14 June 2016

What to consider before sharing a mortgage

While happily unmarried couples are the largest growing family type in the UK, the law is still not clear on the rights of those who live together but are not wedded or in a civil partnership.

Thinking about breaking up with the person you’re about to move in with certainly isn’t romantic, but it pays to at least be aware of your legal rights should you decide to part ways at some point in the future. Knowing where you stand will stop you adding headache to the heartache if your relationship ends.

‘Many people think they have rights because they have been living together for a long time and may even have children together,’ says Christina Blacklaws, specialist family lawyer at Cripps LLP and executive member of the Family Justice Council. ‘Unfortunately, there is no specific protection under the law for people in such a situation.’

If you’re moving in with a partner for the first time, there are steps that you can take to protect yourself however.

If you’re going to own jointly…

One of you may have agreed to pay a larger share of the deposit or to make higher monthly mortgage repayments than the other.

‘The easiest and safest thing to do to ensure that you are protected is to have a solicitor prepare legally binding documents,’ advises Blacklaws. ‘In a Deed of Trust you can be clear as to how you wish to share a property.’

A Deed of Trust, also known as a Declaration of Trust, is a legally binding agreement which will outline:

  • How much you each paid towards the deposit
  • What your shares in the property are and how much you'll each contribute towards the mortgage.

It can also detail how you'll buy one another out of the property, and how you split any profit if the property is sold at a later date.

It's generally recommended that you seek qualified legal advice when drawing up your Declaration of Trust, but there are also a number of websites, such as Rocket Lawyer, which provide you with a template for the declaration.

Note: it's essential that the signing of the declaration is independently witnessed, otherwise it won’t be legally binding.

If you buy property together in Scotland, it's important to decide whether to add in a clause called a Survivorship Destination which would mean that if one of you were to die, the surviving partner would automatically inherit the other partner’s share. It’s a good idea to talk to a solicitor about this part, as including this clause imposes limits on your will.

If your name is not on the deeds (or vice versa)

If you’re moving into your partner’s home and your name is not on the deeds, you may not be entitled to anything in the case of a split, even if you contribute to the mortgage or pay for building work on the property.

It's a common myth that common law marriage exists in the UK, one which left Pamela Curran with ‘Nothing but an Airedale Terrier’ after splitting with her partner, Brian Collins. The county court judge in the case said he had no choice but to ‘ignore his human sympathies’ and to ‘apply the law as he saw it.’

‘To protect yourself and your partner, have a cohabitation agreement – sometimes referred to as a “no nup” – which can set out the financial arrangements and distribution of assets in the case of a split,’ says Blacklaws.

Protect your future

No one wants to think about their relationship ending, especially when you’ve just made the decision to live together, but it's important that you talk about the eventuality when you move in or purchase a property together. You are not only protecting yourself, but also your partner by ensuring that you have a plan in place if your future looks different to the one you currently imagine.

If you’re looking to buy a new place with your partner, find out more about our mortgages.

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