Cohabitation Agreement, Declaration of Trust, Tenants in Common

Cohabitation Factsheet

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Change ‘joint tenancy’ to ‘tenants in common’
There are two ways of holding a property: –

i) Holding as beneficial joint tenants which means that in the event of the death of one of you, the property passes to the other person automatically without the need for a Will. This is the old Roman law called “jus accrescendi” which means that the “right of accretion” passes to the surviving person. If you own the property as “beneficial joint tenants” you own half each and nothing that either of you have done during your relationship affects this

ii) the property may be held as tenants in common and this means that on death the property does not pass to the other person automatically – if there is a Will it passes in accordance with the Will and if there is no Will it passes to the person’s next of kin. The Will might define whether the survivor has a right to continue to live at the property and how the property should devolve if there are children of one or both parties. If you own the property as “tenants in common” then the size of your share should have been specified. You should check. If they have not been specified, you will have to establish the size of your share, based on similar principles as described above. Where the documents are clear that will stand unless you can show that there has been fraud or mistake.

Getting on Well now, think about the worst case scnerio to prevent future stress, problems, … etc
Although you may get on well now, there could be a time in the future when you wish to part company or there is a dispute about property. For this reason it is best to have a document called a Declaration of Trust or a Cohabitation Agreement, which is an agreement in writing setting out how you would deal with the property in this event.

A Declaration of Trust normally states the shares in which the property is held, and sometimes the amount which each person has contributed to the purchase of the property. It may contain other things as well.

A Cohabitation Agreement would cover such things as:-

– how the mortgage would be paid
– who pays the outgoings
– how the property will be dealt with if one person wants to leave, for instance that the person who wants to leave would have to offer their share of the property to the other person for purchase at market valuation and that there would be a time limit for the other person to raise funds, after which the property would be sold on the open market, and that both people would agree not to obstruct the sale if this happens.

Providing for these circumsances now could prevent a great deal of disagreement in the future.