Buying A House Together – Law Firm Mills & Reeve gives you the FACTS!

You’ve made a life changing decision to buy a property with your partner.  You’ve perused estate agents’ windows, sorted out your mortgage offer, visited your shortlist of properties and found the one of your dreams. So, other than thinking about furniture, what might you need to consider?

If you are buying a property with a partner, you may have various questions.

Are there different ways we can jointly own a property depending on our intentions?
Can I protect my financial investment if I pay more than half?
What if my partner is buying the property, but I contribute to the mortgage payments, or fund some renovations?  Will my financial contribution count?
What happens to the property and sale proceeds if we separate?
Is the position for cohabitants different to that of civil partners?

There are two ways of owning property in England and Wales.  They are as joint tenants or tenants in common.  The effect of each means very different outcomes if you subsequently separate, or, whilst it is not pleasant to contemplate, if you die.  So, it is really important to plan ahead, consider your options and set up the ownership to protect yourselves should something happen further down the line.

As joint tenants, you each own the whole of the property.  This is the case regardless of your respective financial contributions.  If one of you pays more towards the purchase price, and then you separate, the usual position is to share the sale proceeds equally.  And, if one of you dies, the property passes to the survivor outright, regardless of what is in written in a Will.

As tenants in common, the consequences are quite different.  In this case, you each own a specified percentage of the property.  So, if you are planning to contribute different sums to the purchase price, you may hold the property in percentages that correspond to your respective financial contributions.  If you sell the property, the sale proceeds are divided in the percentages you hold, and if you die, your percentage share of the property passes to your estate to be dealt with in accordance with your Will.  This is important if you wish to leave your share to someone other than your partner, perhaps to a parent or a child.

A property solicitor acting for you in your purchase should ask you in which way you wish to hold the property.  On occasion though, the question is overlooked, or as buyers, you have misunderstood your options.  Make sure you discuss the position carefully with your solicitor and are clear about what you’re signing up to.

If the property is owned by one of you, and the other makes a direct financial contribution to the purchase price, to mortgage payments, or towards renovations, such contributions may be grounds for seeking a share of the sale proceeds upon separation.  However, if disputed, it may be necessary to trawl through a costly court process.  It is far better to sort things out properly when you make the original purchase, or, if you decide to make contributions at a later stage, to speak to your partner about becoming tenants in common and owning a proportion that matches the financial contributions you make.  It is well worth considering setting out your agreement in a cohabitation agreement, as discussed in an earlier article.

If you are civil partners, you have an additional layer of court protection.  Upon separation, the courts can look at more than just financial contributions and are not restricted by how you opted to hold the property originally.  So, if you have managed the home, brought up children, or if you need more to meet your financial needs moving forwards, the court can take all these factors into account in deciding how to divide the assets of your civil partnership.  If, as civil partners, you feel strongly about keeping your financial assets and property separate, you should consider preparing a pre-nuptial agreement before you become civil partners and back this up with a post-nuptial agreement afterwards.

By Claire Molyneux, Solicitor, Mills & Reeve LLP

To contact Claire Molyneux, please telephone: 0121 456 8333, or email: claire.molyneux@mills-reeve.com. www.mills-reeve.com, www.divorce.co.uk

The Family team at Mills & Reeve can advise in all aspects of family law, including:

Divorce or civil partnership dissolution
Unmarried couples
Collaborative law and mediation
Domestic abuse
Financial settlements on divorce - options and ways to protect assets
International divorce or children related issues
Pensions on divorce
Separation agreements
Wealth and asset protection - cohabitation contracts, pre-nuptial or post-nuptial agreements

The team provides a friendly, responsive and jargon-free service offering pragmatic advice and excellent value for money.

As one of the largest family teams internationally, Mills & Reeve draws on its years of experience and the expert advice offered throughout the firm. Wherever you are located, the family team can help you.

Mills & Reeve also brings you www.divorce.co.uk, the largest and most comprehensive website of its kind in the UK.

About Mills & Reeve LLP

Mills & Reeve is a top 50 national law firm with 91 partners and a total staff of 800, operating from offices in Birmingham, Cambridge, Leeds, London, Manchester and Norwich.

Mills & Reeve is a full service firm with practice specialisms including corporate and commercial, banking and finance, technology, insurance, real estate, healthcare, local authorities, education and private client.

Clients include commercial organisations – from PLCs to start-ups – high net worth individuals and landowners, more than 70 universities and colleges, over 100 healthcare trusts and NHS bodies, and more than 65 local government institutions.

Award winning

The firm has been voted “regional firm of the year” in the British Legal Awards 2007 and came second in The Lawyer Award’s “regional/national law firm of the year 2007”.

The firm is listed in The Sunday Times 100 Best Companies to Work For 2010 and has been since 2004.

For further information please visit the website at www.mills-reeve.com

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