Buying a home together is a major financial commitment. For unmarried couples, it is also worth spending some time thinking about how that property will be owned before the purchase goes through.
We often advise separating couples who bought a property together years earlier and say that they never really discussed what would happen if the relationship ended. At the time, they were buying a home together and understandably were not thinking about separation.
The difficulty is that unmarried couples do not have the same financial claims against one another as spouses or civil partners if they separate.
There is still a widespread belief in the idea of a “common law husband” or “common law wife”. Living together for a long time does not, by itself, give a couple the same financial rights as marriage. When an unmarried couple separates and there is a dispute about their home, property and trust law can become particularly important.
What if one of you is paying more towards the deposit?
This is something worth dealing with at the outset.
A couple might buy a property for £500,000 with one partner contributing £100,000 towards the deposit and the other contributing £25,000. They may both then pay the mortgage equally.
They need to decide what they intend those different contributions to mean.
They may be perfectly happy to own the property equally despite having contributed different amounts. Alternatively, they may want the larger deposit to be reflected in their respective shares or agree that the deposits will be returned first if the property is sold and the remaining equity divided in agreed proportions.
Either arrangement may be appropriate, but it should be agreed at the outset and properly recorded.
Joint tenants or tenants in common?
When a property is bought jointly, the couple will need to consider how they hold the beneficial interest in it.
Beneficial joint tenants do not have separate defined shares in the property. If one owner dies, the beneficial interest passes automatically to the surviving owner.
Tenants in common can hold separate shares. Those shares can be equal, but they do not have to be. One person might, for example, have a 60% beneficial interest and the other 40%. A tenant in common can also leave their share under their Will rather than it passing automatically to the other owner.
This choice can therefore have consequences both if the relationship ends and if one of the owners dies.
Where does a Declaration of Trust come in?
Where couples are contributing different amounts, a Declaration of Trust can be particularly useful.
It can record how the beneficial interest in the property is held and the shares which each person owns. Depending on what the couple agree, it can also deal with matters such as how the proceeds are to be divided when the property is sold.
For example, if one partner is providing a substantial deposit from savings or money given to them by their parents, they may want that contribution properly reflected in the ownership arrangements rather than simply assuming it will be taken into account later.
We sometimes see the consequences when this has not been discussed. One person says, “I put most of the deposit in, so obviously I get that money back first.” The other person’s understanding may have been completely different.
Trying to establish years later what two people intended when they bought the property can be considerably more difficult than recording the agreement at the time.
What if the property is only in one person’s name
This can be more complicated.
The fact that an unmarried partner has lived in a property for many years does not automatically make them a joint owner. Equally, the fact that only one person’s name appears on the legal title does not necessarily answer every question about whether the other partner has acquired a beneficial interest.
Claims can arise where, for example, one partner says there was an agreement or common intention that they would have an interest in the property and that they acted in reliance on it. These cases are very fact-specific and can involve detailed consideration of what was said, what each person contributed and how they dealt with the property during the relationship.
They are also very different from financial claims on divorce. The court is not simply deciding what division would now be fair because the relationship has ended.
What happens if you separate?
If an unmarried couple jointly owns a property and cannot agree what should happen to it, disputes can arise over whether the property should be sold, whether one person should buy the other out and what each person is entitled to receive from the equity.
The starting point will include looking at how the property is owned and any documents recording the parties’ beneficial interests. Depending on the circumstances, disputes concerning the ownership or sale of the property may be dealt with under the Trusts of Land and Appointment of Trustees Act 1996, commonly referred to as TOLATA.
This is why the documents signed when the property was bought can become so important several years later.
Think about it while you are still agreeing
Nobody buying their first home together wants their solicitor to start talking about what will happen if they separate. But agreeing the position while both people are on good terms is usually much easier than trying to reconstruct it after the relationship has broken down.
For some couples, a Declaration of Trust dealing with the property will be sufficient. Others may want a wider cohabitation agreement dealing with the property alongside other financial arrangements during the relationship and what they intend to happen if they separate.
It is also sensible for unmarried couples buying property together to review their Wills. In particular, where the property is held as tenants in common, one owner’s share does not automatically pass to the other owner on death.
The arrangements should reflect what the couple have actually agreed, particularly where their financial contributions are unequal. Recording that agreement at the time of purchase can avoid a very different argument about ownership if the relationship later ends.
How we can help
Our Family Law team advises unmarried couples on cohabitation agreements, Declarations of Trust and disputes concerning property following separation. We can also advise where a relationship has already ended and there is disagreement about the ownership or sale of the family home.
If you are buying a property with your partner and want to protect your respective interests, or you have separated and are unsure what interest you have in a property, please contact our Family Law team on 01708 446781 or by email: mail@mosco.co.uk
Frequently Asked Questions
Does paying the mortgage give me rights to a house if I’m not married?
Not automatically. Unlike marriage, there is no automatic right to a share in a property simply because you have contributed to the mortgage or bills. If your name is not on the legal title, establishing a beneficial interest requires proving a common intention or agreement that you would have a share, which can lead to complex and costly court disputes.
What happens to our property shares if one of us dies?
This depends entirely on how the property is owned. If you are beneficial joint tenants, the property automatically passes to the surviving partner, regardless of what your will says. If you are tenants in common, your share does not pass automatically; it will pass according to your will, or under the rules of intestacy if you do not have one.
Can a Declaration of Trust be changed after we buy the house?
Yes, but only if both parties agree to the change. A Declaration of Trust is a legally binding document, so it cannot be altered or rewritten by one partner acting alone. If your financial arrangements change later on—for example, if one person pays a large lump sum to clear the mortgage—a new deed will need to be drawn up to reflect the updated agreement.
