Is it your place or mine?

Unmarried couples have no statutory property rights, so written agreements are essential. Frances Way reports

"YOUR place or mine?" is a question that takes on a new meaning when a couple decide to live together. A home provides for emotional and physical needs, and is also a big financial asset - or liability - depending on which way you look at it. The last thing you want is for your home to become a source of insecurity and discord. The way to avoid this is to know your individual rights at the outset.

If you both have a home, practical issues may decide whose place is chosen as the new joint home. For example, one partner's place may simply be more spacious and conveniently situated than the other's. Finances may dictate whether two homes can be kept on. Or you may conclude that neither home is suitable and that you must find a new place together.

Whatever you decide, it is important that you are fully aware of your property rights and needs rather than simply allowing an arrangement to evolve by chance. The property disputes of unmarried couples who have not made proper arrangements are often far messier and costly than those of divorcing couples who have the protection of statute. It makes sense to consult a solicitor to discuss your situation before you make decisions about your home.

If you decide to buy a home together, you will need to decide whether to own it as joint tenants or as tenants-in-common. (The word tenant has a wider meaning than when applied to renting).

Joint tenancy gives each an equal financial stake in the property, regardless of who actually pays what towards the purchase. When the property is sold, each person will be entitled to half the proceeds. When one person dies, the property automatically passes into the sole name of the surviving partner.

This gives each partner equal security in the home, but might not reflect the financial investment of each fairly.

A couple who hold the property as tenants-in-common may split the ownership according to each person's financial stake. For example, the home could be owned in a ratio of 1:2, to reflect the fact that one person pays twice as much of the mortgage as the other. When the home is sold, the proceeds will be divided according to the proportions in which the home was owned.

The main problem that arises when a couple hold a home as tenants-in- common occurs when one partner dies without making a will. The deceased person's part of the property will pass according to the laws of intestacy. An unmarried partner is not recognised as next of kin. The surviving partner would need to contest the inheritance to avoid buying out the inheritor's share in the property, or selling up.

Making a will avoids this problem and - unlike the case with jointly held property - each partner in couples who hold a property as tenants- in-common may decide who inherits his or her share of the home. For example, someone with children from a previous relationship may prefer to leave the share to them, perhaps after granting the surviving partner a life interest in the property first.

If one partner already owns the home, it is possible to make an alteration to give the other partner ownership rights either as a joint tenant or as a tenant-in-common. Or the property-owning partner could draw up a deed of trust giving the other partner a right to live in the property and a share of the proceeds of the sale.

The danger when one partner is sole owner is that the other partner could be left in a vulnerable position. In order to sell the property when a home is jointly owned (either as joint tenants or tenants-in-common), both owners must consent to the sale. A sole owner may sell the property without the other partner's consent.

If a deed of trust has been made, however, the non-owning partner could seek redress through the courts, but even this is really shutting the gate after the horse has bolted.

Unlike a married person, the non-owning partner has no way of making a note on the property register to warn a potential buyer of his or her existence. Also, unlike a spouse, the sole owner's partner has no right to request a statement of account to see if the mortgage payments are being made. Nor will the lender be able to accept payment from the non- owning partner. This could cause considerable problems if the owner abandons the home.

Often where one partner owns the property and the other moves in, there is an informal arrangement that the owner pays the mortgage while the other partner pays for the bills and other household expenses. Such payments will give the non-owning partner no rights in the property, regardless of the amount. This is obviously unfair, as one partner will be building up a financial asset, whereas the other - who may be spending just as much - has nothing to show for it.

Property arrangements may also be recorded in a cohabitation contract, which can be drawn up by a solicitor fairly cheaply. Such a contract can go into as little or as much detail as the couple desire, and can include agreements as to how the property is held and what should happen to it if the couple part. It may also cover numerous other topics, such as pension and insurance arrangements and owner- ship of personal items. However, the contract will create no actual right in the property, and the only recourse left to a wronged partner would be to bring an action for breach of contract.

For married couples, property disputes are governed by statute that gives the non-owning spouse a fair degree of security. Unmarried couples must rely on the general laws relating to property. The only exceptions to this are situations where the couple have children, and the court considers it necessary to intervene to ensure that the children have a home.

o The writer is the author of `Living Together', published by Kogan Page. Price: pounds 8.99.