Property buying can be a perilous and expensive undertaking for most of us but what about unmarried couples who buy a house?
For unmarried couples buying a house, there are some key legal issues that need to be understood that only refer to those who are buying a property and who are not married.
The biggest issue of all, is what will happen to their shared home should they decide to break up?
This issue will extend to:
- Same-sex couples;
- Males and females cohabiting;
- Friends buying a home together.
Here, we take a closer look at the process for unmarried couples wanting to buy a home together.
But why is this so important? Firstly, the Office for National Statistics states that:
- In the three years to 2018, the number of same-sex couples who chose to live together grew by 50%. The numbers of those cohabiting as couples rather than getting married, as well as lone parents and couples, grew by 26% in the 10 years to 2018.
So, the real question is how unmarried couples can protect themselves – and avoid the potentially expensive process should they split up.
Can you buy a house with someone if you’re not married?
If you’re asking the question, ‘Can you buy a house with someone if you’re not married?’, then the answer is, ‘Yes’.
You simply need to meet the criteria of the mortgage lender to do so but there are some legal terms that you’ll need to appreciate before signing on the dotted line, including:
- Will you be classed as being ‘beneficial joint tenants’, so that the house will belong to both of the owners jointly? Under this term, you are joint tenants and do not own specific shares and you cannot give away your share in the property as part of a will. Should either of the named couple die, then their property interest will automatically pass to the other person.
- Or will you own the house as ‘tenants in common’, which means that both owners jointly own it but each has a specific share of the property’s value. The owner is then free to sell or mortgage their share of the home or give it away.
This may sound complicated, but essentially unmarried couples who put equal amounts of money, also known as the capital, into a property, then you should take legal advice. A solicitor will probably recommend that you become tenants in common with a ‘declaration of trust’ to legally set out the percentage of the property’s value they each will own.
It’s also worth bearing in mind that this document will then be registered with the Land Registry, so there’s a legal record of who owns the property. This means that you need this record to be absolutely accurate.
Obviously, this will mean undertaking what could be an uncomfortable conversation for many people about what happens should you die.
Are you legally married after 7 years?
This question of, ‘Are you legally married after 7 years?’ is a popular one, and it deserves a straight answer.
Unfortunately, you are not seen in the eyes of the law as being legally married if you have been together for more than seven years. It is something of a myth that has grown up over the years. Also:
- One recent poll asked 2,000 adults in the UK the same question and found that 27% believed that this particular myth was true.
- Many people believe that they are in a ‘common law marriage’ but there is no concept of this at all. This is not a recognised legal status and people who live together do not have the same legal rights they would enjoy if they were married.
- In law, when married couples separate, there are some rights they have to make a claim against all or part of their partner’s assets, including the family home.
And since there are no rights for unmarried couples to do the same, it’s only possible to obtain a share of their partner’s home if there is a written agreement in place such as a cohabitation agreement or a declaration of trust.
It will be these documents that will help prove that the partner has made a contribution to the family home.
Who gets the house when an unmarried couple splits up?
One of the issues to consider for unmarried house buyers is who gets the house when an unmarried couple splits up.
Unfortunately, while this will be a very sad and upsetting time, there is no law in England and Wales that will allow for the assets of what were a cohabiting couple to be divided after they separate in the same way as they would be if a marriage breaks down. You need to consider:
- Under divorce law, the assets of a married couple will be shared fairly regardless of who owns the property legally. This does not apply to unmarried couples.
- Unmarried couples who are in a long-term relationship and have bought a house are not legally protected.
- However, if you can prove that you have contributed financially to the home then you may be able to claim interest on the equity – or the profit – the house has enjoyed.
This process can be costly and time-consuming so this is where a cohabitation agreement can help protect you and also your assets as part of a formal arrangement should your relationship come to an end.
You will need to consult with a solicitor who has experience of dealing with unmarried couples who break up and need to divide their assets accordingly.
How do you split up a house after a break-up?
When it comes to the issue of how you split up a house after a break-up, then you need to appreciate that the law will be treating two unmarried people who have bought a property as unrelated individuals.
So, without any documentation in place means that financial claims may be possible, but only in limited circumstances.
It’s also worth mentioning that should a relationship breakdown, and one of the partners wants to sell the house but the other partner refuses, then you can apply to a court to force the property sale. You’ll need to meet a number of conditions and you also need to deal with solicitors who have expertise in this field.
As with most relationship breakdowns, it’s always a good idea to negotiate and compromise with your former partner and try to reach an agreement that benefits both parties.
It’s also worth bearing in mind that when an unmarried couple sells their property, then the mortgage and charges will need to be repaid in full. Along with the conveyancing fees and the estate agents commission before any profits are divided up.
Buying a house before marriage legal implications
If you are thinking of buying a house before marriage and are wondering about legal implications, then it is important that your heart does not rule your head. Also:
- The conveyancer you hire to help you carry out the legal work will ask whether you are going to move into the property as tenants in common, or as joint tenants.
- The conveyancer or the solicitor will then explain what these terms mean and as joint tenants the remaining partner will get the house automatically should you die.
- As tenants in common, your share of the property will pass to who you decide to leave it to under your will.
So, we’ve explained that in England and Wales, the law offers unmarried couples limited legal protection whereas married couples are well catered for.
Prepare for the worst-case scenario
The real issue for anybody considering buying a house before they are married is to prepare for the worst-case scenario and having documentary evidence of how much money they will be entitled to receive from the equity that has built-up.
Also, if you buy a property as joint tenants, then you will receive 50% of the equity, regardless of how much you may or may not have paid for the deposit or contributed towards the mortgage.
As tenants in common, your share of the property and the equity will be detailed in the shares you own. Usually, this is done equally, i.e. 50/50. And should you and your partner then decide to separate, this is where negotiations will begin.
Again, you should consult with a lawyer about the pros and cons of having a legal agreement in place before marriage – and once you have a ring on your finger, the matrimonial courts are able to redistribute or transfer assets between spouses in a ‘fair and reasonable’ way.
Buying a house as a married couple
Since we have focused on what happens to a house when an unmarried couple decides to separate, it is also worth looking at what happens when a married couple, or those in a civil partnership, decide to split.
- For divorcing couples, there is no standard split of their assets, and various factors will come into play, including what other assets they have including their income and pensions.
- Again, compromise and communication are key to reach an agreement between the divorcing spouses and if you cannot come to terms, then it’s time to have a court decide for you.
- You’ll need to speak with divorce lawyers since the court can make a property adjustment order to transfer the home from joint sole ownership, or order the sale of the property or postpone its sale.
- Both spouses will have a right to a home in the short-term which means they can stay in or are able to return to their home until a permanent order is made by the court.
You should also appreciate that moving out of the family home will not count against you in any divorce proceedings in the eyes of the court.
Advice for unmarried couples buying a house
Essentially, the simple advice for unmarried couples who buy a house is that they really should take legal advice because:
- Having the correct legal documentation in place at the beginning of property ownership will help hugely should that relationship come to an end;
- The documentation will spell out what each of the unmarried partners is likely to receive in the event of a break-up.
It’s worth appreciating that couples who are not married and buying a house should not listen to myths about having a ‘marriage under common law’ once you have racked up seven years of cohabitation as this could be a very expensive mistake to make – and it’s one you should avoid.
It is also important that you always seek experienced legal advice to ensure you are not caught out financially and emotionally in the future.