If you are in the process of buying a house, you are undertaking what will probably be the most substantial investment in your lifetime.
It is essential that you give some thought to what will happen in the future, whether you are buying as a married couple or as partners.
A ‘partner’ relationship may be between partners of different sexes, or of the same sex, or as friends or relatives. Whatever the nature of your own partnership you need to think about the joint property ownership.
Advice for married couples
As a married couple you may be first time buyers as newly weds (like me – I became Mrs Lloyd on 30th July!), or you may be marrying again after previous marriages (for either of you) have been dissolved.
Whatever your own individual circumstances you will need to consider what may happen when your present relationship ends whether by death, separation, divorce or other cause.
This note can only give a brief indication of the problems and possible solutions. If you have any doubts as to your own position, please do not hesitate to ask us for advice. The right advice now can help to avoid problems, and possibly expensive litigation, in the future.
Joint property ownership – your options
If you are buying property jointly there are two types of ownership you should consider:
1. Beneficial Joint Tenants
This means that you will own the property in equal shares.
On the death of either of you, the property will become the sole property of the survivor without the need for further paperwork. This is the usual basis for those buying as a married couple and especially for first time marriages.
It is possible to sever a joint tenancy at any point to become a tenancy in common.
2. Tenants in Common
This means that you own the property in specified shares (which may well still be equally).
On selling the house you will each be entitled to this share in the sale proceeds after the mortgage and all costs have been paid. In the event of the death of a joint owner the share of that partner will not pass automatically to the surviving partner but will form part of that partner’s estate and be dealt with usually as detailed in his or her will.
This is the significant difference between this and ownership as beneficial joint tenants.
Married and non-married partnerships
It is not pleasant, or easy, to think about what may happen if a relationship, whether in marriage or otherwise, comes to an end by separation or divorce. It is nevertheless a sad fact that a substantial proportion of relationships do end this way, and different considerations apply depending on whether you are married or not.
On divorce or separation the court decides how it deals with joint property ownership, and has to first consider the needs of children for a home with one or other partner. If any wishes of your own are to be taken into account they therefore have to be agreed upon by both parties at the outset and very clearly expressed.
This particularly affects second or subsequent marriages where one or other partner has contributed a major share of the purchase price of the matrimonial home, and wants to preserve this. For example, one or other partner may have put in substantial capital derived from a previous marriage which they wish to preserve for their own benefit, or for the benefit of the children of the previous marriage. Provision can be made for this when buying the property, but only if you give clear instructions to do this.
Whether your relationship has been established for a first time, or after previous relationships or marriages, the courts do not have such a clear framework for non-married couples.
Distributing money from the sale of any joint property ownership will therefore depend entirely on your own recorded intentions, which must take account of any contributions to the purchase price. If you are in this situation it is essential that you give us specific instructions as to how you intend to own the property and what is to happen to your interest in this on the death of either partner, or following separation. These can then be recorded in the purchase deed or by a separate Trust Deed.
My advice, for those wanting to own as tenants in common, would be to consider making a will. This will give you peace of mind and more importantly, allow you to carry on enjoying a new life together in your new home.