Family lawyer Nicole Turner answers key questions about buying a property with a partner when you’re not married and how you can ensure your financial security going into this position, as well as if you break up.
“My partner and I have been together for five years, and we moved into a rental three years ago. We are finally ready to buy and are very excited to have found a place we love. I’ve heard I should get something ‘formal’ in place as we’re not married, but I’m not sure what that is? And we are unsure on whether we should be joint tenants or tenants in common.”
Q: How can I make sure that the money I contribute to the house is protected?
A: First of all, congratulations on finding a home you love. Buying a home together is an exciting milestone but as you are unmarried then this can be more complicated than if you were married. Unfortunately, the law does not automatically protect each person’s financial interests as it does for married couples. You are therefore right to consider how you can protect the money that you contribute.
I appreciate that sometimes conversations around how money is to be protected in case you break up can be a difficult conversation to have at such an exciting time but it doesn’t have to be controversial or awkward. Having the conversation ensures that you both know exactly where you stand and can move forward on a more certain footing.
There are legal documents that you can put in place to help clarify ownership and protect both your interests. If one of you is contributing more financially, such as paying all or a larger proportion of the deposit, then you could have a Declaration of Trust drawn up. This outlines each of your financial contributions and how any net proceeds from a sale will be split. This protects everyone’s investment in the property and is legally binding, as it is submitted to the land registry.
You could also look to enter into a cohabitation agreement. This clarifies the assets that each of you have in your sole names, how finances such as the payment of bills/mortgage are to be managed and what happens to joint assets if a relationship ends. Therefore, can cover a wider range of circumstances than the Declaration of Trust.
A cohabitation agreement is not legally binding. However, the courts are increasingly recognising their intention and giving them decisive weight if prepared in the right way. Any agreement should be regularly reviewed and updated if there are any major changes, such as having a child.
Ultimately, which document is right for you depends on your individual circumstances and to ensure that you make an informed decision, it is best for you both to obtain independent legal advice prior to the purchase.
Q: What is the difference between joint tenants and tenants in common?
A: If you are joint tenants, then both of you own the whole of the property and you are entitled to an equal share of the sale proceeds. This is the case regardless of whether one of you contributes more financially to the deposit or mortgage repayments.
In addition, there is the “right of survivorship” and therefore when one joint tenant passes away, their share is automatically transferred to the surviving co-owner which overrides any provisions in a will.
If you are tenants in common, then you will each own the property in distinct shares. This can be equal shares or they can be unequal to reflect the fact that you have made unequal contributions, such as to the purchase price or mortgage repayments.
Unlike with joint tenants, if one of you passes away then your share will pass according to your Will rather than passing automatically to the surviving co-owner. It is therefore very important that your Wills are updated to reflect your wishes in this regard.
A mortgage adviser will be able to help you work through your options and decide what’s best for you as a couple.
Read more about tenants in common.
Read more about joint tenants.
Q: What if other people want to contribute, e.g. parents?
A: If third parties, such as parents, wish to contribute then this again should be documented fully so everyone is aware of the arrangement. You will need to be clear as to whether this contribution is to be treated as a gift or a loan.
It may be that the intention is that parents will be repaid directly, or the intention is that it is to be treated as one party’s contribution and repaid to that party upon any separation or if the property is to be sold.
Such arrangements can be document in a separate loan agreement with the third party, or a cohabitation agreement/Declaration of Trust. Ultimately, which document is right for you depends on your individual circumstances and to ensure that you make an informed decision, it is best for all parties to obtain independent legal advice prior to the purchase.
Q: Do we need to change our agreement if we get married or have a baby?
A: It is very important that any agreements are reviewed regularly, particularly if your circumstances change such as looking to get married and/or having a baby.
If you have a child, then you need to ensure that appropriate provision is made for them in any agreement.
If you later decide to get married, then this changes what financial settlement you may receive on a separation and claims are not as limited as when dealing with an unmarried couple. Therefore, it is likely that a cohabitation agreement will no longer be sufficient to protect your assets.
In those circumstances, prior to a marriage, you could have a prenuptial agreement drawn up (you can adapt any cohabitation agreement into a prenup or start from scratch). Prenuptial agreements are not currently legally binding in England and Wales but they are given significant weight by family courts when making decisions about financial orders, provided they are properly drafted by a legal expert. It is therefore important that legal advice is obtained when looking to convert any agreement into a prenuptial agreement.
Q: What happens to the house if we break up?
A: If you are unmarried and you separate, then this falls under a complex law called the Trust of Land and Appointment of Trustees Act 1996 (TOLATA). This is a very technical area of law, and you should seek expert legal advice as to fully understand your position.
Any claim will largely depend on whether you own the property as joint tenants or tenants in common and the court will look at the intentions of the cohabiting couple splitting up in relation to any property you own.
The court will look to any written evidence showing how you agreed any property should be owned, for example a cohabitation agreement and/or Declaration of Trust. If there is no written evidence, then the court will look at each party’s actions and intentions.
You and your ex-partner could seek to reach an agreement whereby one of you retains the property and provides a lump sum to the other to “buy-out” their interest. If this cannot be agreed, or is not achievable financially, then the property will need to be sold and the net proceeds will be divided in accordance with how you own the property.
Read more about the challenges for unmarried homebuyers and how to navigate them.
Summary of Recommendations for buying a house with a partner
- Ensure you get a legal document detailing each party’s financial interest: This could be a Declaration of Trust or a cohabitation agreement or both. Remember, a Declaration of Trust is legally binding and is submitted to the Land Registry. This document only covers property, but can detail more than just the couple’s contributions, e.g. if parents or grandparents helped out financially. A cohabitation agreement is broader. Speak to an expert family lawyer about your options.
- Decide whether you will be joint tenants or tenants in common: This is an important decision, and will determine the proceeds should you sell the property.
- Amend your documentation if your circumstances change: For example, if you later decide to get married, or you have a child together, you will need to ensure your agreements are kept up to date. Your Declaration of Trust remains legally binding if you marry, but a cohabitation agreement will not have relevance. You can convert your cohabitation agreement into a prenuptial agreement, or edit it to include provisions for any children.
Cohabitation FAQs
What is a common law husband/common law wife?
Unfortunately, the common law husband/wife is a myth that still pervades society. You might have seen it on forms, for example insurance, but this is not a legal term and does not mean anything in reality. The idea is that by virtue of living together, you are ‘de facto’ married and therefore enjoy the same legal and financial rights and protections that married couples do. However, this is not the case. In the eyes of the law, unmarried couples living together are known as cohabitees.
What are my rights as a cohabitee?
If you are living with your partner but not married or in a civil partnership, you have very limited rights or claims on finances and property.
The key thing to remember is that in the event of a breakdown of the relationship, any children you have are protected by law in the same way they would be if your marriage ended. The welfare of children is the court’s priority, whether parents are married or not.
The other main area is TOLATA, under which you may have a claim on property. This is a complex area of law and claims are not guaranteed. It is essential to seek expert advice from a family lawyer if you wish to make a claim.
We’ve lived together for over 5 years, does this change our legal status?
It is does not matter how long you have lived together if you are unmarried, your legal rights remain the same. The only thing that changes this is marriage or a civil partnership.
I own my home as a sole owner and my partner is moving in – can I change the ownership of my house?
Yes, you can change the way you own your home if you wish to add your partner to the ownership documents. You will need to apply to the Land Registry to do this.
You should also make sure you have any agreements on mortgage payments, renovations or other costs in writing as a Declaration of Trust or a cohabitation agreement.
