The complexities for unmarried couples when purchasing a property

Residential property sales increased by nearly a quarter during the pandemic. This significant surge has raised many questions relating to cohabitation and what rights couples have in relation to their property and living situation, particularly for unmarried couples. In this article, Hatch Brenner Solicitors’ Conveyancing Executive, Happy Khumbeni, and Family Law Partner, Amy Walpole, explore the complexities for unmarried couples purchasing property.

Cohabitation

It is commonly believed:

1. when you have been cohabiting for a long time, you are automatically regarded as common law spouses/partners and therefore have the same rights as couples who are married

2. same-sex couples have fewer rights when they separate in comparison to opposite-sex couples

Both statements above are false.

Same-sex and opposite-sex couples who are married or in civil partnerships have greater legal entitlements once a relationship breaks down than couples who are simply cohabiting. For this reason, it is crucial that unmarried couples ensure they are adequately protected in the event their relationship breaks down and seek advice before cohabiting or purchasing a property together.

How can unmarried couples protect themselves and avoid costly legal disputes on separation?

Purchasing a property

When you decide to purchase a property together as a couple, it is vital to consider how the property is going to be owned. You can legally own a property in two ways:

• Tenants in common – When a property is bought as tenants in common, it means both parties can own unequal or equal proportions of the property. The percentage interest of the parties may differ if they are making different contributions to the property. There can be up to four named legal owners and the parties’ can specify how they wish their interest to pass on death within a Will.
• Joint tenants – When a property is bought as joint tenants, it means both parties own the property equally. It does not matter if one person has paid 80% of the deposit or is contributing more towards the mortgage repayments. As joint tenants, ownership is completely equal and on death would pass to the other party.

Declaration of Trust

In instances where unmarried couples wish to invest unequal amounts of capital in the property, we would recommend that the property be held as tenants in common and have a declaration of trust drawn up which legally sets out the percentage of the property which each person is entitled, what each party will be contributing to the property and the impact if these contributions alter.

A declaration of trust can also be used to protect a third party (e.g. parents), if they are assisting an unmarried couple in the purchase of a property, to protect their investment.

Cohabitation Agreement

If you are not married or in a civil partnership, you may wish to consider entering into a cohabitation agreement. This will confirm the ownership of the property, how each cohabitee will contribute to the running cost and what should happen in the event of a separation.

When to seek Legal Advice

Buying a property is one of the biggest investments that occur in an individual’s life. As such it is very important to ensure that there is a formal document which clearly sets out who owns the property and in what proportions, particularly for unmarried couples.

If you already own a property with your partner but are not sure whether you are adequately protected, a joint tenancy can be severed, and a declaration of trust or cohabitation agreement executed with the agreement of your partner. Please seek advice if you are uncertain and feel you require further protection.

Future-proofing your property

It is also important for couples to consider whom they want to benefit from their estate on death. Do you want your partner to inherit the property or just the right to occupy the property? It is important an accurate Will is in place to express a party’s intention on death. These intentions could be entirely different to provisions which may be put in place in the event of a relationship breakdown.

What to do next?

If you are looking to purchase a property with your long-term partner, or to protect your interest in a property please consult the Hatch Brenner Property and Family team in Norwich. Please contact Amy Walpole on 01603 214 220 or email [email protected].