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Do we need a deed of trust as a cohabiting couple?

April 27, 2017  |   Posted by :   |   Blog

 

Under the current UK family law system, unmarried couples who live together (also known as ‘cohabitants’) do not automatically have the same legal rights as married couples, and this can cause particular problems when it comes to the ownership and division of property.

Married couples, and those in a civil partnership, are ascribed certain automatic property rights, regardless of how much each of them contributed to its cost or maintenance. However, for cohabiting couples the situation can be more complicated if a property is not jointly owned or they do not have a declaration of trust in place.

A declaration of trust details each party’s share in a property, and can be used as a way to protect the investment should you separate in the future, or if one of you dies. As cohabitants, unless both parties are named on a deed of trust, one or other may not automatically inherit or claim a portion of a property. A declaration of trust is particularly useful if one of you has invested more in the property than the other, or if you would like to stipulate a specific division of its assets. It can also set out guidelines for who is responsible for certain bills, renovations or mortgage payments, and suggest a procedure for dividing up your assets.

If contributions are uneven and fixed amounts do not seem fair, there is also the option of choosing a ‘floating’ kind of agreement which uses a formula to calculate appropriate shares at the point of sale, based on individual contributions. This is a useful way to determine shares when one of you has paid a greater amount towards the deposit, mortgage payments, or home improvements. It also means you do not have to draw up a brand new agreement each time one of you makes a significant contribution.

(It’s also worth noting at this point that the same rules can be applied for buying property with friends and family.)

In addition to a deed of trust, it’s important to draw up a cohabitation agreement (a legal document similar to a prenuptial agreement) which you can use to set out expectations for household responsibilities and bills, responsibilities for joint investments and debts, instructions for the division of assets should you separate, intentions for passing on inheritance, and any other details that will help to safeguard your relationship and assets.

If you’re embarking on the purchase of property as an unmarried couple, protect your property rights by making sure you know your housing rights as a cohabitant, drawing up a cohabitation agreement, and making sure both of you are named on a declaration of trust. For help and advice on all these issues, speak to one of our experienced property solicitors at Frances Lindsay & Co or get in touch for a free conveyancing quote.

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