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Sharing Your Home With Someone
22 June, 2021 4 minutes reading time
Thinking about asking a friend or family member to move in isn’t a rare thing these days. Sharing your home with someone who contributes to the mortgage and running costs often makes a real difference. But personal circumstances vary, and the motivation behind making the decision is rarely straightforward. So, it’s a good idea to have some degree of certainty should something go wrong.
Fine Detail Matters
Some arrangements work perfectly without a formal, legal document. However, when money is involved, disagreement happens. Discord doesn’t always focus on significant issues; simple day-to-day issues or expenses often tip the balance.
Legal Considerations
You may consider a lump sum investment from someone in your home or their financial support to build an extension or adaptations to the house. Whichever option suits you best, you must consider the legal implications of sharing your home and ensure a solicitor draws up an agreement.
Division Of Ownership
If someone invests in your home, you may be able to add their name to the house deeds – or legal title. Whilst you may add them as part-owners (based on the proportion of the property they have paid for), this is not always straightforward. Where there is a separate annexe or self-contained area within the property involved, a lease can be created or possibly two individual legal titles.
Shared Ownership or Beneficial Co-Ownership
Creating a Declaration or Deed of Trust confirms how and who owns the property. The document also sets out what will happen if someone dies or a breakdown in the relationship.
Tenancy
Under a tenancy agreement, certain rights protect both landlord and tenant in the event of a disagreement. This type of arrangement is valuable when one party is not the legal owner.
Legal Charge
A legal charge applies when someone makes a loan or gift. This legal agreement gives security to both parties should circumstances change or unforeseen events occur.
Conflicts of Interest
Be aware that each person should use their solicitor who will give impartial advice. Independent professional advice removes the potential for conflict or accusations of undue influence later.
Financial Considerations
From the outset, discuss how you see things working financially. Don’t just talk about the more significant costs; think about the smaller bills or sources of income that may be affected.
Operational Costs
It may be better to make a monthly fixed payment to cover bills, food and mortgage. Or pay a specific cost. Either way, it’s best to be precise. Document what’s agreed.
Government Benefits
Some benefits, such as pension credit, may be affected because of moving in. Make sure you take this into account.
Mortgage
If you have a mortgage, you must ask your lender for their consent. Any legal arrangement you agree to will be subject to the terms and conditions of your mortgage agreement.
Estate Planning & Inheritance Tax
Depending on your circumstances, a new arrangement may have Inheritance Tax (IHT) implications. Ask for professional advice to make sure nothing adversely affects you.
Wills
The new arrangements may affect your Wills. Make sure your Will is updated or make a Will if you haven’t already. Decisions you make about your property may affect your estate and any provision you may wish to make for those you care about.
Our Advice
Having a family member or friend move in may sound simple. But families and finances are rarely that. The certainty that comes with a written agreement tailored to your situation, will give peace of mind. A valuable commodity in today’s changing world. For more advice or information, please get in touch. We’re here to help.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.