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Not married? The importance of co-habitation agreements

One of the most exciting times in a couple’s lives is when they buy a property together. As less and less couples are getting married, the purchase of a property is often one of the most significant declaration of the parties’ commitment to each other.  The change to home owners from tenants is a huge step with all the attendant responsibilities and pleasures of having your own property.

At the time of purchase very few couples want to consider what would happen to their home if their relationship were to break down.  Numerous documents are sent out by lawyers, dealing with issues such as freeholds, leaseholds, mortgages, easements and covenants. There is a lot to take in but within those documents there will be a question as to how you and your partner want to own your property.  This seems such a basic question, “we want to be owners, together, it is our property belonging to both of us”.

The ownership of land is divided into two areas; the legal title and the beneficial entitlement. The legal title is held by the people whose names are registered at the land registry as the owners or who are named on the title deed. It is these people who jointly can mortgage, sell or transfer the property. However, having your name on the deed or register does not determine how much each party individually owns.

So if one party provided all or most of the deposit, or if the family of one party gave money to buy the property, they may want that to be recognised and to be reflected in how the property is to be owned.  If this is not decided when the property is purchased, the owners may find that it is too late to try and divide the house if the relationship falls apart.

You can either own your home together as “joint tenants” where you both own all the property in undivided shares or as “Tenants in common” where each own an individual share in the property and that share is defined at the time the property is transferred to the owners.

Where there have been unequal contributions, parties might want to consider recording those contributions in a trust deed or cohabitation contract which would then set out the parties’ entitlement in the future.  Such a contract could also record other agreements including who is responsible for paying the mortgage, or for repairs.  A properly drafted agreement where both parties have been advised as to their rights and obligations can save a lot of trouble and costs later on.

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