Len Dastard wrestles with unmarried couples buying a home
Hola de nuevo, los lectores! It is I, Len Dastard, a real-life litigation executive wearing an imaginary leotard. I come to you from the warmth of my casa Mexicana with some important advice - advice which you ignore at your peligro.
Buying a house is one of the biggest purchases that you will make in your lifetime. Sometimes it takes years of saving to get on to the property ladder. In all of the excitement involved in buying a house, many do not consider the consequences of how they wish to own the property.
There are two ways to own a house in joint names:
• Both owners own the entire house together and upon the death of one owner the surviving owner will automatically own the entire house. If the couple separate, the starting point is that they own in equal shares but this can be subject to legal.
• Each owns a specific share of the house; if one owner dies this does not change the remaining owner's share. If the house is owned as tenants in common the shares will be 50-50 unless a Declaration of Trust is prepared or the Land Register specifies a different arrangement for example 70-30, 60-40 etc.
Whilst many couples think about what should happen to their house if they were to die, and provide for this in a Will, they do not consider what should happen to their share in the house if their relationship breaks up. This is the time a dispute can and frequently does arise, particularly if one member of the couple paid the larger share of the mortgage payments or the deposit for the property, either from their own money or gifts from other family members.
What about married couples?
The Court follows the principles of the Matrimonial Causes Act 1973 and has a wide discretion to decide how the house is shared. The Court can look at factors such as contributions, sharing and fairness. For unmarried couples the principles of the Matrimonial Causes Act 1973 do not apply. The Court is governed by land law and the Trusts of Land and Appointment of Trustees Act 1996. This can lead to results which one party may feel is unfair.
Many people are blinded by love and would not give any of this much thought, but this topic is particularly important if you are contributing more than your partner in terms of a deposit or mortgage payments.
Received financial assistance from parents?
Many young couples will find that their parents help them with the purchase of their first home by providing some or all of the deposit or indeed helping out with mortgage payments, and this is another aspect to consider. If you are lucky enough to receive such financial assistance it is advisable to consider how your parents will be repaid over time, if at all, or what would happen if you and your unmarried partner split up.
Once you have done this you should have the arrangement with your parents recorded in a Declaration of Trust confirming whether the money is a gift or whether it is to be repaid and if so, how much and on what conditions. Without such a document, if there is any dispute when the house is sold or if you separate from your partner, your parents may not be able to recover their money and this can lead to additional family difficulties, uncertainty and expensive litigation. All of this could easily be avoided by considering the above.
If you have a solicitor acting for you in the conveyancing transaction they should advise you on the above. It is definitely worth giving it some thought early on as this could save you time and expense when it comes to the point of exchanging contracts.
Is this something you would consider? Are you an unmarried couple who has not specified a share in the property? You probably don't want to consider while the sex is still reasonably hot, but mark my words, these issues can kick you in the piedras grandes.