There are several benefits of cohabitation, and it’s always a wonderful feeling when, as a couple, you are together handed the keys to your new home.
It’s difficult to pre-empt and consider what could happen if you split during this time. However, it’s important to be realistic, and if you aren’t prepared for the worst-case scenario, the potential fallout from a breakup can have devastating consequences.
In the UK, the legal landscape for cohabiting couples is constantly evolving, and the proposed law reform seeks to address the challenges faced by non-married individuals who find themselves in these situations.
This article will explore legal documents, the differences between joint mortgages and property deeds, and highlight the role of insurance in protecting your assets, as well as advise on when to engage a property lawyer.
Cohabitation Agreements: The current landscape
As it stands, cohabiting couples in the UK lack the legal protections and rights which are granted to married couples.
This is why having a formal cohabitation agreement in place is incredibly important when you decide to purchase a property together.
In the event of a breakup, the division of assets can become a complicated and emotional process to navigate, and having an agreement in place will prevent an already difficult situation becoming more difficult.
When splitting your assets, there are several things to consider, and it’s all dependent on your situation, number of properties and finances.
You need to decide who gets what, sale prices and if you want a quick sale, how to split earnings and profit and capital gains tax, which differs depending on your married status.
Cohabitation agreements lay out rights and responsibilities, and outline financial arrangements made between partners.
They also cover various aspects including property ownership, splitting of assets, and can even include things such as pets.
Though this agreement is not legally binding, courts are increasingly taking them into consideration during dispute cases, so drawing one up is worthwhile in the long run.
It’s important to understand and accept that your situation will change, and in the current market, being single, possibly having a family to support, you may have to compromise.
This is nothing to be ashamed of but try to be realistic about what you can and can’t afford. Downsizing in this situation is common and doesn’t mean you can’t build back up. You may also have to consider things like moving your children away from their school, and catchment area, or moving in with family.
But if you have an agreement in place, the change will have less of an impact on you.
Joint mortgages versus property deeds: What’s the difference?
One crucial difference to consider when cohabiting couples purchase a property together is the distinction between being named on the mortgage and being listed on the property deeds.
The mortgage is a financial agreement with the lender, outlining who is responsible for the repayments. On the other hand, property deeds establish legal ownership of the property.
Understanding this is the difference between gaining debt or equity during any disputes.
It’s common for cohabiting couples to have joint mortgages, sharing the financial responsibility for the loan.
However, just because both names are on the mortgage, doesn’t mean that they are on the deeds, so it’s important to determine the legal ownership and make sure the right names are on the right documents to avoid any future problems.
It’s so important to educate yourself around finances and mortgages before stepping into any agreement.
The role of insurance in protecting assets
Insurance is key when it comes to protecting financial interests, and personal assets, and always worth the investment.
I would recommend purchasing life insurance and critical illness cover that can provide financial protection in the event of illness or death. These policies can help cover mortgage payments or pay out a lump sum that can be used to settle any outstanding debts.
Income protection insurance is also recommended, as it provides a regular income in case one partner is unable to work. This can prevent any disruption or debt to your lives and finances.
Home insurance should be a given, and it’s useful for protecting assets during severe disputes. Having a legal cohabitation agreement in place will also offer protection in this area.
By having appropriate insurance coverage in place, cohabiting couples can ensure that they are financially protected, reducing the risk of financial hardship, or emotional trauma during already challenging times.
When to involve a property lawyer
It isn’t always possible to amicably handle disputes when you split up, and there may come a time where you’ll have to hire the services of a property lawyer, who can help clarify the legal standing of each partner.
The roles of a property lawyer include drafting and reviewing legal documents, ensuring they are legally sound, acting as a mediator to minimise potential conflicts, and helping couples to protect their interests.
But whatever you do, keep the disputes and decisions between the two of you. Don’t include any new partners or allow them to make decisions about your estate.
It is between you as a couple, and your family. Bringing anyone else in, in any capacity will overcomplicate things, and can make an already stressful experience unnecessarily traumatic.
And finally, when selling your property, I also recommend working with an estate agent who has experience in divorce 
proceedings.
Overall, prevention is always better than intervention. By ensuring the right legal documents, insurance and agreements are in place, couples can reduce their risk of legally (and financially) draining disputes whilst also protecting their assets, securing their financial future, and mitigating any potential challenges that may arise in the event of a breakup.
Michelle Niziol is a property expert and owner of IMS Property Group
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