When you first decide to start living together and wish to purchase a property, romance is always high on the agenda. The last thing on either of your minds is the legal aspects of living together and what is involved. You probably can’t ever imagine not being together and, anyway, won’t you have automatic rights to the property?
Well, that this isn’t always the case. You may think that couples living together have the same rights as married couples and that the law will protect you financially as you are a ‘common law spouse’. However, the concept of a ‘common law spouse’ is a myth and in reality you may have no financial rights if you separate or if one of you dies.
So, when you decide to buy a property with your partner, you must make sure that you discuss this at the outset – i.e. whether you wish to own the property as ‘joint tenants’ or ‘tenants in common’.
For cohabitees the basis on which you hold the property is extremely important.
When you co-own a property as ‘Joint Tenants’, each owner owns the property as a whole and neither party has a specific or identifiable share.
If you decide that you would like to sell your property that you own as joint tenants, you will then both be entitled to half of the sale proceeds regardless of how much either of you contributed when the property was purchased or who was financially responsible for outgoings such as mortgage repayments. Joint tenancy is also subject to the concept of ‘survivorship’, meaning that should one of you die then the surviving co-owner will automatically own the property outright.
Tenants in Common.
If you co-own a property as ‘Tenants in Common’, each co-owner owns a specific and quantifiable share of the property. This is usually a 50/50 division: however it is possible to hold the property in unequal proportions.
This type of agreement is ideal for people who wish to leave their share of the property to someone other than the co-owner upon their death. The concept of ‘survivorship’ does not apply and therefore, you are entitled to leave your individual share to your chosen beneficiaries under your Will. For example, if you have children from a previous relationship, you can guarantee that your children will benefit from the sale proceeds from the property in the event of your death.
For any further advice on any of the above or any other aspects of a property transaction, then please contact Thursfields property team who will be happy to discuss this further with you.