Unmarried and Moving in?
Many people will decide to take their relationship to the next level and buy their first home together. While lost in the waves of excitement, most will forget to remember a crucial detail to protect themselves financially. This may not be romantic for you or your partner, but it is important to how things should be if the relationship ever comes to an end.
There are two ways how you and your partner can protect yourselves financially if things don’t work out. Either entering into a cohabitation agreement or a declaration of trust.
In one of our previous articles we discussed cohabitation agreements but how is declaration of trust different?
Declaration of Trust
It formally sets forth the conditions on which an asset, such as a property, is held in trust. As well as recording the property’s ownership, the document usually includes other terms agreed upon by the parties.
The purpose of a Declaration of Trust
In a Declaration of Trust, it is specified how a beneficial interest in a property is held. Additionally, it serves as evidence of the agreement. Conversely, cohabitation agreements are more comprehensive and usually specify what will happen if a relationship breaks down.
When a property is sold or transferred, this document confirms how the net sale proceeds will be distributed or which shares will be passed on. Furthermore, if one or more of the owners pass away, it could provide details about the ownership and shares passed to an estate.
Moreover, it can serve as an overview of the day-to-day dealing of property ownership, such as payments for mortgages, bills, renovations, and other services.
Why is it important?
When things do not go as planned, it protects your investment in the property. Also, it documents how the property is owned, preventing any assumptions or confusion about the shares and general ownership.
In the event that the owner’s separate, the funds and contributions will be documented and protected legally.
This document describes the position which owner contributes more toward a purchase price, mortgage repayments, or improvements to the property. When the property is sold, funds are returned accordingly.
Any time you prepare a legal document, we suggest you seek professional advice. At Michael Spoors Solicitors we give you advice based on your situation. For more information on detailed aspects of cohabitation law and cohabitation agreement, contact us on 01983 632006 or email us on info@michaelspoors.co.uk
