The Hidden Risks of Co-Habiting: What You Need to Know About Property Ownership

A co-habiting couple holding paper hearts, representing the importance of property rights and legal protection for unmarried partners

By Samuel Mather-Holgate

For many couples, co-habiting feels like a natural step in their relationship. You share a home, expenses, and perhaps even dreams for the future. However, when it comes to property ownership, co-habiting couples face a significantly different legal landscape compared to those who are married or in a civil partnership. Without proper planning, this can lead to financial disputes, emotional stress, and unexpected consequences.

The Myth of Common Law Marriage

A widely held belief is that living together for a certain period automatically grants co-habiting couples the same rights as married couples. This is simply not true. In the UK, there is no such thing as “common law marriage.” Regardless of how long you have lived together. Co-habiting couples do not enjoy the same legal protections as those who are married.

This means that, in the event of a breakup, property ownership is determined by legal title and financial contributions rather than the equitable division that applies to divorcing married couples. If the property is solely in one partner’s name, the other partner may have no claim to it. Even if they have contributed to the mortgage or household expenses.

Property Ownership and Contributions

If you’re co-habiting and own property together, how the property is registered can have significant implications:

  • Joint Tenancy: Both parties own the property equally, regardless of individual contributions. If one partner passes away, their share automatically transfers to the other.
  • Tenants in Common: Ownership is divided based on agreed shares, which can reflect unequal contributions. This is a more flexible arrangement but requires careful documentation.

If the property is in one partner’s name, the other partner may face challenges in proving they have any financial stake in it, even if they have contributed to household costs or renovations.

Protecting Your Interests: Co-Habitation Agreements

A co-habitation agreement is a legally binding document that sets out the financial arrangements between co-habiting partners. It can clarify:

  • Ownership shares in a property.
  • Responsibility for mortgage payments and household expenses.
  • What happens to jointly owned assets in the event of a breakup.

Such agreements can be particularly useful in situations where one partner has made a disproportionate financial contribution, such as:

  • Gifts from Parents: If parents have gifted money for a deposit or home improvements, a co-habitation agreement can protect this investment.
  • Unequal Contributions: When one partner pays more towards the purchase price, mortgage, or renovations, a co-habitation agreement can ensure their contribution is recognised.

The Role of Trusts

In some cases, a trust can be used to protect financial contributions. For example, if one partner’s parents gift a sum for a deposit, a trust can be created to specify how this money should be treated in the event of a breakup.

What Happens Without an Agreement?

Without a co-habitation agreement, disputes over property can become complex and costly. For example:

  • Improving a Property You Don’t Own: If one partner pays for significant home improvements on a property owned solely by the other, they may have to go to court to claim any financial interest.
  • Parental Gifts: Money gifted by parents could be lost if it’s not legally protected.

The Importance of a Will

Co-habiting couples also need to consider inheritance. Unlike married couples, co-habiting partners have no automatic right to inherit each other’s property or assets unless specified in a will. Creating a will ensures your partner is provided for in the event of your death.

Take Action Today

If you’re co-habiting, or planning to, it’s essential to take proactive steps to protect your financial interests and avoid potential disputes. A co-habitation agreement, trust, or carefully drafted will can provide clarity and security for both partners.

Our team of financial advisers can help navigate these complex issues and where appropriate, refer you to legal experts. We can assist with your mortgage and will too. We will work with you to create a plan tailored to your unique circumstances. Contact us today to learn more about how we can assist you in safeguarding your future or BOOK A CALL BACK here.

Posted in ,
ifa-logo

Money News

Tenants in a block of flats in Tameside say damp and mould have contributed to serious problems.

A council drops a key objection meaning it is more likely to get approval.

Brighton and Hove Citizens has produced a report into the lack of affordable housing in the city.

Sites across Dumfries and Galloway and the Borders say losing their Bank of Scotland is a "shock".