If you are unmarried and have purchased, or are intending to purchase, a property with your partner, it is important that your interest is accurately reflected – and protected.
Complexities can arise where one party contributes more to the purchase price of the property or to the mortgage repayments.
It is important that you take advice when purchasing the property (it is sensible to seek advice from a solicitor or conveyancer independently of your partner - even if you are jointly instructing a solicitor/conveyancer to deal with the purchase).
There are two ways of owning property jointly with another:
• Joint tenants – if you and your partner own the property jointly as joint tenants this means that you each have an equal share and, importantly, upon your death your share of the property would automatically pass to your partner (and vice versa) irrespective of any contrary intention expressed in your Will or otherwise.
• Tenants in common – an alternative to joint ownership as ‘joint tenants’ is to own the property as tenants in common. This can be in equal shares or specified unequal shares. This can be an appropriate way of jointly owning a property where the parties are making unequal contributions towards the purchase price. In the event of your death, your share of the property would pass in accordance with your Will or, in the absence of a Will, in accordance with the Intestacy Rules (a set of rules in place which determine who inherits your estate).
If you are making a greater contribution to the purchase price then it may be sensible to ensure the property is owned as tenants in common to reflect your share. In addition, your share can be further protected by a:
Declaration of Trust
This is a document entered into by both parties to record their respective shares in the beneficial interest in the property. It can include provision for when and how a property should be sold and the division of the equity.
If you are not the legal owner of the property but have a financial interest in it (e.g. by contributing to its purchase price) or if you have loaned money to your property-owning partner, it may be sensible to secure your interest by way of a legal charge which operates in a similar way to a mortgage. The property cannot be sold without the legal charge being repaid and the charge can set a date by which the loan must be repaid, or the property must be sold and the charge repaid.
The above sets out ways in which you can protect yourself when purchasing a property with another or to secure your financial interest in a property owned by your partner. Unfortunately, in some cases where property ownership has not been protected in advance disputes do arise. This may necessitate one party making an application to Court for the Court to determine their interest in the property (Trusts of Land and Appointment of Trustees Act 1996).
The Family Team at Howes Percival is experienced in advising clients in relation to protecting property ownership/financial interests and, in the event that a dispute does arise, to representing clients in Court proceedings.