We all know that buying a house is a stressful process – but it’s exciting too. When it comes to buying a house with your partner, whether it is your first, second or even last home, there are some things that clients often overlook. The reason for this is their entire focus is on the house, getting the keys, booking the removal van, the re-decoration, the new kitchen etc., etc.
However, when you buy a house with your partner, there are certain things you should consider. You need to consider in whose name the title is held and how the title should be structured. Much also depends on your relationship status. This means whether you are married or in a civil partnership or cohabiting with someone but are neither married to them or in a civil partnership. Finally, you have to consider what happens on a sale or separation if there has been an unequal contribution to the deposit.
Perhaps the first issue is how the title to the property is held. As you are buying with your partner, that usually means the title will be in your joint names. That is fairly straight forward. However, you then need to decide if you wish to include or exclude a survivorship destination.
A survivorship destination means that if one of you should die, the title to the property automatically transfers to the survivor. This means nobody else will have a claim on the house whether you mention it in your Will or not. The instant you pass away, the whole title is then owned by your surviving partner.
The other alternative is when there is no survivorship destination. That means whilst you jointly own the house, when one of you dies, the deceased’s share in the house does not automatically transfer to the survivor. This is where it can get complicated and generally can cause upset.
When the house is held in joint names with no survivorship destination, we need to consider the Law of Succession to determine who becomes entitled to the deceased’s share in the house.
Again, we are faced with two situations. The first situation is where there is a Will and the second, where there is no Will.
Where there is a Will, the deceased will usually direct who should inherit the house. They might decide that their share in the house should be transferred to their partner. Alternatively, they might decide that their share in the house should be transferred to their children (or to some other person or persons). That would then mean that the surviving partner would then own the house jointly with someone else. When asked to advise in this type of scenario, we would normally recommend a provision be included in the Will directing that the surviving partner receive a liferent in the house. That means the surviving partner would be entitled to live in the house after the death of their partner even though they only owned a half share in the house. This protects the surviving partner’s right to live in the house.
If there is no liferent provision, there is always the possibility that those who inherit the deceased’s share of the house might try to force the sale of the house and that might mean making the surviving partner homeless.
Where there is no Will, the Law of Intestate Succession applies. Again, there are a couple of scenarios. The first of these is where the partners were married or in a civil partnership and the second where the parties were cohabiting but not married or in a civil partnership.
In this situation, we need to follow the rules of intestate succession.
If you and your partner are married or in a civil partnership, when one of you dies and there is no Will, your spouse or civil partner is entitled to the family home (or the deceased’s share in the family home) under Prior Rights. However, if you and your partner are cohabiting and are not either married or in a civil partnership and there is no Will, the surviving partner has no right to inherit anything from the deceased’s estate, far less the house. For a surviving cohabiting partner to receive anything from the estate, they must apply to the court within 6 months of the date of death of their partner. They must present their argument as to why they are entitled to receive anything from the estate.
In every case, especially where you and your partner are cohabiting but not married or in a civil partnership, you should consider how the title is held and what else can be done to protect each of your interests.
Perhaps the best way to do this is to consider preparing a cohabitation agreement. Many couples who cohabit do not always think through the ramifications of buying a house with someone to whom they are neither married nor in a civil partnership. Sometimes couples come to a relationship whilst they each own their own property and then decide to pool their resources and buy a house jointly. This sometimes means that there is an unequal contribution towards the deposit with one party contributing more than the other.
In those circumstances, whilst the title will be held in joint names, it is not always clear that there was an inequal contribution towards the deposit. Even if there is an equal contribution to the deposit, it makes perfect sense to enter into a cohabitation agreement.
The cohabitation agreement will cover not only the deposit situation but also what happens should you separate.
We have looked at how the title to the property is held and also whether or not there is a Will. Once you navigate through those questions, the final question you should ask is whether you need a cohabitation agreement. Married partners or couples in a civil partnership have rights in law should they separate. Cohabiting couples who are not married or who are not in a civil partnership have no such rights.
When you are buying a house with your partner, work through the permutations we have discussed above and decide on what basis the title to the house should be taken, make a Will to direct who should succeed to your share in the house and, if you are not married or in a civil partnership, consider whether you need a cohabitation agreement.
If you need any help or advice about this when you wish to buy a house, please contact us.