In Ireland there is no recognition of common law marriage type situations, that is, a union without a civil or religious ceremony. So in Ireland the concept of a ‘common law spouse’ does not exist.
Mortgages before or outside of marriage are now increasingly common in Ireland. So what happens when joint property owners and mortgage holders go their separate ways? In cases where just one cohabiting partner has their name on the deeds and a mortgage solely in their name, what rights does the other partner have?
The Family Home Protection Act of 1976 prevents one spouse from selling the family home without the consent of the other spouse, even if the home is held solely in his or her name. But this Act does not apply to cohabiting couples. Practically speaking this means that if the property is in one person’s name only and he/she decides to sell, then the non owning cohabitee has no claim on the property and no say in the decision. The legal owner can require the other cohabitee to leave at any time, and the Courts will facilitate this (by granting an injunction or an eviction). However, it is important to note that where the name of the cohabitee is not on the title deeds but they have made direct contributions to the mortgage, purchase price, deposit or upkeep of the house, then that cohabitee may have a beneficial interest in the property and a Court may be asked to adjudicate on this. However, this could involve substantial legal fees and would require clear evidence of the financial contribution made in order to gain a legal interest in the property.
Therefore, it is essential that non-married couples seek legal advice before getting mortgage approval and buying property together.
Married couples buying property in both names almost always do so as joint tenants, meaning if one of them dies without making a will, full ownership of the property automatically reverts to the survivor.
But solicitors typically advise non-married couples to buy as tenants-in-common, meaning each partner owns his or her share absolutely.
If, as cohabitees, you are buying a home together, you should decide if you want to be joint owners or tenants in common.
Joint owners own the property between them. There are two types of joint owners; joint tenants and tenants in common. Where a couple are joint tenants then automatically on the death of one joint owner the property will pass directly to the other. This transfer may be subject to a tax called Capital Acquisitions Tax (CAT). If certain conditions are satisfied, the family home may be exempt from CAT. For all other property the Revenue Commissioners will consider a surviving cohabitee as a class C beneficiary. This means that the part of the house that is now passing over to the surviving cohabitee will be taxed on the value of 20% of anything over the CAT threshold (refer to www.revenue.ie for CAT thresholds).
Tenants in Common
Tenants in Common each own distinct shares in the property, which can be left to someone else in a Will. It is possible to draw up a co-ownership agreement if the property is held by tenants in common. This agreement can set out what percentage is held by each of the tenants, what will happen if one of the cohabitees wishes to sell their part to an outside person or what should occur in the event of death.
Breaking up causes major financial upheaval for cohabiting couples, with the question of what happens the family home topping the list of issues to be resolved.
A cohabitation agreement seeks to address these issues. It involves a side agreement, in addition to the purchase contract, that sets out what will happen if the relationship breaks down. For example, one partner may agree to buy the other’s share or they agree to sell and split the proceeds. Such an agreement covers all eventualities. There’s no harm in being cautious when it comes to legal protection of your assets.
To discuss and arrange a Cohabitation Agreement contact LawPlus Home today or view our Fixed Fee Service for further details.