As a family lawyer, I am rarely involved at the start of a relationship when all is going well and people are considering moving in together. Instead, my involvement arises at the point the relationship is breaking down or has broken down. For clients who are not married, one of the first things I often have to do is obtain from the land registry a copy of the transfer deed they signed when they purchased the property. Unfortunately, this is when many people have an unpleasant surprise when I explain that this document is going to be of paramount importance in determining how much of the property they are entitled to receive now they are separating.
For parties who are not married, the law surrounding the ownership of property and assets is strict and can be brutal.
Buying a property in joint names – the legal position
When you buy a property in joint names with another person, your conveyancer should ask you whether you intend to own the property as property as joint tenants or tenants in common. In my experience, this choice is often explained by conveyancers to their clients in the following way:-
“If you buy as joint tenants this means if one of you were to die, the other person would automatically get all of the house, whereas if you buy as tenants in common, your share of the house will pass to whoever you leave it to under your will”.
Whilst this explanation is correct, what is often not made clear to people is that in the event they separate, this choice between joint tenants and tenants on common is also going to be highly significant in determining how much money they each receive from the equity in the property.
By choosing to purchase a property as joint tenants, you are expressly deciding that in the event you separate from your partner, you will each receive 50% of the equity in the property as you own the property jointly. Therefore, regardless if one party paid all the deposit or has been over paying the mortgage, you are each entitled to 50% of the property.
If you buy as tenants in common, you can express how much of the property each of you owns. If you expressly state that you own in equal shares (i.e. 50/50), then in the event of your separation this express declaration is going to be the default position.
The only way to rebut this presumption is to produce clear evidence that, following the purchase of the property, you and your partner discussed and agreed that you would own the property in some other way and you acted to your detriment relying on that agreement – something it can be very difficult to prove in the absence of a written agreement to this effect.
If you are not buying a property with your partner and instead perhaps they are simply moving into a property in your sole name, it may still be possible for your partner to claim a share of the value of the property even though their name is not on the title. To claim an interest in a property, the non-owning person would need to show that there was a common understanding with the owner that by doing some work/improvements to the property or by contributing towards the mortgage or paying for some work or improvements, they had acquired a financial interest in the property. This may not be easy to prove, but there are a large volume of cases where this has been successfully proved.
What should I do before we move in together?
If your partner is going to move into a property in your sole name or you are moving into a property in someone else’s sole name – consider a cohabitation agreement that sets out who is responsible for paying bills. It can also include a statement by the non-owning partner that they understand that they will not be gaining a financial interest in the property regardless of any work they do or any payments they make. Such an agreement can also record the circumstances in which the non-owning person can be asked to move out of the property.
If you are about to purchase a property in joint names – you need to consider what you would want to happen in the event your relationship broke down. Would you really be happy to share the value of the property 50/50 or would you expect to receive a share proportionate to your contributions to the purchase price? The deed you sign to purchase the property should reflect this.
If you marry or plan to marry
Once you marry, the situation changes. The matrimonial courts can transfer or redistribute assets between spouses as they consider fair and reasonable in the circumstances of your case. Therefore, if you intend to marry, simply signing the transfer deed or other deed to say how you own the property will not be conclusive. Instead, if you plan to marry, but want to specify that you want distinct shares of a property in the event of your separation, then you will need a prenuptial agreement.
My main message is think carefully when buying a house or moving in together, and if in doubt take some advice from a family lawyer.
Divorce & Family Lawyer, Bicester