Question: I have received an agreement-in-principle mortgage and plan to buy a house or flat for about £250,000. My boyfriend and I have discussed buying together and getting a joint mortgage but what would he get if we broke up? He doesn’t have any savings and the deposit of about £100,000 would come from me. Can you tell me what he would be entitled to?
Answer: It depends how you buy the property, and how you record your respective contributions. As an unmarried, cohabiting couple you do not have the same legal protection as a married couple, so it is important to record in writing your interests in the property at the outset.
You could buy together, either as joint tenants or as tenants in common. If you hold the property as joint tenants, on the face of it you are each entitled to half of the proceeds of sale and will automatically receive 100 per cent of the equity in the property on the other’s death. This is so even if one of you has contributed more to the purchase price, as you intend to do.
If you hold the property as tenants in common, on the face of it you each own 50 per cent but you can agree to hold the property in unequal shares, for example 60/40, and you should record any such agreement in a declaration of trust deed.
If you take out a joint mortgage you will be jointly and severally liable for the debt, which means you agree to pay off the mortgage together but you will also each be liable for the full amount of the debt, not just your own share.
This means that if your partner defaults, or perhaps disappears and fails to keep up their part of the mortgage debt, the lender could look to you for payment of all of it.
In view of the amount you are considering investing in the property, it would be wise for you to hold it as tenants in common and put in place a declaration of trust deed.
You will need to take separate and independent legal advice.
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If you have a question for Fiona McNulty, please email email@example.com or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE. We regret that questions cannot be answered individually but we will try to feature them here. Fiona McNulty is a partner in the residential property, farms and estates team at Withy King LLP (www.withyking.co.uk).
These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.