Living together as an unmarried couple is fast becoming the norm in the UK.
Figures within the last year have indicated that the cohabiting couple families continues to be the fastest growing family type in the UK. The 2016 bulletin, Households and Families, published by the Office for National Statistics (ONS), states that cohabiting couple families in the UK have doubled from 1.5 million families in 1996 to 3.3 million families in 2016. Therefore it is vital when purchasing a property that you indicate how you and your partner wish to hold the legal title, to set out your rights in the event of a future separation or death.
Joint Ownership
This is often also known as holding the property as ‘Joint Tenants’. In this case each co-owner owns all of the property. When one co-owner dies, his interest disappears and since the surviving co-owner already owns all of the property, nothing passes or is transferred under any will. Little more needs to be done other than to record the death. Whilst this may be simple and convenient, it may not always be appropriate and this option should only be chosen with care.
Ownership in Common
This is often also known as holding the property as ‘Tenants in Common’. This is where each co-owner has a separate and distinct share of the property. For example a 50-50 or 70-30 share. On the death of a co-owner under an ownership in common arrangement, his share will not pass automatically to the survivor(s) but will pass according to the wishes expressed in the deceased’s Will (or to the next of kin under the intestacy rules if no will exists).
Declaration of Trust
The property can be held in Ownership in Common together subject to a formal legal Declaration of Trust.A Declaration of Trust is a binding document which demonstrates, in writing, the intention of the parties relating to the financial contributions made towards the purchase of the property A Declaration sets out any obligations and rights agreed upon by the parties such as the initial contribution to the purchase price, contributions towards mortgage repayments, legal costs and disbursements, responsibility for maintenance charges, outgoings and expenses and the arrangements for the sale of the property or a sale should a relationship breakdown. It is important that a Declaration of Trust reflects clearly the intention of the parties from the outset otherwise uncertainty or even unexpected results may arise.
A Declaration deals with the “beneficial interest/share” that each person will have in the property. A “beneficial interest/share” is basically an interest in the money and not the bricks and mortar of the property. A beneficial interest/share will not supersede or override any “legal interest”. For example if there is a mortgage secured on the property and the property is repossessed due to the non-payment the Lender will be able to deal with the legal title without any reference to the Declaration of Trust.
In all these cases legal advice should be sought to tailor to each individuals circumstances.
If you and your partner are looking to purchase a property, please do not hesitate to contact our expert property team free on 0808 1685 643 or email us on getmoving@ramsdens.co.uk