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Purchasing a property together with unequal contributions

Purchasing a property together with unequal contributions

Resolution’s members are family lawyers and other professionals committed to the constructive resolution of family disputes.

The annual Awareness Raising Week this year focuses on cohabitation. In the spirit of promoting this theme, the Trethowans family team are writing a series of short articles to assist couples either contemplating cohabitation or perhaps facing the breakdown of their relationship.

Yesterday we looked at couples wanting to purchase a property jointly and in equal shares. Today, we look at a situation where couples wish to purchase a property but have unequal deposits or perhaps wish to make unequal contributions towards the mortgage.

If your objective is to simply record an agreement as to the distribution of net proceeds in the event of a sale, either by way of specific percentages or to ensure a fixed sum is returned to one or both of you and the balance then divided equally (or unequally as you may agree), this sort of agreement can be recorded within a Declaration of Trust document.

A Declaration of Trust should be executed where legal title to a property is held as tenants in common or where the beneficial interest in jointly owned property differs from legal ownership, and it will record your respective beneficial interests in the property per your intentions.

Alternatively, you may like to consider entering into a Cohabitation Agreement, which can include a Declaration of Trust but also go on to deal with a wider range of issues. It can record your rights and responsibilities in relation to the property, financial arrangements between you, both during and following cohabitation and the arrangements to be made if you decide that you no longer want to live together, including the following:

  1. How the mortgage and other household expenses are to be paid, by whom and in what proportions.
  2. What should happen if a co-owner wants to sell the property and realise their investment and the other does not.
  3. The arrangements for one party to buy the other’s share and in these circumstances how and by whom the property is to be valued.
  4. How and when the property is to be sold, to include consideration as to who may occupy the property pending sale and how mortgage and living expenses should be paid pending sale.
  5. Ownership of joint and separate property, including personal chattels that you may wish to share whilst living together but should revert to one of you, if cohabitation comes to an end.
  6. Ownership and treatment of any joint bank accounts after cohabitation ends.
  7. Financial support between you during and after cohabitation ends.
  8. The living arrangements and financial provision to be made for any children, if cohabitation ends.

Whilst it is generally accepted that Cohabitation Agreements are enforceable, there have been no cases before the Court testing this point. It is also worth noting that they are governed by ordinary rules of contract and can therefore be challenged on grounds of fraud, duress, undue influence, misrepresentation, mistake or illegality.

Not everyone thinks to enter into these sorts of agreements and many couples have lived together for years without one. So what would happen if they were to separate? Tomorrow we look at the situation where couples do not have any declaration of trust in place or cohabitation agreement and their relationship unfortunately breaks down.

If you want to make an appointment or discuss further, call Trethowans free on 0800 2800 421.

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