A prenuptial agreement for home buyers might in the past have seemed an odd, overly legal and even pessimistic product; however where a staggering 1 in 2 marriages end in divorce and with a falling number of people taking the step to get married, more co-cohabiting couples are looking for ways to protect their home and their relationship should the worst happen.
People sharing mortgages, whether married, cohabiting or not, should be careful to protect themselves in the unfortunate situation that a house sharing relationship breaks down. People have the best intentions however the cost of taking a dispute to court about who owns what in a house share when a breakdown happens can often be hideously expensive.
A prenuptial Agreement for home buyers should include a Deed of Trust to state the share each person owns and, if required, a
cohabitation agreement
to state the living arrangements together.
Need a Prenuptial Agreement for Home Buyers? Get Shared Ownership Protection or call 0207 112 5388.
Marriage, cohabitation, non-cohabitation and individual protection
When married couples buy a home together they do so normally as Joint Tenants which means they own the property equally (literally 100% each in one indivisible share in the eyes of the law) and are protected under their matrimonial rights. This is different for unmarried couples who buy as Tenants in Common which means they each individually own a share of the property which could be at different percentages.
More couples, both in absolute and relative terms, regardless of sexual orientation, are cohabiting rather than marrying or becoming civil partners. Many joint owners also spend a shorter time living in a house together before they choose to sell up, not least in the UK because average house prices have risen greatly in recent years. People are almost expecting to make a capital gain when they sell their property.
There is therefore an increasing number of reasons to have in place legal protection for people choosing to buy properties together and this protection has to be able to adapt to an increasing number of living situations. The focus is on making sure that any sharer's stake in a property is fairly recognised, that there are agreed ways in which anyone can leave and that there are clear procedures in place to deal with any relationship breaking down.
Is Shared Ownership Protection like a prenuptial agreement?
There are similarities but differences as well. With a marriage prenuptial agreement, you are normally intending to stay living with that person until you die; the agreement is insurance against the marriage failing. With Shared Ownership Protection, you may only want to be a joint owner until, for example, the early repayment charging period has expired, then, if the market has risen, you'll wish to sell up. You may also want to guard from the beginning against fully sharing your property and keeping your equity distinct: this is not normally the case within marriage.
Not very romantic
“Darling, I’d like to get a prenup”, is not normally taken as an indication of commitment to someone you love and adore; however with 118,140 divorces in 2012 (Office for National Statistics), for those who do choose to buy jointly as a married couple or in a civil partnership, the love bubble can indeed burst and separation can turn into an acrimonious battle. Perhaps instead of thinking of prenups as a way of listing what is yours, imagine them to be personal insurance to protect against any losses should the worst happen.
How has UK law responded to marriage prenups?
A 'prenup' law is being reviewed by ministers to allow couples to set the terms of a divorce in advance. The ‘Matrimonial Property, Needs and Agreements’ proposals, drawn up by the Law Commission after more than four years of wrangling, will outline a new law ‘to consider the treatment of pre-nuptial, post-nuptial and separation agreements’. It will suggest new rules on how one marriage partner should meet the genuine financial needs of the other after divorce. The package is also likely to include rules to combat ‘gold-diggers’, meaning that a bride or groom who brought their own assets into a marriage - such as a family-owned company or an inherited fortune - would not lose them in the event of divorce.
Is there any similar protection for cohabitees or co-owners living together but not cohabiting?
The simple answer is no, presently, hence the need for a legally-binding joint ownership agreement which is not only a declaration of trust but also a cohabitation agreement (rules governing how you will live together), an inventory and much more.
Our joint ownership agreement is drafted by solicitors based on your and your co-owners' input.
Need a Prenuptial Agreement for Home Buyers? Get Shared Ownership Protection or call 0333 344 3234.
