in cash,
and both names are on the deed.
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But his medical expenses are growing and he now has a significant amount of
debt. My best friend has no debt. Can her boyfriend quit claim deed the house
to her so she would not be responsible for any of his financial debt after his
How much time has to pass so that his creditors can’t come after her?
Can the transfer of the property be immediate?
A: First, when two people are not married, they are not responsible for each
other’s debts. So, your best friend wouldn’t have to pay off her
boyfriend’s medical debts.
That said, if the boyfriend transfers the house to your friend and then he
or his estate declares bankruptcy or a creditor pursues an action to recover
assets that may have been transferred fraudulently, his equity in the house
that was transferred to your friend could put your friend in a difficult situation.
In some cases transfers of assets within ninety days or within one year of
filing for bankruptcy will cause a problem to both the debtor and the recipient
of the asset. In other cases, a court might look at a transfer of assets that
occurred within the last 3 to 5 years.
The process of preparing a deed is simple. Once the deed has been filed at
the local recorder of deeds or registrar of titles office, the world has notice
of the transfer of title from one person to another.
In some counties, the county records may take a couple of weeks to become updated
but the effective date of the recording would remain the date the documents
were delivered to the office in charge of recording documents.
While your best friend will not likely be responsible for any of the debts
of her boyfriend, the equity that your friend’s boyfriend has in the house
may be at risk. You didn’t indicate whose money was used to buy the home.
If your friend used all the money to buy the home, the transfer of title from
the boyfriend to your friend might be proper and might protect the house.
If they both bought the house and both paid in the same amount of money, the
boyfriend’s share of the house may be at risk. The boyfriend’s creditors
will look to any assets the boyfriend may have when the bills come due. That
asset is the house along with any other bank accounts, stocks or anything else
owned by the boyfriend.
Your friend should sit down with an experienced estate planning attorney to
discuss these issues further. The estate planner can make sure that your friend
and the boyfriend both have wills. In addition, they should have a power of
attorney for health care issues and financial issues to help them out if either
becomes totally incapacitated and medical or financial decisions need to be
As part of this discussion, the estate planner will help determine how to best
protect the equity your friend and her boyfriend have in the property, perhaps
through the creation of a living trust.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce
R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your
Home Faster and For More Money In Any Market. If you have questions for
them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022
or contact them through Ilyce’s website www.thinkglink.com