Cohabitation and Joint Property Ownership

Cohabiting couples misunderstand how the law applies to them - specifically, all too often they believe that one gains 'rights' by virtue of the length of the relationship. The reality is far from this. In fact, there is no such thing as a 'common law' husband or wife, in English law.

Buying a property

Looking at property ownership specifically, when two or more people buy property together it is vital that they understand the types of joint ownership available to them. They need to decide on the method best suited to them and their circumstances as well as understanding the potential implications of this decision.

When a property is sold, all mortgages and charges have to be repaid in full, as do estate agents and conveyancing fees on the sale. Only the balance will be available for division between the owners. It is this balance that the joint owners must consider.

With couples increasingly having to find large deposits, it is very common for these to be provided unequally, or with the help of family. Unless the joint owners contribute the same amount of money to the purchase, the person paying or contributing the larger share may wish to ensure that, when the property is sold, they receive a larger share of the balance than the other owner(s).

Before joint owners commit to buying a property they should consider:

1. Do they want the property to be jointly owned in such a way as would give each an equal interest in the property and ensure that, if one dies, the survivor would automatically own the whole property?

OR

2. Do they want the property to be jointly owned so that each owns a precise and specified share of the property and are each able to leave this share, by Will, to whoever they choose. If so, then do they wish:

• To own the property in equal shares; or
• To own the property in unequal shares, (i.e, to protect any owner putting more money into the purchase than the other?)

Option 1 is known as 'Joint Tenants' and Option 2 as 'Tenants in Common'. It is important that this decision is recorded at the time of purchase (as it is usually only possible to arrange for this to happen later if all the joint owners agree - which is rarely the case when there is a dispute). Otherwise, usually it is only if the couple are married or in a registered Civil Partnership that a Court has power to change property rights.

Owners who buy as Tenants in Common will be advised to enter into a Declaration of Trust - a deed setting out their respective interests in the proceeds of sale and matters relating to this.

Preparing for the future

It is very important that joint owners make Wills or update these at the time of a new property purchase. It is particularly important for a cohabiting couple to make Wills, whatever their choice of joint ownership. These can address very practical issues which cause considerable distress otherwise - for example, who is the executor with the right to make funeral arrangements? Who do the contents belong to? Is there any provision to pay off the mortgage? Who will benefit from life insurance? Can the surviving owner afford to pay a mortgage on their own, and can they stay in the home?

As part of our conveyancing service, our conveyancers will advise joint purchasers of joint ownership issues and prepare any necessary Declaration of Trust.

Advice with regard to Wills and/or Inheritance Tax, or Lasting Powers of Attorney/Living Wills, can be provided by our local specialist, or contact Jenny Pierce on 0117 9292811 or jenny.pierce@wards.uk.com

A couple who do not intend to marry or enter in to a civil partnership, may wish to consider a Cohabitation Agreement to detail who owns what and what would happen if the relationship were to end. Whereas a Declaration of Trust will deal only with the shares held in the property purchased, a Cohabitation Agreement can go beyond this and deal with future plans for the property and how these may impact on the shares held and other important aspects of the relationship such as joint debts, personal possessions, cars and even children-related arrangements.

Wards Solicitors is fortunate to have a solicitor who is a specialist in this area and dedicated to advising on matters relating to Cohabitation Agreements and relationship breakdown where the parties are unmarried or not in a Civil Partnership.

If you require further advice with regard to Cohabitation Agreements, or are unmarried (or not in a civil partnership) and need relationship breakdown advice please contact our cohabitation and cohabitation disputes specialists Lucia Mills or Claire James on 0117 9292811.

Alternatively if you are married and relationship breakdown advice is needed this can be provided by one of our local family law specialists, or contact Mandy McCabe on 01275 850460 or mandy.mccabe@wards.uk.com.

For more information as to joint ownership of property please speak to your usual Wards contact, or contact Susan Ellis on susan.ellis@wards.uk.com.