Lots of people buy or transfer property into joint names with someone else, for many good reasons – a family home in joint names of spouses or civil partners, moving in to cohabit with your partner, pooling resources with siblings or friends to get on the property ladder.
In all the excitement and ups and downs of finding a property, arranging finance and making offers, let alone packing and moving, it can be easy to put off thinking about other aspects of this. But this might be one of the biggest financial decisions of your life, so it's right to get serious about the longer term.
Have you put wills in place? What would happen in the event of one of the joint owners' death?
It might be that there is an automatic transfer of title, but this is not usually the case. This may not suit your circumstances anyway, you may prefer to pass your share of the property to children or other family members. It's important that you check with your solicitor about this, how exactly is the title to be held? How does the ownership of the property fit in with your other assets and your family circumstances? It would be worth discussing whether you should have an agreement in place to cover the circumstances in which one of you might want to sell the property, how the purchase was financed (who paid the deposit, who has been paying the mortgage) and who has or will pay for any refurbishment or improvement works.
Buying a house together if not married
For cohabitants, if one joint owner dies without leaving a will, the other would have no automatic rights to the property or to other assets in the estate. You would need to raise a claim on the estate, and it's by no means guaranteed what you might end up being entitled to. Cohabitants are not entitled to be appointed as executors either, so you may end up dealing with a member of the deceased's family as executor and others who are beneficiaries of the estate. Meanwhile, if there's a mortgage outstanding then the cohabitant may end up paying this whilst the estate is being dealt with.
If this is your home, and you wish to remain living there, you might be put in the position where you have to buy out the estate's share of the property. If you prefer to sell, you will need the cooperation of the executor, and the estate formalities in place, before the property can be put on the market.
Buying a house together if married/civil partners
Even for married couples/ civil partners, if there is no will in place the spouse/ partner's rights to the property are restricted by value and the rules on the division of the estate can turn up some quite surprising (sometimes distressing) results. It's not safe to assume that everything would automatically go to each other just because you are married, it's not always the case.
A simple will
The good news is that it's relatively straightforward to put wills in place so that you both have clarity and certainty. You can appoint each other as executor, if appropriate. You can consider whether the property should go outright to each other, to someone different, or whether trust provisions might be appropriate.
Different types of trusts can be used to give security to a surviving spouse or cohabitant even if the property is ultimately to be inherited by someone else, or to pass property to young children. Trusts can also be used in inheritance tax planning and care costs planning.
Taking a bit of time to get this right can save a lot of stress and minimise the potential for disputes and conflict. Remember, too, that you can change your wills in the future, for example if you move home again, or any time your circumstances change. Speak to our experts to get the ball rolling.
Catriona Torrance is a key member of Hayley Robertson's team within the Personal & Family department at Brodies, providing services to individuals and families.
