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Cohabiting Couples and Property Ownership

Cohabiting Couples and Property Ownership

11 September 2019 Jennifer Duckett

Prime Minister Boris Johnson and his partner, Carrie Symonds have become the first unmarried couple to reside at Number 10.  And according to the Office of National Statistics, the number of us cohabiting has increased by 25.8% over the last decade. Cohabiting couples are officially the fastest growing family type and whilst it’s the preferred option for many, there are some legal issues cohabiting couples should consider when thinking about ownership of property.

Common Law Marriage

I should firstly just point out that the term ‘common-law’ means nothing in England and Wales, contrary to many people’s mistaken beliefs. Cohabiting couples have no legal rights, not as married couples or civil partners do.

Property in Joint Names

If you cohabit with your partner and own your property jointly, you should check how you elected to own it when you bought it, as there are two ways in which you can own property. It is very easy to change the way you own property too, if on reading this you decide that you want to change the deeds. You can either own property as joint tenants or as tenants in common.  If you own your property as joint tenants, you are both seen as one legal entity and neither of you have a defined share in the equity.  If you own your property as tenants in common, the law sees you as two separate entities with an equal share in the equity i.e. you each own 50%.

Declaration of Trust

It’s very common for couples to contribute different amounts towards the purchase price and neither of the above options may sound right to you. You may wish to protect the individual contribution you made, particularly if you were assisted by way of a gift from family; had saved up a large share of the deposit; or used inheritance towards the purchase. You can protect your individual contributions by making a Declaration of Trust, which is a document that sets out the equity you each own. It would be signed by both of you and relied upon should your relationship break down, avoiding disputes and potentially significant legal fees in resolving things.

Protecting Your Assets

Another thing to think about is what would happen to the property if one of you died. If you are joint tenants, the survivor of you would inherit the property outright and become the sole owner, regardless of what your Will states.  This is because the law does not distinguish between owners holding as joint tenants; it essentially treats them as a single entity. This might seem reasonable on first glance, but what would happen if your surviving partner remarried or went bankrupt and the entire property was at risk of being depleted? Would you want to take steps in your Will to preserve your assets for your chosen beneficiaries, preventing the survivor from depleting them after you had died? If you have concern about these things, or anything else, then you should seek the advice of a solicitor who would be able to talk through your options when making your Will.

The importance of having a will

If you do already own your property as tenants in common and you don’t have a Will in place, have you thought about what would happen to your share of the property on your death, whether this is a 50% share or a share that you’ve defined in a Declaration of Trust?  If you’re not married and you’ve not made a Will, your share would pass under the rules of intestacy and your surviving partner could end up owning the home you live in jointly with your parents, children, siblings…the list goes on. If this is not what either of you would want, and it tends not to be, then you should again seek legal advice and ensure that you have a professionally drafted Will. 

Keep you legal documents up to date

If you do decide to marry or enter into a civil partnership later down the line, any Will that you had previously made becomes void and any Declaration of Trust you had made could also be impacted. Whilst not the most romantic conversation to have with impending nuptials, it’s an important one!