What you need to know about buying a property as an unmarried couple
Buying a house is a complicated issue enough, but add the complexity of a live in relationship and the small matter of children and suddenly the formalities become all the more awkward.
Imagine the scene, you’ve found the house that you want, agreed a price and you can’t wait to move in and start on the decorating. Even for a “normal” family, there’s a mountain of paperwork to get your head around and important legal consequences flowing from the decisions that you make.
The law relating to unmarried property owners is unclear and complicated. If you don’t get the paperwork right at the beginning, it could mean that you have a long and expensive legal battle on your hands if the relationship ever breaks down. Although nobody wants to predict a relationship split, it makes sense to plan for the unforeseen.
Take the example of a couple who have both sold their own homes and want to buy a property together. They trust each other so, despite the fact that one person is contributing more than the other, they ask for the property to be owned a “joint tenants”. This means that any future equity in the property will be divided equally between them and in the event that the relationship goes sour this can be a huge surprise to the person who made the larger contribution.
Take another couple where one person sells their property to move into their partner’s property. They spend the sale proceeds from their house on improvements to their partner’s home as a joint venture and also contribute towards the mortgage and other outgoings. If the relationship fails, does the person who sold their house have an interest in their partner’s house? The answer to this, surprisingly, is not automatically yes and it depends on many different factors. People often think that they can rely on the concept of “common law” husband or wife but the truth is that no such status exists in law, even if you have children. Situations such as this can sometimes result in a painful and drawn out legal case to sort things out. This can be avoided if you consider these things at the beginning of the relationship.
The vast majority of well publicised disputes between cohabitants arise from a failure to consider what their shares in a joint property will be in the event of a relationship breakdown. This has been caused, in part at least, by the Land Registry allowing properties to be registered without this information. The good news is that the Land Registry has now introduced a new form which should make people think about this issue at the time of purchase. However, if you have already bought your property then the new form will not apply to you.
Whilst nobody wants to take the shine off the idea of starting a new chapter in your life with your partner, I urge you to look at the possible pitfalls – think about your rights of occupation (who will have the right to stay in the house if you split up), your rights on the death of your partner, your rights regarding contents bought as a couple or how your cohabitation might affect children from previous relationships or marriage. Getting these things sorted out more formally could make life a great deal simpler and in the long run a great deal happier. Cohabitation agreements are therefore not just for the rich and famous but could help many families avoid unnecessary disputes in the sad circumstances of a breakdown.
What you need to know about buying a property as an unmarried couple:
- If you buy a property with a joint mortgage you are each jointly and individually responsible for the mortgage regardless of who is living in the property.
- The joint legal ownership of a property can be expressed either as “joint tenants” or “tenants in common”. Joint tenants are always entitled to equal shares in the property and automatically inherit the other owner’s share on death. Tenants in common can state the size of each person’s share in the property and do not automatically inherit the other person’s share on death.
- If you have contributed to the purchase price in unequal shares then you should be tenants in common to protect both of you. You should also be tenants in common if you want somebody other than your partner to inherit your share of the property if you die – what about if you have children from a previous relationship?
- If one person pays the entire deposit or a greater share of the repayments on the mortgage, if you are joint tenants then you are still each entitled to an equal share of the property.
What the law says:
- Just because you have lived in your partner’s property and contributed to the outgoings does not automatically mean that you have a claim against the house even if you have children.
- There is no such thing as “common law” husband or wife.
- Cohabiting partners are under no legal obligation to make maintenance payments for one another if their relationship fails. However if there are children of the relationship then there is a responsibility to pay child maintenance.
- There is no way to claim against your partner’s pension
- If you do not have a will, your partner may have to apply to the court for financial provision in the even of your death
- Any other types of assets held in joint names (for example joint savings) are likely to be shared equally in the event of a breakdown regardless of where the funds came from