UNISON HOMEOWNER AGREEMENTS
UNISON HOMEOWNER AGREEMENTS
Unison HomeOwner Agreements are contracts with an organization, FirstREX, that provides homeowners with immediate cash in exchange for a percentage of the future appreciation of their homes. At present, these programs are available in Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington, and Wisconsin. Read more about Unison HomeOwner Agreements.
A Unison HomeOwner Agreement, previously called a REX Agreement, is a contract with an organization formerly called FirstREX. (In December of 2016, FirstREX changed its name to Unison Home Ownership Investors, or for short, Unison.) A Unison HomeOwner Agreement enables a homeowner to convert a portion of their home equity into cash. It provides the homeowner with a lump sum of cash today, in exchange for a percentage of the change in the home’s value (17.5% to 70%) in the future. This means there is no interest charge or monthly payments to be made.
PROS & CONS
Similar to a reverse mortgage, individuals are required to live in their home during the entire term of the Unison HomeOwner Agreement. Should care needs require an individual to move from their home for more than 180 consecutive days, and it is clear they will not be returning, then the Unison HomeOwner Agreement comes due. If this occurs during the first three years of the agreement, and the home has lost value due to fair market conditions, Unison will not share in the loss.
For this reason, a Unison HomeOwner Agreement should be a potential source of funds for long-term care only for seniors where at least one of the spouses has no intention of moving for at least three years. To further clarify, should a single senior or both spouses of a couple require assisted living or skilled nursing in the near future, Unison HomeOwner Agreements are not a good option.
As with reverse mortgages, the concern that Unison can force a homeowner to sell is not justified. Unison does not go on title and is not a co-owner. Homeowners are required to live in and maintain the home in good condition. If the home is not maintained and there is a significant decrease in market value because of this, Unison will not share in the loss. Instead, a deferred maintenance adjustment will be applied.
Homeowners must also stay current on their mortgage, insurance, and tax payments. If an issue does occur, the homeowner can ask for a special termination after three years, keep the home, get an appraisal, and pay the amount borrowed, and any profit that would be owed Unison if the house were sold.
Homeowners can make home improvements, such as making a home more accessible for the elderly, without Unison unfairly benefiting from those improvements. Homeowners simply notify Unison of the improvement and apply for a “Remodeling Adjustment,” and Unison will not share in the value of that improvement in the appraisal when the home is sold. Make note, the Remodeling Adjustment is not available until after the HomeOwner Agreement has been in effect for three years.