Stepping in to what?

My grandmother used to refer to it as “stepping out” or, if feeling particularly modern, “courting”. As we hit Valentine’s Day and love is in the air, what are the pit-falls of moving in with your other half?

Apart from the inevitable squabble about dirty washing up being left in the sink, there are a number of issues that cohabiting couples should be aware of, particularly if buying or renting a property.

Most people’s first step on the ladder is to rent a flat or a house. Co-habiting couples should be aware that nearly all tenancy agreements make their tenants “jointly and severally liable” for the rent. This means that the landlord can pursue either or both of you for any unpaid rent and since it will usually be easier for them to chase the person living in the property they will usually do so.

The next step is to buy a property. For most of us, that means getting a mortgage. You should be aware that the principle of being “jointly and severally liable” that is referred to above, applies equally to your mortgage debt. Even if your relationship breaks down and one of you moves out of the house or flat, the lender can chase either or both of you for the debt.

On a practical basis, this will make it nearly impossible for the “outgoing” partner to get a new mortgage until the old one is either paid off or the property is transferred to the partner remaining in the property (usually with the consent of the existing mortgage lender or with the aid of a new mortgage). The process of transferring a property from joint names into one is usually referred to as a “transfer of equity”, and it will not surprise you to learn that a mortgage lender will want to be quite certain that the existing partner is financially able to pay the mortgage before releasing the other.

And with the inevitability of birth and taxes comes death. When you are buying your house or flat together you should be asked whether you wish to hold the flat as “tenants in common” or as “joint tenants”. I cannot emphasise enough the importance of the difference between the two.

If Jack and Jill decided to hold their property as tenants in common, both Jack and Jill would have a separate and distinct share in the property. It may be half and half, but it may be any other proportion. If Jack and Jill are sensible and both make wills it is possible for them to make specific provisions in their wills for what happens to their share in the property. Jill might, and probably should, want to make absolutely sure that £20,000 that her parents learnt her to help buy the property goes back to her parents rather than to Jack. Jack might want to make a provision for his children from a previous relationship.

If Jack and Jill were to own as joint tenants, neither has the luxury of being able to make these bequests. Neither of them has a separate or distinct share in the property, and if Jack’s untimely falling down and breaking his crown injury were to result in his death, his notional share in the property would automatically pass to Jill (regardless of the provisions set out in any will).

The rules on intestacy (dying without a will) are too complex for a short article like this, but if you are about to move in together it is vital that you take proper advice about the appropriate form of co-ownership, and also that you consider making a will.

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