A recent marriage study has shown that 25% of couples aged 18 to 34 purchase a home before marriage. Purchasing property as an unmarried couple is a monumental commitment, and a decision on which you must be informed.
The purchase of a property has serious financial implications, and communication with both your partner and your lender is vital in ensuring that the process runs smoothly. An agreement must be met for the budget and financing of the property.
It is important to review your finances and your individual ability to cover initial expenses and monthly repayments by examining all other debts and outgoings.
The expenses incurred when purchasing a property extend greatly beyond a 50/50 split of mortgage costs. You must create a plan for the distribution of payments from the home once the property has been secured. Both major costs (such as utilities and insurance) and minor costs
(such as internet and household maintenance costs) should be accounted for in your budget.
It is also recommended that you keep track of who makes major payments toward the property, including but not limited to, each contribution to the deposit and mortgage payments. This can be relevant when dividing the proceeds of sale should the joint tenancy or tenancy in common break down.
The best home ownership option for you
Unmarried couples have multiple options available when registering title. One party can register the property solely in their name, or the title can be held by both parties as a joint tenancy or tenancy in common.
A joint tenancy will mean that both parties own the property in equal shares, and each party is permitted to use the entire property. When one joint tenant dies, the entire property is then automatically owned by the other tenant.
A tenancy in common will involve outlining the percentage of ownership interest held by each party. In cases where one of the tenants in common dies, their share will not automatically pass to the other party but to whoever is specified in their will, or next of kin in a case of intestacy.
While many couples do not consider creating a contractual relationship beyond the purchase contracts, a co-ownership agreement can provide vital protection should a financial issue arise.
This agreement will ideally create a plan that addresses how a sale can be devised should one party wish to sell while the other wishes to retain the property, or if the relationship should dissolve. This can prevent great future expense incurred by litigation or mediation. This agreement can also prevent your partner’s inability to meet their obligations from impacting your personal financial history.
Many co-habiting couples fear the logistics of selling their property should the relationship dissolve. Should a cohabiting couple wish to sell their property, there is a variety of options available.
- The co-habiting couple could sell the property and split the proceeds in accordance with the contributions from each party.
- One of the parties could buy out their partners interest in the property.
If an agreement cannot be reached, you can apply to the court to have the property sold and the proceeds divided, or if appropriate, you may be able to seek an order breaking up the property. This will enable each party to decide what they wish to do with their share.
If you are purchasing a property as an unmarried couple contact us today on 074 9175921 or using our online request form for guidance.
*In contentious business a Solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement
**This information is for guidance purposes only. It does not constitute legal or professional advice. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. No liability is accepted by McElhinney & Associates for any action taken in reliance on the information contained herein. Any and all information is subject to change.