Picture the scene.
You’ve just snuggled up on the sofa in your new home with your partner.
You glance down at your watch which tells you it’s passed Presecco’clock already, a box set sits waiting in the wings.
It’s is like a fairytale come true.
What could possibly go wrong in the future?
Welcome to Day 25 of your Conveyancing questions answered all in one place: Setting Up Home with a Partner.
What Do You Need to Consider When You Set Up Home with a Partner?
There are a few legal issues to consider when you set up home with your partner in a new home.
We’re not trying to be killjoys and it’s all in your best interests.
We’d like you to follow these 5 simple steps to ensure that if misfortune does befall you or your partner you will have done everything you needed to do legally.
And please note that these steps are as relevant for two “uncoupled” people who cannot afford a mortgage on their own to buy with another person to achieve that first step on the property ladder. This form of arrangement is a trend set to continue.
5 Simple Steps to Complete When You Are Setting Up Home With a Partner or “Non Partner”
1. Put the deeds of your property into joint names.
If the house is not in your name, then things can get tricky when sharing the profits on sale, especially when you have contributed to the deposit or mortgage payments, or another form of financial commitment, such as paying for any major work on the house.
If you put the deeds of your property in joint names from the beginning, it reduces the potential crisis of the named owner asking you to leave the property.
2. Jointly owned or equal or unequal shares?
There is a subtle but important difference to joint owning a property or each owning a share of the property.
You need to decide whether you would like equal rights (joint tenants), or a predetermined share (tenants in common), such as 70/30, 60/40.
If you decide to be ‘joint tenants’, you may still receive a sum of the property when you sell, and regardless of whether or not it is written in a Will, you will inherit the property if your other half passes away.
However, if you go for the ‘tenants in common’ option, you are only entitled to your specific share in the property, and no more.
Your Conveyancer can draw up a ‘Declaration of Trust’ in order to formally agree on how much of the property each person owns.
If you would like your share to go to your partner when you die, then you must also ensure you make your Will. The reason is that where you are not married or in a civil partnership, your share of the house or flat will not automatically transfer to your partner.
3. What happens if you split up?
Things can go wrong and you may decide you cannot live together.
The law protects cohabiting couples in some areas, but those rights and protections fall short of those for married couples or those in a civil partnership.
At best, you would try for as amicable a break up as possible. You would try to jointly agree who can continue to live at the property or you may decide that it is both your interests to sell the property.
The worst case scenario if you have not legally protected yourselves and your relationship comes to an end could be an often complex and costly legal dispute.
A Declaration of Trust which we have already mentioned can be extended to cover such contingencies as a split up.
Other contingencies can cover non-payment of the mortgage, death and one partner not living at the property for a defined period.
So if you break up, this document will save you a lot of money, time and hassle and also give you reassurance and peace of mind.
4. Work out your ongoing running expenses for your property.
If you would prefer a belt and braces approach and you would prefer a micro-managed agreement so as to avoid any possible dispute then a “Cohabitation Agreement” would be the answer.
Such agreements are not uncommon where partners agree on an unequal share.
Each person agrees what they expect from the other and discuss what will happen if they separate or die.
These are simply ‘honourable agreements’, so not all clauses may be enforced by the court.
Regardless, the Deed protects both partners, as both will benefit from full disclosure of finances at the beginning, which should hopefully limit disagreements later on.
The Deed can always be renewed, reviewed or ripped at a later date.
You and your partner should take separate legal advice before signing such an agreement.
A WILL will protect you.
This is essential advice, especially where you have decided to hold the property as Tenants in Common.
There is no guarantee that your partner will obtain the property in the event of your death. You must be prepared for the worst case scenario: not meeting an agreement with the deceased partner's executors and being forced to sell the property, only receiving your original share.
Look for Conveyancers who are willing to give you a fixed price for any additional Deeds or Documents and will also provide a fixed fee guarantee with no hidden costs.