Buying your first home together is a big step forwards in any relationship. All too easily you can get caught up in the excitement of the property search and how you will decorate the living room or what new kitchen you will need that you fail to stop and actually consider how you are buying what is arguably one of the most valuable and expensive assets a person can acquire.
Despite the common misconception, there is no such legal status as that of “common law spouse”.
Choosing simply to live with a partner does not confer legal or financial entitlements upon the couple akin to that of a marriage. In fact, the law is very strict when it comes to the property rights of the unmarried couple where division of property upon separation reflects how the property is actually owned legally or beneficially. No account is taken of the relationship in terms of financial or other contributions they may have respectively made. There is not the blurring of ownership rights that can be found with a marriage, where the powers of the court upon divorce are greater than the powers of the court dealing with the unmarried couple. For the unmarried couple this can often produce an unfair outcome in the event of separation particularly for those who have been in a long-term relationship or where there are children as a result of the union.
At the outset, when the property is being purchased, it is always worth dedicating time to ensuring the property is acquired in the manner that reflects your intentions as to how the property would be owned and divided in the event of separation. How are you buying the property? Are you contributing in equal amounts both to the initial deposit and going forwards? If not and one party is paying more than the other, then should this be reflected in how the property is beneficially owned and do you need to seek advice on how this may be documented?
Cohabitation does not provide an automatic or guaranteed right to ownership of a partner’s property. Whilst cohabitants can apply to the court for a determination of whether or not a party has an interest in a property, the extent of such an interest and for an order dealing with how that interest is to be realised, the court’s powers are limited to establishing who are the legal and beneficial owners of a property and in what proportions. The court has no power to override the strict legal ownership of property that is determined and to potentially divide it differently as could occur on a divorce.
Jointly owned property
There are two ways of buying a property in joint names.
The first (“joint tenancy”) means the holding of an estate or property jointly by two or more parties, with the share of each passing to the other or others on death. The owners have an equal share in the entire property and not defined shares of the beneficial ownership.
The alternative is to own as “tenants in common” which will give you both specifically defined shares of beneficial ownership in the property which may be equal or otherwise and which can be useful if one party is going to be contributing more either initially or moving forwards. If electing this option, it is always useful to have documentation prepared to define the percentage shares of ownership in the hope of minimising the potential for future dispute.
Property owned in one person’s name
When a couple is unmarried it is notoriously difficult for a non-owning partner to be able to successfully claim a share in a property which is legally owned solely by the other.
The legal owner of the property will be presumed to also be the sole beneficial owner and if the non-owing party is to succeed in claiming a share, he/she will need to be able to prove either that he/she has made a direct contribution to the acquisition of the property (i.e. by way of paying the initial deposit or contributing to the payment of the mortgage) or that there was some form of agreement, arrangement or understanding that the beneficial ownership of the property was to be shared and that there is some form of relevant conduct on the part of the non-owning party in reliance of the same. Claims of this nature are not straightforward and can be both complex and costly. If you find yourself in this position, you should not underestimate the importance of seeking specialist legal advice.
How you own a property will dictate how you divide the property in the event of your relationship failing. For this reason it is always recommended that specialist advice from an experienced family law solicitor is sought whenever you consider buying a property with your partner and that your intentions are fully documented not least in a living together/cohabitation agreement. Do not leave it to chance and going forwards if your plans change and you contribute differently to the property that was your original intention, make sure this is also properly documented and not overlooked.