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Planning a summer move? - Macleod and MacCallum is here to help

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If you and your partner live together, do you know what your rights would be upon separation? For cohabitants, the rights given by law are less than those married couples have. For that reason, before you and your partner consider buying a property together, whether in joint names or not, you should consider entering into an Agreement with your partner, which would set out exactly what is to happen with your home in the event of a separation.

Macleod and MacCallum
Macleod and MacCallum

What is a Cohabitation Agreement?

A Cohabitation Agreement is a legally binding document which would set out what would happen to your property, and the money that went into it, upon separation. The agreement will be specific to your circumstances, and can include other financial matters, alongside the jointly owned property, such as the division of household goods. The legislation defines a cohabitant as a person who is or was living with another person as if they were husband and wife, or civil partners. If you are living together as a couple then you will likely be considered a cohabitant by law.

Macleod and MacCallum
Macleod and MacCallum

What does the law say?

If the home is purchased in joint names, and the title is held equally, then both parties will be deemed to be joint owners of the property entitled to a 50/50 share in its value. This means that each party will be entitled to a one-half share of the net free proceeds, in the event that the house is sold.

A common misconception is that each party would be entitled to what they put into the property – but that is not the case. As each party is deemed to be an equal joint owner you are only entitled to receive one half of the net free proceeds of sale. This could result in a financial disadvantage for one party if they paid a larger part of the deposit or if the Bank of Mum and Dad funded a deposit. Upon separation, there is no guarantee under the legislation, that you would get the full amount back.

Without a Cohabitation Agreement in place, if your partner does not agree to deviate away from a 50/50 share, then the only recourse available would be to raise a court action. Litigation is expensive and it is not a quick process. There is also no guarantee that the Court would make an order allowing you to get back what you put in.

We would advise you to seriously consider entering into a Cohabitation Agreement with your partner if you are buying a property together. Our Family Law team are here to help.

Contact Family@macandmac.co.uk

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