Buying a Home with a Friend or Partner – Possible Problems and Pitfalls

Buying a Home with a Friend or Partner – Possible Problems and Pitfalls

Buying a property seems to become more difficult each year – ever rising property prices and large deposits required by mortgage providers means that buying on your own is a huge challenge. Increasingly, friends, relatives or unmarried couples need to combine their finances to afford a home.

This will probably be the biggest and most permanent investment you will ever make, and you should be sure to protect the large sums of money you will be putting into it. Unfortunately, a relationship that is very strong when a house is purchased can change a great deal over the years, or even break down altogether. It is a sad fact that when money and property is involved, relationships can become very strained and you may find yourself involved a dispute over ownership and the sale of the property at some point.

How can you protect yourself from such problems?

Reach an Agreement Before Buying

Hopefully the person you are buying with is well known to you and you have a good relationship with them. Be open about your desire to come to a solid agreement about the ownership of this huge investment you are both making.

This is often easier said than done. Perhaps one of you is making a far greater financial contribution than the other, or you are relying on them to obtain the mortgage. This may make you feel awkward about holding these discussions, but an agreement at the start will protect all parties and ensure that everyone knows where they stand. The parties should have a good idea of how you plan to fund the purchase, how long you plan to live together and what happens if one or all of you want to sell their share in the future. Some knowledge of the types of ownership will help you to have these discussions.

Types of Ownership

Joint Tenancy

This means that each person owns the property. If the property is sold, each person will be entitled to an equal share of the sale price. However, if one owner dies, the whole of the title in the property will pass automatically to the survivor, and they will own it in its entirety. This is normally only advisable for very close or married couples. It is unlikely that friends buying together would want to choose this option.

Tenants in Common

This is far more appropriate for friends or relatives buying together, and means that each person has a distinct share of the property.

Once the property is sold they will receive that share of the sale monies (after the mortgage is repaid and costs of sale are deducted). This means that friends or partners who decide to go their separate ways will each receive the share previously decided upon at purchase. It also means that should one of the owners die, their share of the property can pass to whoever is named in that person’s Will (A properly drafted Will is vital, especially as a property owner).

Unless properly recorded when the property is purchased, it will be assumed that each person named as a purchaser owns an equal share, ie 50/50. If this is not what the parties want, they should create a Declaration of Trust. This will allow far more control and flexibility over legal ownership of the property, which is often required when two or more people come together to buy a property. It can also be used to determine other factors such as repayment of deposit monies upon sale. The following are examples of a Declaration of Trust in action:-

  • James is buying a house with his friend Steve as Tenants in Common. James has inherited some money so contributes £15,000 of the deposit, whilst Steve only contributes £5,000. However, Steve has a better paying job, so they decide that Steve will contribute 70% of the mortgage and bills each month and will own 70% of the house. A properly drafted Declaration of Trust will ensure that upon sale of the house, they will each receive their deposit contributions back and then a 70/30 share of the remaining sale monies.
  • Gina is buying her first house, but to get a reasonable mortgage rate she needs a huge deposit. Her parents contribute half the purchase price to make this possible. The mortgage and the title to the house will be in Gina’s sole name. However, her parents want their investment back, plus any profit that investment makes when the house is sold. A Declaration of Trust can ensure that even though they are not legal owners of the property, they receive 50% of the sale price.

The above examples show how useful a properly constructed agreement can be. Without such an agreement, the legal assumption is that each party owns the property equally and should receive equal shares upon sale.

If A Problem Arises

Proper discussions and each party seeking seperate legal advice on the above is the ideal, but buying a property is often an exciting, emotional or unsettling time and many buy a property without properly protecting themselves. People buy property together for many and varied reasons and sometimes they can find themselves, many years later, in a difficult situation. Perhaps a relationship has broken down, deposit contributions have been forgotten and both parties are demanding a share they feel they are entitled to but has not been legally recorded.

When there is a disagreement over shares or ownership of a property and no Declaration of Trust has been made, legal advice should be sought. It may be possible to look into the intentions and contributions of the parties and calculate who is entitled to what share, and negotiate an agreement. If no agreement can be reached, Court proceedings may be necessary to obtain a decision on the matter. Any Court action comes with cost consequences for the parties involved, and familiarising yourself with the basics, open discussion with your buying partner and perhaps some legal advice at the time of purchase can prevent these problems from arising.


Gareth specialises in Civil Litigation and Dispute Resolution, and can assist where such problems have arisen. He can be contacted at gpb@beechamfisher.co.uk or on 01702 348 384.

To ensure these problems do not arise, Frances White can offer specialised conveyancing advice and assistance at the point of purchase. She can be contacted at fw@beechamfisher.co.uk or on 01702 348 384.

Nothing in this publication should be regarded by any person as advice or in the nature of advice: it should not be relied on, and the author assumes no liability whatsoever to any person.

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Kathryn Pavitt

Paralegal

Kathryn is an affiliate member of the Chartered Institute of Legal Executives and is a qualified Residential Conveyancing Paralegal. Since joining the firm in 2009 as a secretary, she has attained these qualifications whilst providing support to the Conveyancing and Probate departments, with the ultimate aim of qualifying as a Chartered Legal Executive.

Kathryn is a mother to a young child and in her spare time she enjoys cooking and spending time with friends and family.

Val Nunn

Legal Assistant

Val has more than 30 years’ experience working in legal departments, with 25 spent as secretary then PA to Margaret Ridley.

More recently, Val has run her own body of matrimonial cases and following Margaret’s retirement as a partner, continues in this role and also as PA to Peter Fisher and Debbie Stanton.

She has extensive experience of dealing with all aspects of family matters and of assisting with high value and complex financial issues.

As well as her work, Val enjoys spending time with her family, football as a supporter of both Arsenal and Southend United, reading, entertaining and dining out.

Gareth Brazier LLB (Hons)

Associate Solicitor

Gareth qualified as a Solicitor in 2012 and has many years of civil litigation experience, having previously worked in the City of London advising major insurers on a range of issues including road traffic accidents, industrial accidents and the defence of fraudulent claims. He has experience of handling serious and complex injury matters including spinal, traumatic brain injury and amputations.

More recently Gareth has transferred these skills into providing a detailed and thorough service for both private clients and small businesses in property, contract and debt recovery disputes. Where agreement or mediation is not possible, his robust approach to litigation can secure the right outcome.

Gareth has three young children, and when not enjoying time with family he spends time on outdoor pursuits such as running, hiking and clay pigeon shooting.

Peter Fisher FRSA

Solicitor / Consultant

Peter qualified as a solicitor in 1969 and had been with the firm throughout his professional life, becoming a partner in 1971 and senior partner in 1994. Peter retired from Partnership in 2015 to become a consultant, and is pleased to take on new work and still has a significant caseload.

Peter’s speciality is family law and he is a member of Resolution (The Solicitors’ Family Law Association). He is very experienced in dealing with complex matrimonial cases, whether these involve structuring financial settlements or handling sensitive child issues. A number of his cases have been published in law reports, including a case which has stood the test of time as the benchmark for unreasonable behaviour as a ground for divorce.

Besides sitting for a number of years as a Deputy District Judge, Peter is also experienced in the preparation of wills and lasting Powers of Attorney.

Peter and his wife have three adult children and four grandchildren. For more than twenty five years Peter was a governor of Thorpe Hall School, a local independent school. A life-long Anglican, he has been much involved with the affairs of the Church of England and is a churchwarden of the Church of St. Margaret of Antioch, Leigh on Sea. He is a Fellow of the Royal Society of Arts and a keen photographer. He enjoys walking in the UK and abroad, and aged over 65 years he completed the Yorkshire Three Peaks in a very respectable time. He has also devised and walked a coast to coast from Harwich to the Bristol Channel and an up-England trek from the English Channel to Lake Windermere.

Frances White LLB (Hons)

Partner / Solicitor

Frances qualified as a solicitor in 1978, having trained with the firm’s founder and former senior partner, Mervyn Beecham. She became a partner in 1979 and has worked with the practice ever since.

A member of Avenue Baptist Church for over 45 years, Frances continues to undertake legal work for various local churches and the community. She was previously a member of the management committee which established the YMCA hostel in Southend.

Frances has a Bachelor of Laws Degree, with upper second class honours, from the University of Newcastle. She was also awarded honours on passing her final solicitor’s examinations with four distinctions.

She is a member of The Society of Trust and Estate Practitioners (STEP) and The Chartered Institute of Taxation (CIOT). Also the Law Society’s Property Section and Private Client Section, which are representative associations for members.

Frances enjoys gardening, baking, the theatre and many types of music. She has no children but has recently become a great aunt three times over!

Debbie Stanton LLB (Hons)

Partner / Solicitor

Debbie qualified as a solicitor in 2004 since when she has specialised in Family Law with a particular interest in resolving financial aspects within divorce/co-habitation/ civil partnerships and disputes involving children. Debbie joined the firm in May 2010 and was brought into Partnership in November 2011.

As a member of Resolution, Debbie is committed to providing a personal, non-confrontational and supportive service.

Debbie’s outside interests include interior design, gardening, reading and socialising with family and friends.

Since January 2016 Debbie has been a trustee for HARP, an established charity which is committed to eradicating homelessness in Southend. As part of her role as Trustee, Debbie attends regular monthly meetings which deal with the general day to day running of the charity.