How Can Cohabitors Protect Property and Contributions to Prevent Disputes

Late summer and early autumn are among the busiest times for property moves with almost a third of completions taking place during this period.

For advisers working in conveyancing, mortgage broking or financial planning this trend brings familiar questions from clients preparing to live together for the first time or formalising their arrangements.

The excitement of moving in together often comes with concerns about how deposits are protected, how household costs will be divided and what should happen if circumstances change.

Whilst clients should always be directed to a solicitor for tailored advice, these are some of the main options available for consideration.

What protection do cohabitation agreements offer?

A cohabitation agreement is a legal document that records how a couple, or in some cases friends or family members, intend to manage financial commitments and property interests while living together.

It also sets out what should happen if the relationship ends, if one party moves out or if one person passes away.

Unlike marriage or civil partnership, cohabitation in England and Wales does not provide automatic legal rights over property and finances.

The cohabitation agreement can protect deposits, mortgage contributions, rent, household bills, furniture, vehicles and savings.

It can also include provisions for selling or buying out a share if one party wishes to leave.

How does a declaration of trust compare?

A declaration of trust is most often used during conveyancing when the parties contribute unequally to a property purchase.

This may apply where cohabitors have a significant difference in income, or where one has funds from the sale of a previous property or from an inheritance.

It formally records ownership shares, which is particularly important where one buyer provides a larger deposit.

Unlike a cohabitation agreement, a declaration of trust is limited to property ownership. It does not cover wider financial arrangements or joint assets beyond the home itself.

Some clients may benefit from both documents. The declaration of trust protects the property share while the cohabitation agreement covers household finances and personal assets.

What role does the TR1 form play for cohabitors?

The TR1 (Transfer of Whole of Registered Title) form signed on completion allows solicitors to specify whether a property will be held as joint tenants or tenants in common.

As joint tenants both parties own the whole property equally legally and beneficially and if one dies the survivor automatically inherits the other’s share.

As tenants in common each party owns a defined share which can be unequal and which can be left to someone else under a Will.

However, a TR1 does not on its own address how contributions or household obligations are managed, which is where a cohabitation agreement and/or a declaration of trust can provide the additional clarity and protection needed.

As the trend of buying before marriage continues and with so little protection afforded to cohabitors without formal documentation, I advise anyone looking to move in with a partner, friend, family member or even a housemate to come and talk to us about the most suitable ways to protect financial and property interests.