Cohabiting couples who buy a property together need to consider whether having the title in joint names adequately reflects the financial contributions each is making. Should you enter into a minute of agreement when buying a property jointly?

It is often the case that one party commits to paying a greater share of the required deposit than the other, even where subsequent mortgage payments are divided equally between the purchasers. Sometimes a parent or other relative provide a gift or loan to one individual to aid the purchase. Structuring carefully how this financial contribution is reflected to all parties' satisfaction is not always done and subsequent tax, legal and practical implications are not always considered.

In the event the relationship breaks down, parties often are aggrieved that where nothing has been minuted and where parties acquired title on an equal basis, any discrepancy in the initial deposit contribution is no longer relevant. Many clients wish they had entered into a Minute of Agreement declaring at the time of purchase how their respective contributions would be protected and, indeed, what would happen in the event the relationship ever ended. Some parties would prefer to have the ability to buy each other out if there is a relationship breakdown rather than risk automatically triggering the property being placed on the open market.

The law provides certain statutory rights to cohabiting couples in the event of a relationship breakdown or on the death of one of the parties. Therefore care and consideration as to the implications this may have on any jointly owned property should be discussed at the point of purchase. In the event that a relative is providing one of the parties with a loan for the deposit this might affect any offer of loan available from a High Street lender and, should be discussed at the initial stages of a proposed purchase. Contributions may not be divided equally at the point of purchase or, indeed, if refurbishment or refitting is required during the period of ownership one of the parties may make a more significant contribution towards capital improvements. In the event the value of the property is significantly enhanced by this contribution, is it fair that both owners benefit equally from the uplift in value at the time of a sale?

We offer impartial advice to clients on the above matters. Formalising a minute of agreement to capture all parties concerns at an early stage can avoid conflict arising later. For more information please contact our property team.