Every year thousands of couples move in or buy a house together. But many have no idea about how little protection the law gives them. This is why a living together agreement can be so useful. Find out what it involves.
What the law says if you live together
If you buy a house together, you might be entitled to half its value (or more) depending on how you own it in the first place. However, you can live in your partner’s house for decades and find you may not be entitled to anything when you split up. In Scotland and Northern Ireland, the situation is slightly different. But there’s still no automatic right to a share of your partner’s property. If you want to make your position crystal clear you should consider drawing up a legal agreement.
SAVVY TIP: Even if you paid towards the mortgage or deposit, if the property is in your partner’s name, the law in England and Wales is so unclear that you couldn’t be guaranteed to get back the money you’d put in (in Northern Ireland the situation is different and you can make a claim against your ex for the return of money you’ve paid in). The law may imply that you should be entitled to some of the proceeds of the sale of the property. But you shouldn’t rely on it without an agreement in place.
How a living together agreement can help
If you move into your partner’s property without a living together agreement in place, the law is confusing, unclear and costly to challenge. An agreement can save money and stress.
There are two different types of agreement that you can draw up:
1. Living together agreement. This is something you can sort out yourselves without the help of a solicitor. You can download a living together agreement from the independent legal advice website Advicenow.
SAVVY TIP: The agreement is quite long and covers all aspects of your relationship – not just what would happen to your finances if you split up. However, it’s useful to think about what you’d do in the event that you did split up.
2. Deed or declaration of trust. This document needs to be drawn up by a solicitor. It can cost a few hundred pounds (or more), depending on what it covers and how complicated it is.
Are living together agreements legally binding?
If you draw up a living together agreement it should be enforceable in the courts (although it doesn’t have such clear legal status as a declaration or deed of trust).
SAVVY TIP: That means that if you or your partner went to court and made a claim that went against what was written in the living together agreement, a court should take the living together agreement into account.
However, when you are thinking about drawing up a living together agreement you should:
1. Be honest about your financial situation when you sign the agreement.
2. Make sure the agreement isn’t unfair. A living together agreement cannot go against what the law would provide.
SAVVY TIP: Some experts recommend taking legal advice before you decide what should go in your living together agreement, even if you don’t use a solicitor to draw up the document. That way you can be sure that the agreement will do what you want it to. You can find a solicitor who deals with couples and cohabitation at Resolution, which represents family lawyers in England and Wales.
Declaration or deed of trust
A declaration or deed of trust is a legally enforceable agreement that can limit itself to dealing with what happens to your house or cover joint accounts, joint debts and possessions.
SAVVY TIP: If you have a deed of trust, you should review it regularly. An agreement you drew up 20 years ago is still legally binding – even if your circumstances have completely changed.
A declaration of trust could state:
1. How ownership of the property is split.
SAVVY TIP: A straightforward declaration of trust that just sets out how the value of the property would be divided if you split up should take a solicitor about an hour to prepare, which should cost around £150-£350 (plus VAT).
2. How money in joint savings accounts is split. It could be 50:50 or unequally.
3. Whether each of you is responsible for your own debts. If one of you takes out a loan for the other, you should spell out who is responsible for paying it.
SAVVY TIP: Some solicitors draw up straightforward declaration of trust documents for a fixed fee (often between £300 and £400), which simply states that each of you takes away money and debts that are your own (the advantage of this is that it isn’t limited just to the property you own but covers other assets, such as savings etc).
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