For a large number of divorcing couples, the most important financial asset will be the former matrimonial home which has most likely provided a home for both spouses and any children of the family. 

Many couples purchasing their first home together will choose to register the legal title in their joint names. After all, most couples swept up in the excitement of a new property purchase are probably not contemplating the demise of their marital partnership. 

In order to transfer legal ownership of a property into the joint names of you and your spouse/prospective spouse, your conveyancing solicitor will need to prepare, amongst other important legal documents, a TR1 transfer deed. 

You can own a property as either ‘joint tenants‘ or ‘tenants in common‘. If you do not specify otherwise, the default position is that you and your spouse/prospective spouse will own the property as joint tenants. There are three important consequences which follow as a result of such ownership: 

Joint Tenants 

• you both have equal rights to the whole property
• ownership of the property automatically vests in the surviving spouse if one party dies
• you cannot pass on your ownership of the property in your Will. 

In circumstances where one spouse is advancing a much greater capital deposit than the other -if not all of the capital – this could have unintended consequences in the event of marital breakdown. If this should be the case, holding the property as Tenants in Common should be considered. 

Tenants in Common 

• you can own different shares of the property 
• the property does not automatically go to the other owners if you die 
• you can pass on your share of the property in your will 

The starting point holding the property as Tenants in Common is that each co–owner owns an equal share of the equity in the property – regardless of how much each party contributed to the initial deposit and/or mortgage payments. 

The Court, when exercising their statutory discretion on divorce, is concerned with achieving a fair result between the parties and has a wide array of dispositive powers at its disposal in order to do so. In the majority of cases, factors which might otherwise have assumed importance (for example, the advancement of unequal capital sums when the property was first purchased) may be subsumed under the principle of ‘needs‘ which predominates. ‘Needs‘ in this context means housing needs, and income needs (both now and in the future). It is therefore unsurprising that this can often give rise to unexpected consequences for one of the parties. 

So what, if any, protection is available? 

One way to minimise risk is by signing a Declaration of Trust – a legally binding document which removes uncertainty and eliminates the chance of disagreements in the future. If the percentage shares are clear cut i.e. 70%/30%, this can be done within the TR1 form itself. 

If the shares are more particular, a Declaration of Trust (sometimes called a Deed of Trust) which is a legal document, can be entered into between the parties who have an interest in the property and records the financial arrangements between co–owners of a property. 

A Declaration of Trust protects your financial interests by allowing you to specify how the property will be dealt with if you and your partner separate, including, for example, what percentage of the proceeds each of you would be entitled to if the property were sold. Or where a parent or other relative is providing money for a deposit, it may be agreed that they will retain an interest in the property or that their stake in the property will be returned to them in the event of a sale. 

Whilst this does not fetter the Court’s discretionary powers under the Matrimonial Causes Act 1973, an express Declaration of Trust will be persuasive and is the best available evidence of what the parties‘ intentions were at the time. 

For further information or to speak to a member of our friendly conveyancing team, you can contact Williamsons on 01482 323697.