LA man put $70K into buying a house (and renovations) — his ex put in $5K and now they plan to sell. Why The Ramsey Show says she's entitled to 50%

Now that the relationship is ending, the house is expected to sell for about $625,000. After paying off the $510,000 mortgage and closing costs, John believes he and his ex could walk away with roughly $95,000. With this in mind, John also thinks each person should get back what they invested into the house; $70,000 for him, $5,000 for her, then split the rest.

But cohosts George Kamel and Ken Coleman quickly warned John that it may not turn out that way.

“It’s going to be a knockout, drag down fight on the way out,” said Kamel.

Ownership doesn’t always follow the money

While some homeowners might think whoever puts more money into a property owns a bigger share of it, that’s not how homeownership works.

The key legal requirement that determines ownership is the title — recorded in a document called a deed, which records who legally owns a specific property — whereas the mortgage outlines who is responsible for repaying the loan. Being on the mortgage doesn’t necessarily mean you own the home, while being on the deed usually determines the legal share of ownership.

If two people are listed equally on the deed, which is common for couples that purchase property together, each typically owns 50% of the property, regardless of who paid the down payment or funded renovations. In other words, the law may treat the home as an equal asset even if the financial contributions were unequal.

Unlike married couples going through divorce — where courts have established systems for dividing assets — unmarried partners (often referred to as common law) must rely on property law and ownership documents when a breakup forces the sale of a house.

Without a written agreement that says otherwise, courts typically treat all owners listed on the title as having equal ownership, and this can create problems when one partner contributes more cash to the purchase of the property or its upgrades than the other.

Unless those contributions were documented in a legal agreement, or can be proven clearly in court, the extra investment may not change ownership percentages.

When it comes to John’s situation, he may have contributed more money to the property than his ex, but if the property is legally split 50-50, the proceeds from the sale could simply be divided evenly, potentially leaving John tens of thousands of dollars short of what he invested.

Even John admitted on the show that he doesn’t “have a leg to stand on” if his ex insists on a strictly legal interpretation of the sale of the house.

Best practices for buying property with a common-law partner

This case highlights what can be a common, and often expensive mistake when purchasing property.

Many couples buy homes together assuming everything will play out fairly if things go wrong. But without written agreements, verbal understandings or handshake deals about money and ownership rarely carry much legal weight.