Purchasing a property unmarried couples
Unmarried couples do not have the same legal rights as married couples.
When purchasing a property, when you are not married it is important at the outset to consider how the property is going to be owned.
There are two ways to own a property with your partner:
A property can be owned as Joint Tenants. This is where both individuals share equal ownership in the property and have equal right to keep or dispose of the property.
When you own the property as Joint Tenants:
- You have equal rights to the whole property.
- The property automatically goes to the other owner if either of you die;
- You cannot pass on your ownership of the property in your will.
Alternatively, the property can be owned as Tenants in Common. This is where both individuals co-own the property and each co-owner owns a specific share in the property.
As Tenants in Common:
- You can own different shares of the property;
- The property does not automatically go to the other owner if you die;
- You can pass on your share of the property in your will.
If the property is owed as Tenants in Common, it is very important to consider making a Will to ensure that your share is left to who you wish. If you intend to own the property in unequal shares then it is a good idea to agree a Declaration of Trust setting out how you intend to own the property.
A Declaration of Trust may be used in the following scenario, by way of example:
Ms Taylor’s parents gave her £20,000 as a deposit towards purchasing a house with Mr Smith. Mr Smith did not pay any of the deposit, but he is named on the property and intends to pay equally towards the mortgage payments with Ms Taylor. Ms Taylor may wish to draft a Declaration of Trust which states that the first £20,000 of the equity in the house is hers should the property be sold and the remaining amount split equally.
Steps for Unmarried Couples
There are steps that unmarried couples can undertake to protect themselves when they are considering purchasing a property with their partner.
1 Consider how you will deal with the property in the event that you separate and have this conversation at the outset to minimise uncertainly, hostility and ultimately legal costs;
2 Does the ownership of the property reflect how you would distribute the property in the event that you separate? If the answer to this is no, then you need to consider owning the property as Tenants in Common and agree a Declaration of Trust clearly setting out how you intend to own the property with the other owner, for example, 70% to Mr Smith and 30% to Mrs Taylor;
3 Is either party making an unequal contribution to the property? If so, do you still intend to share the equity in the property equally should you separate in the future? If the answer to this is no then you need to seek independent legal advice on ways to protect you interest in the property.
If you are considering purchasing a property, it may be very useful to consider a Cohabitation Agreement. The agreement will incorporate both parties’ rights and responsibilities in respect of the property.
Severing a Joint Tenancy
If you own the property as Joint Tenants and you have separated from your spouse of former partner then you may wish to server the tenancy and hold the property as Tenants in Common. In that case, in the event of death, you can leave your share to whom you desire.