IT IS a very modern problem. An increasing number of people are buying property together without being married – and without taking steps to protect themselves if things go wrong in their relationship.
On top of that, in the current financial climate, a large number of people are being declared bankrupt.
It is a potentially devastating combination.
People can find themselves being forced out of the home they bought with their ex if their former partner becomes bankrupt.
And the law seems to favour trustees – solicitors representing those who are owed money – in bankruptcy.
As Michael Dyer, a partner at Eric Robinson Solicitors, head of the firm’s matrimonial department and its Hedge End Offices says: “the trustees in a bankruptcy case have, generally speaking, precedence over the rights of the person living in the house.”
He adds that while in the 80s trustees in bankruptcy would often wait for the value of property to rise and allow the occupants to stay put, these days they generally allow 12 months to pass to try to resolve all the issues and see whether the joint owner of the property can buy the share that belonged to the bankrupt before forcing sale. This is partly due to a change in the law which means that the trustees in a bankruptcy usually have three years to make an application to the court to realise their interest in a property.
He adds that even in divorce cases where one parent’s right to their share of the property is postponed until the child living in the house has reached 18, bankruptcy may override this.
If the partner who has left becomes bankrupt before the child turns 18 the trustees in the case have a right to overturn the order allowing the parent and child to remain in the family house until the child turns 18 and force sale of the house immediately.
What’s more, if you remain in the house once bankruptcy trustees are involved, you could even be charged rent for your occupancy of the trustees’ share of the property.
And the situation is even more complex for unmarried couples.
“People think that if they live together they are common law husband and wife but there is no such thing,” Mr Dyer explains.
“People would expect that if they had lived together for, say, 20 years they would have the same rights as if they were married but they don’t.”
A spokesperson for Citizen’s Advice Bureau agrees.
“There’s a common misconception that people who have been living together for some time acquire the same legal rights and protections as married couples or civil partners,” she says.
“This is not the case and people need to be aware of how to protect their interests in the event of things going wrong and the relationship breaking up.”
Mr Dyer adds that contested property rights claims can be extremely expensive – costing each party anything from £7,000 to £20,000.
The bottom line seems to be, make sure you protect your assets when you buy anything with anyone else and at the end of a relationship.
“If you can, it’s best to cut your financial ties to your ex and own your own property,”
says Mr Dyer.
So what should you do?
Michael Dyer says that often people don’t want to think about what will happen if things go wrong in their relationship but it is critical.
l “People need to think very carefully and take proper legal advice right at the beginning when they buy property and understand what their legal rights are.
The key is if people buy property together they need to know what will happen if that relationship breaks down,” says Michael.
l When you buy property with someone, Michael advises that you enter into a Deed of Trust, which sets out your shares and what would happen if the property had to be sold. “If parties do not clarify their ownership the court will look for a common intention and if it cannot find one will look to infer one. It is important to remember that each case turns on its own facts.
l Many solicitors offer 30 minutes’ free advice.
l If you are married or in a civil partnership the court is able to look at all of your circumstances, under the Matrimonial Causes Act 1973.
Michael says: “People don’t have the same protection within the law if they are not married. The main claims that cohabitees do not have relate to pensions sharing and on-going maintenance both of which can be significant.”
l Contact Michael Dyer at Eric Robinson Solicitors, Hedge End, on 01489 788922 or by e-mail mike.dyer@ericrobinson.