Financial issues for cohabiting joint owners after separation
Rules on mortgage payments and loans on the property for cohabiting joint owners on the breakdown of a relationship.
Paying the mortgage
The position of cohabiting joint owners in relation to mortgage payments can be summarised as follows:
where there is a mortgage in joint names, both parties are jointly and independently liable for the mortgage payments, regardless of who is occupying the property. In a relationship breakdown situation, if one party leaves the property and stops contributing to the mortgage payments, the lender is entitled to require payments from the remaining party to cover all of the mortgage and it is not possible to argue that s/he is only liable for a particular share. This is known as 'joint and several liability'
where there is a joint mortgage, either party can make payments and either is entitled, if eligible, to claim income support/jobseeker's allowance towards the interest on the mortgage loan payments.[1] Where the property is a leasehold property, maintenance, service charges and ground rent can be included as housing costs that are eligible for benefit[2]
where there is a joint mortgage and the partner who has left is claiming income support/jobseeker's allowance towards the interest on mortgage payments, benefit can be paid on two homes if s/he is treated as liable to make payments for both dwellings, is treated as occupying both dwellings as her/his home because s/he has left and remains absent through fear of violence and it is reasonable that housing costs should be met on both the former and the present dwelling.[3] Payment can also be made for up to four weeks if the cohabitant has moved into a new home permanently and the liability for payments on two homes is unavoidable[4]
where there are joint owners but there is a mortgage that is in one name only, if the partner who does not have the mortgage liability wishes to remain in the property, s/he may try to make mortgage payments to the lender to avoid possession proceedings. The lender has no legal obligation to accept payments, but may do so anyway. In the short term, the remaining cohabitant could apply for an occupation order transferring mortgage liability temporarily.[5] If, however, the lender refuses to accept payments and tries to repossess the property, the partner who does not have the mortgage liability may have to apply to the court for an order under the Trusts of Land and Appointment of Trustees Act. This could prevent the trust for sale being brought to an end and oblige the lender to accept mortgage payments and prevent it taking action to repossess the property.
Loans on the home
If one of the joint owners wants to raise a loan on the property then, whether the joint owners are beneficial joint tenants or tenants in common, the written consent is needed of the other party. If given, written consent can only be set aside if the party signing can show that s/he signed under undue influence from the other party, or misrepresentation or fraud has taken place (see the page on Preventing sale/disposal of home for more information).