Top 10 tips when joining forces to buy a home
Buying a property is one of the most important decisions you'll have to make. It's a significant investment and most people take this step with someone else.
Law Society Chief Executive Desmond Hudson said "sharing the financial burden of the purchase and the day-to-day costs of living together has its advantages, but negotiating the complexities of joint ownership can be tricky.
‘A solicitor can provide you with expert guidance on how best to protect your legal rights.’
Hughes Paddison has extensive experience of advising a wide range of clients on the property-buying process.
Jane Witek, Head of Residential Property said many people believe that if they buy a home together, they will automatically have rights to the property if they break up or the other person dies, but this is not true in every case.
‘To help people better understand what's involved with joint property ownership, we've compiled a list of the top ten things to be aware of,’ Jane Witek said.
- Think about how you want to own the property - you can own the house or flat in equal or unequal shares. How and why you do that may depend on your own circumstances but it is best to be clear about how much of the property each of you will own at the outset, otherwise it could be very difficult to work out what each of you is entitled to if the relationship ends.
- Inform your mortgage lender - the names on the mortgage deed must match the names on the Land Registry Entries so make sure your bank is kept informed of any changes. If you want to change the names on the deeds you will need your lender's permission to do this.
- If one of you already owns the property check whose name is on the title at the Land Registry - this may determine who has legal rights to the property if the property is sold or the relationship breaks down.
- Record who pays for what - keep a record of each party's financial contribution to the property including mortgage payments, household expenses and the cost of repairs, maintenance or extensions. If there is a dispute over shares in the property, a court may take these factors into account.
- Don't forget about initial deposits and other financial contributions - it can be tempting to think 'we'll just divide things up equally if we break up', but it is important to give careful consideration to each party's contributions. If one of you has put more money towards buying property, for example, by paying the whole of the deposit, you may wish to reflect that in the size of their share of the property or the money from selling it.
- Discuss moving out - if you are buying a property with a group of friends or family, give some thought to what would happen if one of you wished to move out and how their share would be transferred. In most cases someone moving out might mean the property has to be sold.
- Whatever you decide, tell your solicitor - your solicitor will be able to advise on the best way of documenting and protecting your interests in the property. This is often by writing a Declaration of Trust. Although it will cost money think of it like an insurance policy. You pay a premium to compensate you if your house burns down and your possessions are lost. In the same way, if you do not protect your contribution to the property you may lose out.
- Consider making a will - however you own your property, you should consider making a will to record who you want to inherit your share. Many people mistakenly think that if they own a property jointly, their partner will automatically inherit their share, but this is not always the case. Your solicitor can advise you about wills.
- Commercial property - your solicitor can help you document your interest in a commercial property through a partnership agreement or other company agreements.
- Get the best advice - many solicitors with expertise in property buying are members of the Law Society's Conveyancing Quality Scheme. This is the quality mark for property legal experts, recognised by the UK's biggest mortgage lenders. CQS gives you reassurance that you are in safe hands.
Jane Witek underwent rigorous assessment by the Law Society in order to secure CQS status, which marks the firm out as meeting high standards in the residential conveyancing process.
For more information on the Law Society's Conveyancing Quality Scheme visit www.lawsociety.org.uk/cqs
Or contact the CQS Unit on 020 7316 5550 or CQS@lawsociety.org.uk