If you live in your partner’s house, it shouldn’t be affected if you go bankrupt. However, there are circumstances where the property could be at risk.
Included in this article:
- Can a claim be made on your partner’s house if you go bankrupt?
- Exceptions where the property could be at risk
- What if you have given your share of a property to your partner?
Need more advice about going bankrupt? Give us a call (0800 077 6180) or complete the form below. Its free and confidential
Can a claim be made on your partner’s house if you go bankrupt?
Where you have no financial interest in your partner’s house, the Official Receiver (OR) has no claim on the property if you go bankrupt.
The role of the Official Receiver is therefore to establish whether you have any financial interest or not.
For the purposes of bankruptcy, as a general rule, if the house is listed only in your partner’s name at the Land Registry and, you are not named on the mortgage, you are regarded as having no financial interest in it.
This is regardless of how long you have lived together or even whether or not you are actually married.
In contrast, if you are a joint mortgage holder (even if you don’t pay the mortgage) and/or have registered interest in the property at the Land Registry, it will be assumed that you do have an interest.
This area of bankruptcy is complex. If you are living in your partner’s property, don’t go bankrupt before you have spoken to us for advice.
Exceptions where your partner’s property could be at risk
There may be instances where you do have a financial interest in your partner’s property. This could be the case even if you are not on the mortgage or named on the Land Registry.
One example is if you have been maintaining the mortgage payments on behalf of your partner.
You may be assisting your partner each month by providing money towards the household bills. This situation is common and does not automatically mean you are building up a financial interest in their property.
However, if you have paid the mortgage on their behalf because they have no income of their own, this is different. The OR may then be able to argue that you have built up a financial interest. This would be equivalent to the amount the mortgage has reduced since you have been paying it.
Another example is where you have directly paid for material improvement to the property. For example, you have paid for an extension or a conservatory with your own funds. Your financial interest in the property is then the additional value that has been added as a result of the improvements you paid for.
Where you have built up a financial interest in your partner’s property, the Official Receiver can claim an amount equivalent to your interest from them. They can enforce the payment of this amount with Court action if necessary.
What if you have given your share of a property to your partner?
If you have signed over your share of a house to your partner (or ex-partner), this is something you will need to consider very carefully before going bankrupt.
This potential problem is that any significant assets you have given away before you go bankrupt can still be treated as yours.
Specifically, you will be asked about any property you have given away within the last 5 years. The Official Receiver can look further back than this if your name is still on the mortgage.
Generally speaking there should not be a problem if you have a legal agreement (such as a separation agreement). This would normally state the reasons why you gave your share of the property to your ex and the value (or consideration) you received in return for doing this.
But, where there was no legal agreement, the OR may treat the transfer as a transaction at undervalue. This is where you gave away your share of the property for no reasonable return. In this situation, they are then legally entitled to claim your share of the property back from your partner. They can use legal enforcement to do this if necessary.
Thinking about going bankrupt but need more advice about your partner’s house? Call us (0800 077 6180) or complete the form below. Its free and confidential.