This article was first published in CONNECT magazine.
At BCR Law LLP we see the same themes and queries being asked when we advise clients who are not married or in a civil partnership, but are purchasing a property together.
When purchasing a property with someone who is not your spouse or civil partner there are steps which should be taken to protect you both.
Equity or Co-Habitation Agreements
Couples purchasing together often make an equity or co-habitation agreement. This is particularly relevant where one party is contributing more to a purchase than the other in order to protect the party’s contribution.
The agreement sets out the payments by each person, how the upkeep and costs of the property will be paid for and what will happen if the couple split up.
Whilst these types of agreements give guidance they are open to variation if the Court were asked to review it. An agreement will reflect the intent of the parties at the time of purchase, but over time the financial situation between the parties can change. For example one party may stop work to care for their family and no longer be contributing financially to the property. It is important when signing an agreement to bear in mind that it may not still be binding or relevant if you wanted to enforce it. Furthermore, an equity agreement between an unmarried couple is not a pre-nuptial agreement. It is important to take advice on such an agreement before contemplating marriage or civil partnership.
We frequently see situations where an unmarried couple are purchasing but one of them is not ‘entitled to buy’ in Jersey. In this situation the couple will usually be joint borrowers for the mortgage but the party without housing qualifications cannot be on the title deeds for the purchase. In this situation the lending bank will require the party who is not going to be on the title deeds to have independent legal advice, because they are taking risk in relation to the loan but will have no legal control over property which is not held in their name.
If one of a couple does not have housing qualifications it is very important that the party who has the property in their name makes a Will to protect the other party. If a Will is not made then the party without housing rights could find themselves saddled with the outstanding mortgage but have no right to live in the property. A person inheriting a property has the right to occupy the property and is therefore protected by the Will.
It is worth bearing in mind that once both parties have the appropriate housing rights, provided the property is your home and you have lived together at the property for at least one year, then it may be possible to transfer it into joint names with payment of minimal stamp duty. The reduced stamp duty is at the discretion of the Public Registry and subject to satisfying the criteria. You would need to discuss the transfer with your property lawyer and bank, which is something worth considering as joint ownership offers protection to the party not named on the original purchase contract.