In my 7 years in practice I have come to realise something; at the risk of sounding woefully unromantic, a property purchase is a business transaction. Full stop.
Like purchasing shares in a business, buying a classic car or even investing in legal services; purchasing property involves a significant outlay, and sometimes significant borrowing, with a potential financial return in the future. It is not coincidental that all of the big investments you will ever make in life usually come with a detailed agreement, set of terms and conditions and sometimes insurance! Why should purchasing a property with a partner be any different?
What am I getting at here?
If you want to purchase property with a partner, I would first make this suggestion: view the purchase transaction as business, and the moving in as romantic.
Second, I would make this suggestion: have a cohabitation agreement in place which sets out how your finances are to be organised once you move in, and as an insurance policy what will happen in the event of a breakdown of that relationship. Who will contribute what and to where? Who do the pets belong to? Who keeps the sofa, and who keeps the fridge?
Third, I would advise in the very least to have a Declaration of Trust prepared at the time of purchase. This is a legal agreement which sets out precisely what happens with the net proceeds of sale of the property, whether you remain in a relationship or not following that sale. For example, if person A contributes £100,000 as a deposit, on a sale they won’t automatically get £100,000 back unless they have protected it with a Declaration of Trust.
My professional view is that moving in with someone, without having a Declaration of Trust or a Cohabitation Agreement (or better still, both!) is quite literally like throwing your money into the wind and hoping it all lands neatly in a pile back at your feet in the event of a storm.
Business first, romance second. If this is you, and you need some advice, please get in touch.
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