Just like marriage, when you buy a home together, you sign a legally binding contract between you and your partner. But what if things don’t work out?
Do you have to live with your ex forever? 💀
Do you have to sell the property? 🏡
Is there any way to protect your investment? 🔐
We've got you! Here are 12 things you should know before you sign on the (joint) dotted line...
#1: Thinking ‘what if’ can save you time, money and hassle
You’re buying a home together. It’s an exciting step in your relationship. Probably the last thing you’re thinking about - or wanting to talk about - right now is breaking up.
But having a legal agreement (e.g. A Declaration of Trust, a Cohabitation Agreement or a Prenup) will protect you in the event that things go south.
#2: What’s a Declaration of Trust?
A Declaration of Trust is a legally binding document that records details such as:
- The amount each of you have contributed to the deposit.
- How much you’ll both pay for the mortgage repayments.
- The percentage of the property each of you will own.
- How the property would be valued before (if) it’s put up for sale.
This makes sure that you both get what you’re entitled to.
#3: What’s a Cohabitation Agreement?
A Cohabitation Agreement can be used to cover the other stuff like:
- Money you’ve contributed to home improvements.
- Contributions to utilities and bills.
- Ownership of gifts.
#4: What if you’re married/in a civil partnership and have kids together?
Your property will be considered as one of your ‘joint assets’ and the court will deal with any negotiations as part of your divorce. They always consider the welfare and comfort of your kids as part of these negotiations (e.g. Is this the best home environment for them? Is it close to their school? etc).
#5: Your credit record will impact each other
Buying a home together means — in the words of the Spice Girls — that two becomes one.
So if your bf (or gf) has sh*t credit while you’re together, then you break up and want to buy a home on your own, you could struggle to get another mortgage.
P.s. This also happens if you open any type of joint account together. Our Team Up feature doesn't count though, because it's not a joint account. It's just a shared view (we like to think of it as two-player mode for our app) where you are always in control of your own money.
#6: If you separate, you still have to make your repayments
If you’ve moved out while you wait for your joint property to go on the market, you still have to contribute to the mortgage every month.
Yep, even if they’re living in the flat and you’ve moved back in with your parents. If your name’s on the mortgage, you’re equally responsible.
Note: If there’s no evidence of you keeping up monthly repayments, you could be entitled to a smaller percentage of the property.
#7: There are different types of ownership
Joint ownership means you both have equal rights to the property. 50/50 right down the middle.
This means you each own a specific share of the property (e.g. 60/40). This could be the case if one of you has put down a bigger share of the deposit, or contributes more to monthly repayments.
Your Declaration of Trust will protect you in any of these cases.
#8: You can sell the house
You’re done with the relationship and you’re done living in this house. You can put the property on the market and split the profits based on the percentage you own.
Note: You both have to agree to this.
#9: You can buy out your ex (or they can buy you out)
You might’ve fallen out of love with your partner, but you’ve still got love for the place you call home. If your partner agrees to it, you can remortgage the property and buy their share (and vice versa).
Note: The property will be revalued and sold to you or them at a price that reflects what it’s currently worth (not what you bought it for).
#10: You can both own the home with just one of you still living there
This is a common option for people who have kids together.
They live in the house and you both contribute to the monthly repayments. When the house sells, you get the percentage you’re owed.
Note: Again, if your name is still on the mortgage and there’s no evidence of you making monthly repayments, you could be entitled to a smaller percentage.
#11: What if my partner doesn’t agree to any of these options?
For any of these options to happen, you both have to sign the dotted line. Buying a home together is no joke! If it has been a particularly bitter break up and they’re withholding their agreement, you can make a claim and take the case to court. But it can be a really long, withdrawn process.
#12: How do you split your stuff?
In your Cohabitation Agreement, you can declare who owns what before you move in, and what happens to anything that has been gifted during the course of your relationship/living together. But! It doesn’t cover everything.
Throughout your relationship, you want to keep thinking about that ‘what if?’ scenario. So, keep receipts for anything you’ve bought in the house (especially big things or things that you really love) and if your partner agrees that you can have the Herman Miller Noguchi table if you ever break up — get it in writing (preferably an email).