Property ownership and cohabitants
When buying property with another person, it is crucial to agree how you are going to own the property together.
Couples living together have few legal rights if they split up, but there are steps they can take to protect themselves. If you're unmarried and have chosen not to enter a civil partnership, but own a home with your partner, or are thinking about buying a property - it's time to get your house in order.
Plan in advance
When buying property with another person, it is crucial to discuss and agree on how you are going to own the property with the proposed co-owner — and your conveyancing solicitor.
It is not as simple as just owning the property ‘jointly’.
Different ways to jointly own property
“Joint tenants” means that if either one of the co-owners die whilst the other continues to own the property jointly, the surviving co-owner will automatically inherit the whole property, even if the deceased co-owner has made a will stating to the contrary.
“Tenants in common” means that the parties still own the property jointly, but that if one of the co-owners were to pass away, instead of the survivor automatically inheriting the whole property, the deceased co-owner’s share would be passed in accordance with their will if there was a will, or if there was not a will in place, in accordance with the intestacy laws.
The importance of a declaration of trust
If you wish to own the property in unequal shares, you must hold the property as tenants in common. It is vital to agree — and record — how you hold your respective unequal shares in a declaration of trust to avoid any uncertainty or ambiguity in the event of a dispute later down the line.
If you are planning to live with a partner, you may also want to give consideration to a cohabitation agreement, regulating occupation of the property and property obligations including the payment of bills — both now and in the event of a future dispute.
All of the above are common scenarios and our property and family law experts can help guide you through the process.
If you split, how do you deal with your home?
If your relationship with your partner breaks down and you are not married or in a civil partnership what happens to your house?
This will depend on many different factors.
- Did you buy it together in joint names or is it owned in one or other of your sole names?
- Do you both agree that it should be sold or does one of you want to stay?
- Can one of you afford to buy out the other and if so will the mortgage lender consent?
- Do you agree the value?
- Do you agree what you each contributed and therefore the division of the sale proceeds and was that recorded anywhere?
- Do you have children and where will they live?
Dealing with your home at the end of a cohabiting relationship can be a minefield, not least as there is no specific law designed for cohabitants and therefore no legal guidance which takes into account what is now a commonplace family arrangement.
Separating couples who cannot agree what should happen are left with the prospect of an application to the court to try and resolve their dispute. Complex trust and land law (which was never developed with the cohabitant in mind) is applied by a judge who may well have little or no experience of family law. Such applications (called TLATA or TOLATA claims) often involve expensive, complicated, lengthy and high-risk litigation through a court system in which the personal nature of the relationship is of little, if any, relevance.
Non-court dispute resolution
So is there a better way? Although neither a panacea nor always suitable, there are alternatives to traditional court proceedings which give separating couples the opportunity to take back some control over their situation and make it more personal to them. A degree of cooperation is needed but it is generally to both parties’ benefit.
Mediation, using an independent mediator who facilitates discussions, can help couples to reach a compromise that is quicker and cheaper than court and allows couples to move on.
A collaborative solution, where the couple uses a series of round table meetings with their lawyers to reach a solution, also allows them to regain some control over the process and outcome and avoid some of the emotional cost.
Arbitration, whilst having many similarities to court in that a third party imposes a decision having overseen the collection of evidence and considered that evidence, does allow couples to set their own process, agree their own ‘judge’ and enable a decision to be made in a quicker, more tailored and cost-effective manner.
If you find yourself in this difficult situation it is always worth exploring other options before turning to the court.
For further information and advice for cohabiting couples, speak to our family law experts.