Friends Purchasing A Property Together: Cohabitation Rights
Friends are made, and lost, in University. Sometimes relationships are so strong that the friends want to buy a property together and start the next phase of their life together. When this happens, there is only a friendship bond between the people, no legal rights like in a marriage, so agreements and contracts should be drawn up. This might feel unfriendly, but a house is a big asset and takes a large portion of the income to sustain, so there needs to be protection for both sides.
Property might be owned as ‘joint tenants’ or ‘tenants in common.’ If your relationship with another person who owns the property with you fails or if one of the owners passes away, the form of ownership will determine how you may proceed with the property. If you own property as a joint tenant, each of you has equal ownership rights.
Before you do anything else, you must sign into a rental agreement — purchasing a house with someone is a serious undertaking that should not be made unless you are completely certain that you are acquiring with the right person and that there will be no cohabitation conflicts to address. Since you may not know the other person very well until you move in with them, a leasing agreement serves as a good safety net.
Even if you are completely sure in your choice of house co-owner, a Cohabitation Property Agreement or Declaration of Trust is needed. Because you are not married to the person with whom you are purchasing a property and lack the standard spousal legal protections, you will have to go through an attorney or a solicitor to set this up.
A Declaration of Trust may be used to formalise a difference in the ownership of a property by two or more joint tenants. In the absence of such a contract, the revenues of a sale would be divided equally among all joint tenants. Cohabitation Agreements, which are legally enforceable in the UK, serve a similar function as Declarations of Trust. These agreements may encompass a broad variety of topics, such as how the selling profits of a jointly-owned property would be divided in the case of a separation and sale.
If you’re having trouble qualifying for a mortgage on your own, purchasing a property with a friend might be a good option to consider. However, there are some negatives to consider as well.
