My son is buying a house together with his partner. He puts the largest amount into the purchase.
How does he ensure that this is taken into account if the relationship breaks down, if he dies first or if the house is sold in the future?
His partner has two children from a previous relationship, aged ten and nine.
Tanya Jefferies from This is Money replies: You don’t confirm this in your question, but we assume that your son and his partner are not currently married.
Many unmarried couples purchase property together and there are ways to protect both their interests for the future.
This is also important if there are two young children involved who need a financially secure living situation.
We asked a lawyer who has experience helping people in this situation to explain what legal steps your son and his partner should take when buying a house.
House purchase: what additional legal steps should a couple take if they contribute unequal amounts of money? Our expert explains
Rachel Spencer Robb, family law partner at Clarion, responds: This is a situation that is becoming increasingly common as real estate prices rise and couples contribute different amounts to the purchase of a home.
When an unmarried couple purchases a property together and one partner contributes significantly more than the other, it is important to ensure that these contributions are properly recorded from the outset.
Many people are surprised to learn that unmarried couples do not currently have the same legal protection as married couples or civil partners.
There is no such thing as a ‘common law marriage’ in England and Wales, no matter how long a couple has been together.
Rachel Spencer Robb: For now, cohabiting couples remain largely dependent on property, trust and inheritance law to protect their position
Although the government recently held discussions about it reforms that could strengthen the rights of cohabiting couples in the future, those changes will not yet become law.
For the time being, couples living together remain largely dependent on property, trust and inheritance law to protect their position.
This means that if the relationship breaks down in the future, disputes over ownership of the property will generally be determined by the law of property and trusts rather than the wider discretionary powers available to the family courts in matters of divorce.
In this scenario, the partner contributing the largest amount should consider preparing a declaration of trust when purchasing the property.
This document can accurately record how much each party contributed and how the proceeds should be divided if the property is sold in the future.
For example, it may provide that each party receives back its original contribution before any appreciation is shared, or that ownership be held in unequal shares reflecting the parties’ respective investments.
The manner in which the property is owned should also be carefully considered.
By owning property in common, rather than joint tenants, each person can own a certain share of the property and decide through their will who should inherit that share upon their death.
This structure is often preferable where contributions are unequal or where there are children from previous relationships whose interests need to be taken into account.
If the relationship breaks down, a Declaration of Trust can provide valuable assurance and significantly reduce the chance of disagreement.
Without this, disputes can arise over what was intended at the time of the purchase, especially when one party contributed substantially more than the other.
Although the courts can determine interests in a property, litigation can be lengthy, expensive and stressful, making prevention far preferable to cure.
What else can they do?
The couple may also want to conclude a cohabitation agreement.
This can set out broader agreements regarding household expenses, mortgage payments, maintenance costs and other financial obligations during the relationship, as well as what should happen if they separate.
Although discussing these issues at the beginning of a relationship may feel uncomfortable, it is often much easier and significantly less expensive than dealing with disagreements after a divorce has occurred.
The question of what happens when a partner dies is just as important. Unmarried couples currently do not benefit from the same inheritance protections as spouses.
If either partner dies without a valid will, their partner will not automatically inherit according to the intestacy rules.
As one partner has two children from a previous relationship, careful estate planning is especially important to ensure that their wishes are reflected and that there is clarity as to who will inherit their share of the property.
It’s also worth remembering that financial contributions don’t end once the purchase is completed.
If one partner then contributes more to mortgage repayments, renovations or significant home improvements, this could potentially impact their respective interests.
Keeping clear records and revising any agreements as circumstances change can help prevent future disputes.
Ultimately, the best protection is to have open conversations about finances from the start and prepare proper legal documentation before exchanging contracts.
A declaration of trust, a cohabitation agreement and well-drafted wills can provide certainty for both partners and their families, safeguarding individual contributions and reducing the risk of costly disputes in the future.
The couple should also be aware that if the relationship were to result in an engagement, a prenuptial agreement could also provide for and protect that initial contribution to the purchase of that property.
