16th June 2020
Many couples in the early stages of their relationship who have had to put their plans on hold during lockdown may now finally feel able to take the next step and buy their dream home together. However, before taking that exciting step, some careful thought needs to be given to what might happen if things took a turn for the worse.
The family home is usually the main asset to be considered upon relationship breakdown, so unsurprisingly the majority of the argument relates to how to split ‘1 household into 2’ with the assets available whilst meeting the needs of the parties and any children involved.
Married couples can rely on Section 25 of the Matrimonial Causes Act 1973; a checklist of factors used by the court when deciding how to distribute assets upon divorce (it is worth noting that these factors will be relied upon whether you have issued court proceedings or are negotiating your own settlement outside of court).
Unmarried couples however do not have the same protection. There is a common misconception that cohabitees become ‘common law spouses’ acquiring the same rights as married couples after living together for a long period of time; they don’t.
The number of cohabiting couple families is continuously growing, faster than married couples, so it is important that cohabitees know how to protect themselves and avoid legal disputes if they split.
Conversations about separation and death are not always straightforward, especially when you are excited about starting the next chapter of your life together! But it is important to consider and understand these issues at the outset so that appropriate measures can be put in place, minimising stress and acrimony further down the line. It also demonstrates some maturity to the relationship to be able to talk openly about this sort of thing.
Here are some things that you need to be thinking about:
When buying a property there are two methods of ownership: joint tenants and tenants in common.
If you hold the property as joint tenants, both of you will own the whole of the property. You will not each have a quantified share in the property and will not be able to leave a share of the property in your will. If you sell the property, or if you separate, it will be presumed that you both own the property equally, regardless of your respective contributions to the purchase price or to any subsequent improvements to the property. On the death of one co-owner, their interest in the property would automatically pass to the remaining co-owner without any further action. The surviving co-owner would then own all of the property, this is known as the “right of survivorship”.
Tenants in Common
If you hold the property as tenants in common, each of you will own a specified share in the property. You can choose to own in equal shares or differing shares. Your share of the property can be passed on to another person, either during your lifetime or under your will. If you do not have a will at the time of your death then your share will pass in accordance with the rules of intestacy. So if you want to have control over who inherits your share of the property, you need to make a will.
If you wish to hold the property as tenants in common, then we would recommend entering into a declaration of trust. A declaration of trust is a document that formally records that you hold the property as tenants in common and sets out your respective shares in the property. If you sell the property, or if you separate, the declaration of trust will be referred to when apportioning the sale proceeds from the property. It is advisable to review and consider changing the declaration of trust from time to time to ensure it reflects ongoing contributions.
It’s not too late if you are already co-owning property as joint tenants with your partner but now wish to own the property as tenants in common (whether married or not). We can prepare a Notice of Severance to serve on your partner and register at Land Registry (if the house is registered at Land Registry) or placed with the deeds to the house (if the house is unregistered).
In this scenario, we would recommend entering into a cohabitation agreement which will confirm that you own the property, but also set out:
It can be stipulated in the agreement that the person you are moving in is not to acquire a beneficial interest in your property from contributions, direct or indirect, that they may make throughout the relationship.
If you are (or intend to be) cohabiting with your partner and want some advice to ensure that you are protected, then your first step is to speak to one of our family lawyers to understand your rights and options. We can also take care of any conveyancing or will services that are likely be required.
To speak to someone today, please call 01256 844888, email email@example.com, or speak to our online chat assistant who is available on our website 24/7.
Love Locked Down
5 Things you Need to Know if You are Living Together
Myth of the Common Law Marriage and How to Protect Yourself
Buying Your First Home Together
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
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