5 Mistakes To Avoid When Setting Up Home With Tom, Dick or Harriet.
- AuthorPaul Hajek
You’ve just received the keys to your new home and can’t wait to move in.
But here’s a question for you.
What would you do if it all went wrong?
I know, I know – what a killjoy, leave us alone we’re very happy thank you very much.
It‘s perhaps the last question you want to hear from your Conveyancing Solicitor when you’re about to set up home with your partner or friend.
But, it is something you do need to think about.
The good news is that you can avoid adding insult to injury by a sensible piece of preplanning with the help of your Conveyancing Solicitor
5 Tips to Avoid Future Heartache and Hassle
- Put Your Home in Joint Names
This way you will not encounter problems of sharing in the profits on sale, especially where you may have contributed to improving the property.
It also eliminates a potential crisis if the named owner asks you to leave the property and you name is not on the title deeds
- Decide Who Will Own What and in What Share
There are two ways you can hold your home;
- ‘Joint Tenants’ – you hold the property jointly. Each owns the whole of the property and the property automatically passes to the other on the first death
- ‘Tenants in Common’ – you hold a predetermined share e.g. 50/50/ 60/40.
Married couples or those in civil partnerships, unless there are Inheritance Tax considerations, tend to hold their properties as joint tenants.
Unmarried couples, friends, those in second marriages or those who contributed unequal contributions or “deposits” normally hold property as Tenants in Common.
Where the contributions are unequal it is wise to make a supplementary document known as a Declaration of Trust.
- Make a Declaration of Trust
If you have put in an unequal share, rather than simply having your actual contribution or deposit returned when you sell the property, you can have your contribution expressed as a percentage.
That way, if your relationship doesn’t work out each partner will know exactly how much of the net sale proceeds will be his or hers to receive. This avoids an area of potential conflict.
A Declaration of Trust is a document that clearly outlines how much of the property you each own and how the value would be divided should you split up or sell the property. It is a legally binding document that contains the details of how much each has contributed and how much they will get if they sell.
- Work Out the Running Expenses for Your New Property.
Again, if your deposits are unequal and your contributions to the household budget differ you may wish to consider a “Cohabitation Agreement” with the help of your Conveyancing Solicitor.
Both parties will benefit from full disclosure of finances and getting things off your mind right at the beginning.
The Deed can always be ripped up at a later date, or reviewed and renewed as the partners see fit, as if and when you decide to tie the knot, as marriage and civil partnerships can still be colloquially known.
- Make A New Will
This is essential advice. It is worth saying it again.
This is essential advice.
Without a Will there is no guarantee that the property will go to your partner on death or even be available for your children and other relatives after the death of the surviving spouse or partner.
In fact, in the worst case scenario, with no agreement with the executors of the deceased partner, you might be forced to sell the property and only receive your original share.
Although, the general advice will be the same, individual circumstances will vary, and you should obtain specific advice from your Conveyancing and Wills Solicitors.
Following these steps can ensure that any break up or falling out that results in someone selling up or moving out can be dealt with swiftly and professionally.
But, above all, no one likes to make avoidable mistakes so don’t be an unfortunate Tom Dick or Harriet.