When you buy your first home with your partner, it is an exciting time. That can make it difficult to contemplate your relationship subsequently coming to an end, whether as a result of separation or death.
It is relatively common for a couple to make unequal contributions towards their deposit when purchasing a new home. Each party’s contribution may comprise of savings, gifts or inheritances from family members or from the sale of a previous property.
Beyond that, once you have collected your keys and moved in, your circumstances may mean that you are not paying the same amount as your partner towards the mortgage, household bills and home improvements.
Generally, the title to a jointly owned property is held in equal shares. This means that each owner is entitled to 50% of the net value of the property.
So, as a member of a cohabiting couple, if you have made the greater financial contribution towards a property, how do you ensure that it is protected?
One option is to enter into a Cohabitation Agreement with your partner, ideally before you purchase the property. The Agreement is a legally binding document, meaning that both parties should seek independent legal advice prior to signing it. An Agreement typically sets out how the net value of the property shall be divided on its sale or on the termination of the relationship, meaning that a greater contribution by one of the parties can be recognised. Parties can also agree on a timescale for selling the property or transferring the title to one party, providing much-needed certainty at an important time. Indeed, as the law currently stands, a separated cohabitant cannot seek a transfer of title unless the other party is in agreement.
A Cohabitation Agreement can also record the arrangements for a property if one party dies. The binding nature of an Agreement can be particularly useful where there are other beneficiaries as well as the surviving cohabitant to consider.
In the absence of a Cohabitation Agreement, resort may have to be had to Court action under Section 28 or 29 of the Family Law (Scotland) Act 2006, where financial claims can be made on the termination of a relationship in certain circumstances. However, the success of such a claim is by no means guaranteed and when considered alongside the time and cost involved in pursuing or defending a Court action, having a Cohabitation Agreement is a much better and cheaper option.
If you're considering buying a home with your partner, our expert Family Law team can help you draft a Cohabitation Agreement that protects your interests. Speak to one of our experienced solicitors today to ensure you have the right legal arrangements in place. Contact our Family Law team for advice and guidance tailored to your situation.
