I do meet many families where more than one generation may be living in a home. This can take place in one of three ways: firstly a parent can move in with a child; secondly a child may return to live with a parent or indeed may never have left home or thirdly the parent and child may buy a home together. When I say parent and child this could also be other relatives for example aunts and nieces or elderly persons and their carers whether they are related to each other or not. Often other persons may also be involved in that the child may have a spouse, and or children who are also living in the home. They may also have brothers and sisters who are not living in the home but who are concerned about the family arrangements. All of these persons may be affected by the arrangement and yet rarely would the family consider the financial and legal position and take legal advice on it. They all have a good relationship and cannot see this breaking down. They do not want to involve themselves in legal costs. Often solicitors only become involved because the relationship has broken down and we can see how easy it would have been had families considered the implications when moving in with each other and how much cheaper and less stressful it would have been to record the agreement rather than argue about it afterwards.
In the absence of any legal agreement elderly parents, adult children and all non-relations can be evicted from the home by the resident owner if they are given reasonable notice. This can cause problems if the occupier has paid any money to the owner whether as a lump sum or as regular smaller amounts. Problems can also arise if the occupier has exclusive possession of any part of the home – for example a granny living in a separate annexe at the home. These problems may be avoided if a legal agreement is drawn up in the first instance.
One aim of the legal agreement is to ensure that all parties can get out of the agreement and resume a fully independent life without loss having resulted to any one of them. The legal agreement can cover many things including the intentions of the parties whilst they are living together the intentions with regard to any financial contributions, and their intentions concerning a sale of the property should the relationship break down. In addition an agreement can record the financial contributions that are to be made by each party to the outgoings on the home, to the improvements and repairs to the home and to any mortgage on the home. Although you may have reached an agreement about all these matters if the relationship does break down how will you prove the agreement unless it has been properly recorded?
The legal agreement – often referred to as a declaration of trust or a co-ownership agreement can go hand in hand with any other documents affecting the legal title to the home. This could be a transfer of the legal title to the home, a lease, a licence, a tenancy or a mortgage if the occupier wishes to loan the owner money.
A transfer of the legal title in the above circumstances can have an inheritance tax benefit which it would not have if the transfer were to a non-resident family member.
In addition to the above all parties need to have new Wills.
With or without an agreement home sharing can be a source of real conflict within families during the parties’ lifetime and upon the death of one of the parties and so it is important to take legal advice.
At Dixon Stewart we can provide you with that advice.
Call Helen Stewart 01425 279222 Kelly Taylor 01425 621515 Paul Moores 01425 673994
Or e mail firstname.lastname@example.org