What should I do if I am buying a property with my girlfriend? - The Law House Family Law Solicitors, London & Peterborough

What should I do if I am buying a property with my girlfriend?

By in Property Law Category on December 13th, 2017

Moving in together

Upon finding out that my girlfriend and I are planning to move in together soon, my mother asked me what our intentions were? Did we intend to find a place to purchase and then marry or marry and then buy a property together? Once the heart palpations had stopped and a large sip of whisky had calmed my nerves sufficiently, I began to give this some thought.

If we are living together don’t we have the same rights as a married couple?

Whilst the rights of married couples in relation to property are better known, it appears that rights of cohabitees are less well known.  There also seems to be a worrying and persisting belief in common law marriage mythos, where unmarried couples supposedly have equal rights to married couples.  This is not the case and unmarried couples can find themselves in a legal minefield if their relationship should end and they come to sell the house.

Joint Tenants or Tenants in Common? What’s the difference?

Before discussing how unmarried couple’s rights differ to married couples in relation to property, I will first discuss how property can be held. When two or more people purchase a property, they can either hold it as joint tenants or as tenants in common.  The way a property is held can have a significant impact. If you hold a property as joint tenants, you hold it in equal shares and if one of you were to die, the surviving person automatically receives the deceased’s share, i.e. they get the house.  This can be a problem for married and unmarried couples alike, as your share automatically goes to the other, even if this was not your intention.

Property held jointly like this will also fail to reflect the initial contributions made when purchasing the property. It will also fail to take into account future ocontributions like paying the mortgage or carrying out repairs or building works. This can quite unfair if one person has or will contribute a lot more than the other.  As such, holding a property as joint tenants is off-putting to some. If this is the case with you, you can hold your property as tenants in common.

If you own together MAKE A  WILL!

When you hold a property as tenants in common, you can dictate who gets what share of the property. Furthermore, your share of the property does not automatically go to your partner should you die. Simples! You may say if you are a certain Russian meerkat oligarch, thinking this deals with the aforementioned issues. However, this can be a double-edged sword. For one, if you do not have a Will and you are not married, your partner will have few or any legal rights to  your estate .  Also, without making a Will, your share in the property is distributed according to the intestacy rules. If you are living with somone you will have virtually no control over distribution. I can’t say it more clearly, if you live together and own property together make a Will.

The second issue is a quirk with how official copy entries, i.e. title deeds (called official copies) reflect the ownership of the property when held as tenants in common. Firstly, it will not actually state that the property is held as tenants in common. Instead a restriction will be put on the title. This will prevent the property being sold without the consent of both parties or without a court order. Secondly, it will not state what shares in which you hold the property. So even if you have agreed who gets what share of the property, this rather maddeningly will not be reflected in the title records. It is, as we say in the legal profession,  a “quirk”

Declaration of Trust – a must for cohabitees.

This quirk can be dealt with relatively simply with a declaration of trust. A declaration of trust essentially confirms the proportion of the property you each will own.  It can also be used to confirm

  • who contributed what to the initial purchase,
  • the person responsible for the mortgage repayments and sometimes
  • who will repair and maintain the property.

A declaration of trust can even go as far as stating who gets what share of the proceeds of sale when the property is sold. This alone can often deter parties from beginning costly and bitter court battles, where no one really wins.

A declaration of trust can also be registered against the property, preventing the property from being sold unless the sale complies with the terms in the declaration of trust.  Not only does this provide more protection, but holds greater legal weight should this ever go to court. Little can prevent the family courts from dictating who gets what share of the property. Their decision is based on a balance of needs test.  This is too complicated to discuss here. However, having a declaration of trust registered against the property will often be seen as a binding document.

A declaration of trust can be cancelled by mutual agreement, for example,  if you both later decide that it is no longer needed or you wish to amend it.  Although, if you have registered the declaration of trust, you will need to have it removed officially from the title.  Discuss with your solicitor or conveyancer  to ensure that it is dealt with properly.

And finally…..

With long-term cohabiting couples becoming increasingly common, you should seriously consider how you wish to hold the property. You should also discuss:

  • who will be responsible for what payments
  • and any repair or building works,
  • who owns what share and
  • who gets what amount when the property is sold.
  • making a Will

For more information, contact me, Luke Corby-Owen, on 020 3150 /1919 or at lcorby-owen@thelawhouse.com.