Finding Love Later in Life: Moving in Together

By Karen Pritchard

Principal Associate

A serious step in any relationship is when it moves to living together. This may mean one person moving into the home of the other, or finding a new home to live in.

If the Property is Owned in One Person’s Name

Where the property is to be owned by one person but the other is to live there, you should ensure that there is a cohabitation agreement in place. This will help to ensure that there is a clear agreement that the non-owner will not acquire an interest in the property.

A cohabitation agreement can also deal with other issues, such as ownership of cars, bank accounts and furniture for example, or contributions towards the household outgoings.

If the Property is to be Owned in Joint Names

Where the property is to be jointly owned, it is advisable to have a declaration of trust. it may be that one person will provide the majority or all of the deposit. It may be that the couple intend to make unequal repayments towards the mortgage. A declaration of trust can set out what each person will recover if the relationship breaks down, and whether the property should be sold or one person should buy out the other.

There are two ways of jointly owning a property – as joint tenants or as tenants in common. You and your co-purchaser will need to choose how you wish to own the property when you buy it.

Owning a property as joint tenants means that you both own the property equally. On a sale, you would each be entitled to 50% of the proceeds of sale. You would not be able to recover any additional amounts that you had individually paid to the deposit or the mortgage repayments. The 50/50 division is very difficult to argue.

If you own a property as tenants in common you have defined shares in the property. It is possible, and sensible, to protect your deposit by entering into a declaration of trust. This document would provide that, on a sale, you would recover your initial deposit and document how the remainder of the equity in the property is to be shared. This could be in proportion of how the mortgage repayments will be shared, for example.

A declaration of trust can be quite simple, and just set out what each of the couple is to receive if the relationship breaks down. Or a declaration can be far more comprehensive, and cover, for example, mechanisms for what should happen in the event that one of you wishes to sell and the other doesn’t, what should happen to the property in the event of the death of either of you, what happens if one of you is made bankrupt, and what should happen if one of you wishes to ‘buy out’ the other.

Remember that if you and your co-purchaser marry in future, the declaration of trust will be a factor to be taken into account on divorce and would not be conclusive as to how the equity in the property is to be divided. Advice should be taken before entering into a marriage so that you can be protected. See part 2 of this series for more advice on how to protect yourself if you marry. Part 2: Marriage

Where there is cohabitation, it is also important to think about what should happen to your interest in that property in the event of your death. This is covered in part 3 of this series. Part 3: Planning for Later Life and Death

For more information and to find out how we can help you, please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.