Buying property as cohabiting partners
Buying or selling property is a significant step in any individual's life, but when it comes to cohabiting partners, the process can be even more complex. Cohabitation, where an unmarried couple lives together, brings its own unique set of considerations when it comes to property transactions. In this article, we will discuss the essential aspects that cohabiting partners should consider when buying or selling property together.
The foundation of any successful property transaction for cohabiting partners is open and honest communication. It is crucial to have transparent discussions about financial goals, preferences, and long-term plans. Communicate your expectations, financial contributions, and how you envision the property's ownership structure. This ensures both partners are on the same page and can make informed decisions throughout the process.
Next, cohabiting partners should consider drafting a cohabitation agreement before embarking on a property transaction. This legally binding document outlines the rights and responsibilities of each partner and covers property ownership, contributions, division of assets, and potential scenarios such as separation or death. Understanding the implications of each option is imperative, as it can impact inheritance, taxation, and property division in the case of a separation.
When applying for a mortgage bond to purchase property, both partners' incomes, credit scores, and financial histories may be evaluated. Your combined financial situation can determine the most suitable approach to buy the property. Deciding whether one partner or both will be indebted by the mortgage bond and clearly defining how financial contributions will be divided between partners becomes imperative. This will require determining the monthly mortgage bond payments as well as the maintenance costs of the property and potential rates and levies. It is essential to keep track of each partner's contributions to avoid future disputes and to ensure a fair distribution of expenses.
Lastly, it is important to discuss an exit strategy in case the relationship ends or circumstances change. Address how the property will be handled, whether one partner will buy out the other's share, or if the property will be sold and proceeds divided. This can be inserted into your cohabitation agreement and help avoid disputes in the future.
Buying or selling property as cohabiting partners requires careful consideration and the addressing of the legal considerations relating to such purchase or sale. This makes it imperative that cohabitating partners discuss their legal position and approach to purchase and exit beforehand and capture such in a cohabitation agreement drafted by their attorney.
