PERSONAL ADVICE

PURCHASING A HOUSE WITH A PARTNER



Buying a house with a partner
It is common for couples to purchase and maintain a property together with their joint incomes and assets. However, few couples realise - from a legal point of view - how big a step this is and often fail to arrange legal protection should the worst occur and you no longer live together.

We’ve answered some frequently asked questions to help clarify what legal protections you can have in place when purchasing with a partner.
 

Q: Should I buy a property with my partner?


A: Using your joint income to buy a property with a partner, is very common. Before going ahead you should consider:

 

Q: Where do I stand legally if I buy a property with a partner, and then we split up?


A: This will depend on how you own the property and whether any agreement was entered into regarding ownership when you first purchased. Whether you are married or simply co-habiting will also have an effect on legal implications.

 

Q: If I move out of our joint property, will I still have to pay the mortgage?


A: If the mortgage is in joint names then you are still liable to pay the mortgage irrespective of whether you live in the property or not. 

 

Q: We are buying a property together. If me or my partner - or both of us - lose our jobs - who is responsible for paying the mortgage?


A: If the mortgage is in joint names you are both jointly and severally liable to meet the payments. If there is a default on the mortgage the lender may come after either of you irrespective of your personal circumstances. We would advise that in the event your financial situation changes you contact your lender to discuss before defaulting on the mortgage as they may be able to offer you a payment holiday or lower payments. This is dependent on your mortgage and would be decided on a case by case basis.

COHABITATION AGREEMENTS

Q: What is a cohabitation agreement UK?


A: A cohabitation agreement is a document that sets out in advance a couple’s financial arrangements and any other personal agreements they wish to be included.

 

Q: Why do I need a cohabitation agreement UK?


A: It provides details of what the couple expects from each other should various circumstances such as death or separation occur.

 

Q: Is a cohabitation agreement legally binding?


A: Although the courts may not always enforce all of the clauses (as these agreements are considered honorary) they do tend to provide peace of mind and a point of referral.

Of course, there are a variety of means to provide you with security when purchasing a property with a partner. And it is so important you both take legal advice before agreeing on a course of action.

DECLARATION OF TRUST

Q: What is a declaration of trust UK?


A: A declaration of Trust is a legal document that is used to outline the financial arrangement between joint owners of a property. 

 

Q: Why do we need to have a declaration of trust UK?


A: This document is commonly used when unmarried couples are cohabiting and clarifies the percentage of deposit each person will pay. It also includes:

  1. The percentage of the property each person will own,
  2. How much the owner will contribute towards mortgage payments,
  3. What will happen should the owner decide to sell their share.

 

Q: My partner and I want to buy a property together but he/she earns a lot less / a lot more than I do. What approach should we take to ownership?


A: You could consider entering into a Declaration of Trust or similar agreement when you purchase which will set out the agreement between you as to who will make the payments towards the property. Please note, however, that if the mortgage is in joint names you are both jointly and severally liable to meet the payments and the lender will not care about any private agreement. If there is a default on the mortgage the lender may come after either of you irrespective of the terms of your Declaration.

JOINT TENANTS OR TENANTS IN COMMON

Q: What does it mean to own a property as ‘joint tenants’ or ‘tenants in common’?


A: Joint tenants and tenants in common are two forms of ownership of a property which is bought by more than one person. With joint tenants, each party has an interest in the property but that interest is not specific. Upon death the interest will automatically pass to the surviving owners, irrespective of the terms of any Will or intestacy.

For Tenants in common, each owner has a specified interest i.e. 50/50, 1/3rd. Upon death, that share will pass in accordance with that person’s Will or intestacy which means it may not go to the surviving owners.

 

Q: Do we have to be married or unmarried to be classed as joint tenants or tenants in common?


A: No, it does not matter.

BUYING A PROPERTY - MAKE A WILL

Q: What is a Will UK?


A: Your will is the most common and useful tool for establishing your personal assets and wishes for the future. It includes exactly what assets belong to you rather than your partner. 

 

Q: Why do I need to make a Will UK?


A: It is essential you have a will in place, otherwise, your estate could go into intestacy. If it does, there is no guarantee who will inherit your assets.

We encourage you to make a will when buying a property, whether jointly or solely. A will is essential for security in the future.

Please note that the above information is a basic guide, for more information please get in touch today.





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