Buying property together

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Robin Troy writes:

With more freedom from lockdown, the sun hopefully shining and viewing property possible again, the desire to buy a property or upgrade may not just be a possibility, but for some a necessity.

Lockdown has highlighted to many the value of an outside space, whether it be a patio, terrace, balcony or a garden, and the limitations of confinement in a small space. There is anecdotal evidence that desire for homes with an outside space (preferably a three-bedroom house, garage and garden) has increased exponentially.

Having a garden usually means having a house, not a flat, but with the cost of housing as high as it is, this is out of the reach of many, unless they fit the dink profile (dual income, no kids).

With the modern couple tending to enjoy a relationship free from the ceremony of marriage or other legally recognised partnership, are there pitfalls to buying a property jointly with a partner?

One of the problems with a joint purchase is that of housing qualifications. If one party has housing qualifications and the other does not, then the property must be acquired in the name of the party who has the qualifications. In law that person is deemed to be the outright owner (as you cannot have a trust of realty), whereas the reality for the parties is quite different, as they are likely to have both made contributions to the purchase by way of deposit and subsequently to mortgage payments.

In addition, if a joint income loan is needed to buy the property, both will have to agree and sign the loan documents and be liable for the loan, and consequently the person without his or her name on the contract as a joint purchaser is at a potential disadvantage.

Some security for that party can come from an equity or co-habitation agreement. This is an agreement which acknowledges the funds provided by both parties (which can be disproportionate) towards the deposit and purchase price. The agreement can also deal with the responsibility towards loan repayments and other costs and the inherent right of both parties to a share or interest in the property.

Ownership of property gives rise to liabilities such as rates, service charges, maintenance and repair, as well as desired improvements, and these should also be considered. Provision for payment of a proportion of these costs or some other way of acknowledging these contributions can be incorporated in the agreement.

An agreement should also cover the difficult point of a potential future separation and the desire of one party or both to sell the property. The trigger mechanism for a sale, as well as the method by which a sale is to occur, should be included with the appointment of an estate agent and facility for viewings also covered (especially if one party has left the property, as is often the case).

Another consideration may be that one or both of the parties may wish to buy the other out (provided that such person has at that time appropriate housing rights). This can often be achieved by including a provision that a sale must take effect if one or the other desires it. If there is a dispute as to how this is to be achieved, then a sales process can be put in place, often in the form of a blind tender process conducted through a third party, with the highest offer being successful.

It is generally considered that the courts will enforce an equity agreement or co-habitation agreement. Although these agreements may incur additional legal fees in an already expensive process, they are an essential and necessary protection and form of security, for all those doing it together.

This article is not intended as legal advice, but for legal advice on joint purchases and equity or co-habitation agreements contact Robin Troy or, telephone 760760.

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