Statistics show that the number of couples who are choosing to live together without getting married or entering into a civil partnership is increasing. For the purpose of this blog, I will use the phrase cohabiting couple to mean a couple who live together but are not married or in a civil partnership.
What are the implications for those couples?
I have previously explored some of these issues in my blog, The Myth of Common Law Marriage, but as part of Cohabitation Awareness Week 2017, felt that now would be a good opportunity to look at how property is treated.
What is the legal starting point for cohabiting couples and property rights?
Cohabiting couples do not automatically have financial claims against each other. However, where a property is owned by one or both of the couple, they may have a potential claim under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
For the purposes of this blog, I am going to focus upon the cohabiting couple’s home.
The starting point is to look at how the property is owned
If the property is owned jointly:
If the property is owned jointly then the first thing to do is to establish if it is owned as Joint Tenants or as Tenants in Common. This can usually be established fairly easily and cheaply by obtaining documents from the Land Registry.
Joint Tenants – Where a couple own a property as Joint Tenants then they do not own shares in it but are considered to be joint and equal owners. Therefore, the presumption is that they each own the property equally.
Tenants in Common – Where a couple own a property as Tenants in Common then they each own shares in the property. These shares can be held equally e.g. 50/50 or not e.g. 70/30. Where a couple own a property in non-equal shares then this would normally be evidenced by a document called a Declaration of Trust. If there is no evidence regarding the shares that they each own in the property then there is a presumption that they will own the property in equal shares.
In some circumstances it is possible to show that a subsequent agreement between the couple needs to be taken into account e.g. that although on the face of it the property is owned equally there is a reason why this should be departed from.
These claims are fact specific and can be difficult to establish. The burden will be upon the person trying to show that a subsequent agreement should be taken into account.
If the property is owned in one person’s sole name:
If a property is owned in one person’s sole name there may still be a document confirming that their partner has an interest in it. This would normally be in the form of a Declaration of Trust.
Where there is no Declaration of Trust a cohabitee may still be able to show that they should have an interest in the property if they can demonstrate that:
a. There was a common intention between the couple that the cohabitant would have an interest in the property and they have acted to their detriment in reliance of this.
b. The non-legal owner cohabitant was led to believe by their partner that they had a beneficial interest and as a consequence of this they acted to their detriment.
In most, but not all, of these cases the applicant has injected capital into the property in question and claims that there was an agreement or understanding that this was in return for a beneficial interest in the property, so they expect to receive this capital back when the relationship breaks down.
If you are thinking of injecting capital into a property that you hold jointly with your partner, or that is held in your partner’s sole name, make sure that you have an open discussion about whether it is intended that you will acquire a beneficial interest, or an increased beneficial interest, as a result. If so, you should seek legal advice and consider entering into a Declaration of Trust to avoid confusion and possible litigation later down the line.
This is a complicated area of law and each case will depend upon its individual circumstances. If you find yourself in this situation it is really important to get advice from a family law specialist as early as possible.