A recent YouGov survey found that over a third of co-habiting couples believed they had the same rights as a married couple. This is a common misconception encountered by couples, with many believing in a “Common Law” spouse – a term used to describe a couple who live together, maybe own property together and may, to the community, refer to themselves as married, but have not gone through the legal marriage process.
Some couples believe that being a “common-law” spouse entitles them to certain rights with legal obligations, however this is not the case and the provisions relating to married couples are far more generous than to non-married couples. The logic behind this is that when you chose to marry you autonomously opt in to the laws that govern marriage and partners rights. It is generally thought that automatically entering couples into the same system of laws unknowingly (i.e. when they co-habit and buy a house together) would cause confusion and uncertainty.
Understanding how you hold property
One of the main assets in any family is often the home. Couples often delay marriage until after they have lived together, so it is important to understand the different ways that property can be held.
There are two ways that one can hold property: tenants in common or joint tenants. There is a significant difference between these positions.
l Joint Tenants: Parties cannot state the shares that they own regardless of who put what into the property or from whose wage the mortgage is paid. If one person dies, the property passes automatically to the survivor. The property passes to them even if you have a will and you cannot leave a share of the property to anyone else. Regardless of contribution to the purchase price. This is usually the way property is held for spouses as there is more of an acceptance of a shared intention that both should benefit from any increase in value and you would usually want your husband or wife to be able to stay in the property and to own it.
l Tenants in Common: There is a presumption of equal shares unless there is a trust deed stating the percentage that each person should receive when the property is sold. You are advised to obtain such a deed. Each person can leave by Will their share of the property to whomever they wish and it does not automatically pass to the survivor.
If you are married and you divorce, the joint assets and the family home are all divided according to the Matrimonial Causes Act 1973. The court has wide reaching powers to vary the ownership of property. With Cohabitees the court looks only at direct contribution and intention, and this is governed by the Trust of land and Appointment of Trustees Act 1996. This is much stricter and does not take into account a parties needs in any way.
It is important that before you enter into property ownership with a partner that you consider your options carefully and don’t let love blind your decision making, particularly where you have raised the majority of the funds for the deposit!
Paul Nuttall, the author, is a Solicitor in the Duncan Lewis Family & Childcare Department. He regularly deals with individuals going through divorce who have to simultaneously arrange their financial separation and/or child arrangements. He regularly represents clients who are struggling to come to an agreement over child contact and residence.
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