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Buying a House Together - Considerations for Unmarried Couples.

If you and your partner are looking to buy a property together, but intend to remain unmarried, at least in the short term, you should consider whether you need to protect your respective financial interest in the property.

This is particularly relevant if your contributions towards the purchase price will be significantly different, or if one of you will be paying more towards the mortgage repayments or utility bills.

Many people choose to live together and assume that because they share the same house, they have the same rights and protections as a married couple. At the start of a relationship, couples understandably don’t want to think about the relationship breaking down, however this is the time when such matters need to be considered.

You should have some sort of agreement in place in case the relationship ends or if one of you dies.

Ownership of the Property

If you are both contributing towards the purchase price then it is likely that you will both be named on the title deeds as the legal owners of the property.

There are two ways to own a property – as Joint Tenants or as Tenants in Common.

Joint Tenants

Most, but not all, couples choose to own a property as Joint Tenants. This means that if one of them dies, the property passes to the survivor automatically, without the need to specify this in a Will and without the need to obtain Probate. However this might not be suitable for your circumstances, for instance, if you each have children from a previous relationship you might prefer your share to pass to you children.

If you own a property as joint tenants, there is a presumption that you have each contributed to the purchase and to subsequent outgoings equally and so if you are unmarried and decide to sell, the expectation would be that you would share the net proceeds of sale equally.

Tenants In Common

Owning the property in this way means that if one of you die the property does not automatically pass to the survivor but would instead either pass to your next of kin or to whoever you left your share to in your Will. This could be your surviving partner, but it could be someone else.

In this situation you can each own a 50% share of the property, or you can own the property in different shares depending on your contributions.

If you decide to own your property as tenants in common, then it is sensible to have a separate agreement in place which determines how the sale proceeds would be divided between you if the property was sold. This could be in the form of a Declaration of Trust or Cohabitation Agreement.

It is also advisable for you to each consider making a Will in these circumstances.

A Declaration of Trust is an agreement which specifically deals with your ownership of a property, and what happens when the property has to be sold or if one of you dies. It can set out the proportion of the property your are each entitled to (or if you decide to rent the property out, the percentage of the rent you would each get). You would normally enter into this document when you buy the property, but you can also enter into it retrospectively.

As well as protecting co-habiting partners it can also be used to protect someone who is not on the deeds - for instance, if you decide that only one of you will be on the title documents but the other has made a significant financial contribution, or where you have had help from a third party, such as a parent or sibling, who wants to protect their interest in the property.

When it comes to Property, a Declaration of Trust is usually the right form of agreement for you.

A Cohabitation Agreement can be a much wider ranging agreement and sets out how much each of you will pay towards the mortgage, council tax, utility bills. It can also go a lot further setting out what happens to other shared assets should your relationship come to an end, such as a car, the TV, artwork in the property, family pets, the toaster etc.

In most cases a Cohabitation Agreement may feel inappropriate and too restrictive, particularly if you are at the beginning of a relationship and find it difficult to address such matters.

We Can Help

Much of the advice given here could equally apply if you are buying a property with a friend or a member of your family.

If you are considering buying a property with a partner, a friend or a family member, or of you have recently inherited a property jointly with a sibling, then we can discuss the various options that are available to you and how you can best protect your interests.

Call Michael Christopher on 07792 869095.

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