Our previous blog covered Cohabitation Agreements and the protection that they afford cohabiting couples in the event of separation. Another area which we felt it was useful to consider is what happens to joint property in the event of a cohabiting couple separating.
If you reside with your partner but are not married, the legal definition of this arrangement is known as ‘cohabitation.’ Cohabiting couples do not have the same protection in law as married couples, in the event of their separation or death. This can prove to be very difficult for some couples particularly as, in practical terms, their lives operate in the same way as it would if they were married. Many cohabiting couples own joint property together and have children together, but simply are not married.
If the title to the property is held in your sole name, you have the right to continue to reside at the property. If you and your partner are both named on the title deeds, then you will need to decide between you who will continue to reside at the property, or whether the property will require to be sold and the net free proceeds of sale be divided between you.
If you and your partner agree to sell the property, we would advise you to enter into a Minute of Agreement clearly narrating the agreed terms and the division of the net free proceeds of sale. Thereafter, you can market the property for sale in the usual way.
If the title to the property is held in your joint names and one party wishes to continue to reside at the property, they will require to buy the other party’s share in the property unless you come to an agreement otherwise. They will require to seek the advice of an Independent Financial Advisor/Mortgage Advisor to ascertain whether they are in a financial position to take on the title and mortgage to the property in their sole name. The mortgage lender will need to be satisfied that that party is able to afford the mortgage on their own. Once their lending is approved, a conveyancing solicitor will be able to transfer the title to the property into their sole name.
If you cannot reach agreement regarding what to do with the property, you may wish to attend mediation to reach an amicable conclusion. If that is not an option, the Court can determine the matter. Generally the Court will divide the value of the property between you based on how the title to the property is taken.
It may also be the case that one party can make a financial claim against the other party in the event of separation under s.28 of the Family Law (Scotland) Act 2006. This is normally the case where, for example, the title to the property has been taken in the sole name of one party but both parties have made contributions towards the property during their relationship. In such a case, the party who is not named on the title to the property would have to prove that they have derived an economic disadvantage from contributions made by them; or as a result of supporting the other or the parties’ children; while the other party has experienced an economic advantage as a result. The party making the claim, if successful, could be entitled to a lump sum payment from the other party. Such claims require to be made to the Court within one year of the parties’ separation.
If title to the property and the mortgage is held in your joint names then you are both jointly responsible for payment of the mortgage each month, regardless of whether you continue to reside at the property.