Looking to buy a property with your partner but you’re not legally married? No problem – as long as you take a few precautionary steps to ensure you are both protected under the law.

When it comes to property, the law has different rules for married and unmarried couples. There are courts and legislation set up to deal with marital assets, but for unmarried couples, the situation can be a lot murkier. That’s why it is essential to set up some ground rules before plunging into your exciting new purchase together. Get a co-purchase agreement

It sounds overly legalistic – asking the love of your life to sign a formal written document – but the benefits are invaluable.

A good co-purchase agreement will actually serve to protect the both of you, by setting out each person’s rights and responsibilities, as well as a dispute resolution mechanism and exit strategy in relation to the purchase.

A co-purchase agreement covers things like who will pay the bills, what if the relationship breaks down, who will reside in the house, and how can a party sell its share. Both parties know exactly what they’re getting into, and the transparency of such an agreement can only help make your relationship stronger.

TIP: Get independent legal advice to ensure your personal rights are protected. After all, a written, signed contract is your ultimate legal protection as an unmarried couple. And if you decide to get married in the future, no problem – your agreement can include a sunset date.

Joint and several liability

When buying a property, you’re most likely also taking out a mortgage together right? Be aware that most home loan agreements have a clause that makes both you and your partner jointly and severally liable to pay the mortgage in full (plus any interest or costs). This means that the bank can come after you for the whole amount of the loan (and possibly more) if your partner refuses to pay it.

So how do you protect yourself against this financial exposure? A good first step is to talk with your lawyer about indemnities and warranties that can be included in your co-purchase agreement.

Another option is to talk with your bank to see if your liability under the loan as a co-borrower can be limited. Alternatively, see if you can finance the purchase separately as tenants in common rather than joint tenants.

Tenants in common

When buying, title can be placed in your names either as joint tenants or as tenants in common. Joint tenancy is what most married couples opt for, because it gives you a right of survivorship (in other words, if your spouse dies, the whole property automatically transfers to your name). But it also makes it extremely difficult to divide and sell a share of the property – because you both effectively own the entire property.

On the other hand, a tenant in common arrangement makes it very easy to divide and sell your share of the title. This could be handy if the relationship ever turns sour and you want to get out of the property. And you can always change the title to a joint tenancy later if you wish.

Buying a property with your partner is an exciting financial venture that can bring you even closer together. Just take your time planning it – get the right documents in place and know your rights and responsibilities – and you’ll enjoy it for many years to come.

Posted by Belinda Gadd – Domain on 15th December, 2014