Buying a house together? What happens if you separate?

Couples today, instead of investing money in costly weddings, often make the more practical decision to invest their hard earned savings in property, and subsequently buy a house together. On the face of it this is a good investment, and often this decision is made when the couple are happy and settled, and more importantly trust one another. Sadly however couples do separate and if this happens the future of the property they purchased must be resolved.

When it comes to sorting out who should get what from the property, first of all we have to find out whose name is actually on the title deeds. If you purchased the house together, and both put money towards the cost, both parties’ names should be on the deeds. If so, then we have to find out whether their is any prior agreement between the parties to divide the property in equal or unequal shares. Again we can usually find this out from the title deeds. Often this issue will have been discussed with your solicitor when the house was originally purchased, especially if the parties have contributed differing amounts.

If the title deeds clearly show that both parties own the property and in what shares, then generally that will be fairly compelling and is likely to form the basis of any settlement. However, this is not always the case.

Couples who choose to live together are, unlike married couples, not protected financially by statute if they separate. For this reason, when they separate, attention is paid to any financial arrangements or agreements that they made while they were together. These agreements can be express (i.e. verbal or written) or implied by their behaviour, which can be far more ambiguous.

A case called “Stack v Dowden” came before the House of Lords in April 2007. The parties in this case owned the family home in their joint names, and the title deeds suggested that they both had an equal share. However, the parties contributed to the property in unequal shares. After 18 years together and four children, they separated. It was decided (broadly) that where property is held in joint names then the chances were that the parties intended an equal share, however, if one party felt that this was incorrect, then that person must prove how the couple intended to own the property and in what shares. The House of Lords set out as follows, various factors that should be taken into consideration, before a decision is made:-

- Advice given to the couple when the house was purchased.

- Why was the house purchased in joint names to begin with?

- Why the house was purchased and for what purpose.

- Whether the parties were responsible for any children.

- How was the house financed, both on purchase and subsequently?

- How the parties arranged their finances.

- The parties individual characters and personalities.

- How any extensions or substantial improvements to the property were financed?

This list is not exhaustive.

Ultimately the House of Lords decided that the parties, given their financial contributions to the property and the factors detailed above, held the property in unequal shares 65%/35%.

The above case is exceptional and the decision turned on specific factors relevant to the way in which the couple chose to run their financial lives. Each case must be judged on its individual circumstances.

When considering purchasing a house with your partner, be clear about your financial contributions to the property and what will happen to that money and any increase in value in the property, if you separate. Discuss this with your partner before you see your solicitor. Your solicitor can prepare documents which will help safeguard your investment should you wish.

In addition, when you purchase property with another person, you should also consider making a Will. If you purchase the property in equal shares it is likely that you will own the property as what is called “Joint Tenants”. This means that if either of you should die then the property will pass to the survivor regardless of any Will. If however you own the property in unequal shares then you will own it as “Tenants in Common”. This means that in the event of death the deceased share will pass to whomsoever the deceased has named in their will and not to the co-owner of the property.

If you are separating from your partner, and have concerns about your share of the money in the family home, you need to find out first of all if your name is on the title deeds, and then if there is any agreement recorded about what share either party should have. You can do this by contacting the Land Registry and requesting a copy of your title deeds. If your name is not on the title deeds, but you have contributed financially to the property, or have been led to believe that you have a financial interest in the property, you need to collect together any evidence which supports your position i.e. bank statements showing that you paid for an extension/ new kitchen etc..... , and then make an appointment to see a solicitor who specialises in matters such as this. At Bird and Co. we have several solicitors, both at our Grantham and Newark Offices, who will be pleased to advise you on such issues. Hence if you require advice on any of these issues raised above, or on any other issue arising from separation, please do not hesitate to contact Bird and Co. Solicitors LLP.