There's a growing number of couples choosing to buy a property together in today’s modern times, even without getting married or a civil partnership. This is suddenly booming because it's a great way to secure a property and climb up the ladder when house prices are at an affordable price. Not to mention, it's a great way to get the keys to their dream home until they get married.
Unfortunately, cohabiting couples don't fully understand how the law applies to them. The biggest misconception is that one gains "rights" under the length of the relationship, but that's not the case. Confusion can arise in property ownership for cohabiting couples, so it pays to do some research and understand its complexities.
When two or more people are looking into buying a property together, it's crucial to know the types of joint ownership available to you and decide on a method that best suits your financial situation. In addition, sitting down and discussing potential complications can provide you with a smoother buying process with less risk.
Another thing you should know is that when a property is sold, all the mortgages and charges have to be paid in full; this includes the estate agents and conveyancing fees that are on sale. The remaining balance can only be divided among the owners, which you should also consider. Oftentimes, working with a conveyancing solicitor can help you understand potential financial woes.
If you're interested in buying a property with your partner, even if you aren't married to each other yet, it pays to know what you can expect from the whole home buying journey. With that being said, our team has compiled all the need-to-knows so you and your partner are well aware of the whole process and potential issues you may face. Let's take a look!
What Should We Look at Before Buying a Property?
When you and your partner are buying a property, there are two key considerations:
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Do you want the property to be jointly owned, so both have an equal interest in the property? This way, when one dies, the survivor automatically owns the property?
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Do you want the property to be jointly owned so that each owns a specified share of the property and leaves each share by will?
If you choose the second option, there are other things to consider: Do you want to own the property in equal shares, or do you want to own it in unequal shares, meaning you want to protect the owner who's putting more money into the purchase?
Now, let's dig deeper into both options. Option 1 is known as the Joint Tenants option, while the second option is known as the Tenants in Common. You must record this at the time of purchase so that you can make proper arrangements later on. Otherwise, only married couples can change property rights.
Usually, owners who buy as tenants in common are advised to enter into a Declaration of Trust, which is a deed that lays out their respective interests in the proceeds of sales and matters that are related to this.
How Do You Protect Both Interests of Each Party?
One of the most important things to consider when buying a property with someone else is choosing the best tenancy structure. Usually, the following questions will arise during ownership or when another party wishes to move out:
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How will the property be valued when one of the owners wants to sell their share?
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Can the current owner get "first refusal"?
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Can an owner leave their share to another person?
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How will the property sale proceeds be split if the joint tenants make an unequal contribution to the mortgage?
To clear these questions, a Declaration of Trust or Cohabitation Agreement can be used to address these points. It helps remove stress and confusion from the process if one of the parties chooses to sell their share.
Seeing as this can be a bit complex, it's worth talking to an agent or legal professional to ensure that it is carried out properly. Having a clear agreement can help avoid future complications that can otherwise ruin a partnership.
How Much Percentage of the Property Will I Own?
Typically, when buying a property with someone else, individual shares of the ownership is usually considered to be 50:50, regardless of how much each of you pays to buy the property.
If you want to have a different arrangement because one of you is contributing a larger amount than the other, you will need to have your percentage of ownership in a legally binding document.
How Should You Pay the Mortgage and Other Bills?
If one party is contributing more than the other towards mortgage payment and other bills, you should also consider this if you're thinking of selling the house.
With that said, it may be a good idea to make arrangements in advance to understand how much percentage each of you will contribute to cover ongoing costs like mortgage payments and other differences. Included here are your conveyancing fees, which you should discuss with your conveyancing solicitor as well.
If this is unclear and you're unsure how much each of you will contribute, having an agreement drawn up that includes the percentage of property each of you will own can help with how much you should contribute for ownership.
The Bottom Line: It Pays to Know the How to Deal with Owning a Property Even as an Unmarried Couple
There are many reasons unmarried couples buy a property—this could be to diversify their investments or start taking root early for when they decide to tie the know. Either way, there are many things that couples need to consider so that each part of the property is well protected.
All of these can be pretty complicated, from choosing the right property to invest in to handling all the monthly fees and legal documents. So when it comes to dealing with conveyancing, it's worth discussing the best option with your conveyancing solicitor, so you have the best deal that fits you and your partner or friend.
There's no doubt that buying a home can be a bit complex, but doing enough research and asking the right questions can help you throughout the whole process. Not to mention, you won't have to deal with issues related to shares if you and your partner discuss this and come up with an agreement early on.
How Can We Help You?
If you're looking for conveyancing solicitors in County Durham, it's best to check out the Conveyancing Calculator. We offer a conveyancing calculator and match you with fully-regulated conveyancing professionals that provide competitive conveyancing quotes across the UK.
Our SRA-regulated solicitors and licensed conveyancers can protect your property for sale, purchases, or help you with a remortgage. Looking for a residential conveyancing expert? Reach out to us today!
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