Buying a House: the pitfalls
for unmarried same-sex couples

The current government lockdown is making everyone aware of their living arrangements.  Relationships are being put under new pressures and the current emotional and financial impact of the virus may be causing additional stresses in a relationship. It is a sensible time to make sure you understand how you own your property and the implications of such ownership.
 

There is some confusion surrounding cohabitation and what rights couples have in relation to their property and living together, particularly for same-sex couples. Some people think that if you have cohabited for a lengthy period of time then you become common law spouses or partners and acquire the same rights as couples who are married. Some believe that same-sex couples have fewer rights if they separate than opposite-sex couples. Neither of these statements are true.

Same-sex and opposite-sex couples who are married or in civil partnerships acquire more legal rights and protection once a relationship breaks down than couples who are cohabiting. The Office of National Statistics recently found that:

1. the number of cohabiting couple families continues to grow faster than married couples and lone parent families, with an increase of 25.8% over the decade 2008 to 2018, and
2. the number of same-sex couples living together rose by more than 50% in the three years to 2018.

In light of the significant increase in cohabitation, how can unmarried couples protect themselves and avoid costly legal disputes if they split up?

Firstly, once the decision has been made to buy a property, couples need to consider how they are going to own it. Assuming they are buying the property in their own names, there are two options for ownership: tenants in common and joint tenants.

Owning the property as beneficial joint tenants means the property belongs to both owners jointly. The owners must all act together as a single owner, for example on a re-mortgage or a sale. As joint tenants, the owners do not own specific shares in the property and cannot give away a share of the property in a will. If either of the couple die, their interest in the property passes automatically to the other owner.

Owning the property as tenants in common means the property belongs to the owners jointly but each owner also owns a specific share of its value. An owner can give away, sell or mortgage their share. If an owner dies, their share of the property passes to the beneficiary in their will.

If an unmarried couple are investing unequal amounts of capital in the property then we would recommend that they hold the property as tenants in common and have a declaration of trust drawn up which legally sets out the percentage of the property they each own.

The solicitor acting for a couple buying a property will ask them how they want to hold the property and it will be included in the legal document which transfers the property to the couple. This document is registered at the Land Registry which means there is a legal record of how the property is owned. It is crucial that this record is accurate.   

Aside from deciding how you own the property, there are other options available to protect your assets. If you are not married or in a civil partnership, you may want to consider entering into a cohabitation agreement which can confirm the ownership of the property, how each cohabitee will contribute to the running cost and what will happen in the event of a separation. As a property is usually the highest value asset owned, it is important to formally document who owns the property and in what proportions, particularly for unmarried cohabitees and where the property has not been paid for equally. 

Couples need to think about what they want to happen if one of them dies and whether they want their partner to inherit the property in the event of their death. In addition to the above, couples should also make a will to give effect to what they agree.

Conversations about separation and death are not always easy when you are about to move in with one another but it is imperative that these issues are dealt with at the outset with both parties understanding the situation in order to minimise stress and any acrimony later down the line. Couples can then decide themselves what is fair in their circumstances rather than having to rely on legal proceedings, which could involve complex arguments spanning both property and family law, after any separation.

Further Information

If you have any questions about any of the real estate issues covered in this blog, please contact Vanessa or any member of the real estate team. For family related questions, please contact Connie or any member of the family team.

About the authors

Vanessa  is a senior associate solicitor in the Real Estate team and is experienced in a range of commercial and residential property matters. 

Connie is a Senior Associate in the family team and has experience of dealing with all aspects of private family work relating to both finances and children.