By Amanda Barker, Conveyancing Assistant
One of the nicest parts of a Conveyancer’s job is helping couples to achieve their dream of buying a house together. It is always a pleasure to meet people who are happy and excited to be setting out on a new phase in their lives.
However, at the start of the transaction, there is one question that you should always ask: “What would you do if you split up?”
This is probably the last thing anyone wants to think about at this exciting time, when they are about to set up home with their loved one. The usual reply is: “Oh, it will be fine” “We trust each other” “We have talked it through”
Unfortunately, this is something that you need to think about. Careful planning beforehand can help make the heartbreak of a future split, should it happen, slightly less painful.
Purchasing a property in joint names
If you both own the property you will avoid any problems that can arise when dividing up the proceeds on sale. This can be especially hard when one party owns the property, but the other party may have contributed financially to improving the property, paying the mortgage, etc.
It also provides some protection from one party, the owner of the property, being able to ask the other party to leave. A non-owning partner would usually have no right to remain in the property.
There are two ways that you can own the property together and avoid these difficult situations:
- Joint Tenants – this means you own the property in equal shares and upon the death of the first person the survivor automatically inherits the whole of the property. Married couples or those in civil partnerships, unless there are Inheritance Tax considerations, tend to hold their properties as joint tenants.
- Tenants in Common – this means that you hold a predetermined share of the property, e.g. 50/50 or 60/40. Unmarried couples, friends, people in second marriages who may have children from a previous relationship, or those who contributed unequal contributions usually hold property as Tenants in Common.
Make a Declaration of Trust
Where the contributions are unequal, it is a good idea to enter into a Declaration of Trust. A Declaration of Trust is a legally binding document that clearly outlines how much of the property you each own depending on the contributions made and how the proceeds would be divided should you split up or sell the property.
The Deed can always be destroyed at a later date, or reviewed should you decide to marry or enter into a civil partnership.
Planning for the future
One further important question I always ask: “Have you made a Will?”
Where a property is held by the parties as joint tenants, when one party dies, their share of the property passes to the surviving joint owner automatically on their death, regardless of whether they have made a Will.
Where the parties are tenants in common however, unlike married couples (or those in a civil partnership), the survivor will not automatically inherit if their partner dies without a Will. Therefore it is especially important to ensure that you have a Will in place if you are in a relationship but are not married or in a civil partnership.
Are you buying a home together? Speak to Switalskis’ Conveyancing Team today for a quote, call 0845 138 0458 or complete the contact form below and we’ll call you back.
Disclaimer: The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice, and the law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice on their own particular circumstances.