Equitable accounting – what unmarried home owners need to know

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As we have explored in previous blogs, unmarried couples have fewer rights when it comes to the division of assets should the relationship end compared with married couples.

In this blog I explore the issue of equitable accounting, and when this might be used in disputes following the breakdown of a relationship between an unmarried couple.

What is equitable accounting?

Equitable accounting is the process where the court will seek to take into account unmatched payments which one of the co-owners has made towards the property.

For example, if one person has paid mortgage repayments on the property and the other person has not contributed towards this, the court may consider it fair to take this into account.  Another example might be where one party has paid for major improvements to the property and the other hasn’t.

However, it is important to bear in mind that equitable accounting does not alter how a property is owned.  I.e. if the co-owners are each 50% owners of a property then equitable accounting will not change that to mean that one person owns 60% in that property.

Instead, it can be used to recognise the unmatched contribution.

When does equitable accounting start?

Typically, in cases where a couple are living together, equitable accounting would not begin until the relationship is at an end or where they are no longer living together.

What is occupational rent?

Occupational rent may form part of the equitable accounting exercise and may arise where one co-owner is not occupying the property and so the owner who is not occupying the property claims rent from the occupying co-owner.

The concept of occupational rent is to address the fact that the occupying party has benefitted from having enjoyed sole occupation and use of the jointly owned property.

However, the starting point is that a co-owner is not obliged to pay occupational rent merely because they are living in the property and the other co-owner is not.

Instead, there must be something which means that it is fair for the co-owner who is occupying the property to pay an occupational rent.  This will depend upon the circumstances of the case although it is clear that this does not mean that one co-owner has to be forcibly prevented from occupying a property.

Indeed, in the case of a relationship breakdown, the breakdown of the relationship may be sufficient to justify why one person has left the property and seeks to claim an occupational rent.

However, there may be various reasons why it is not felt appropriate for occupational rent to be taken into account or why occupational rent may be offset against an expense that the co-owner who is living in the property has met.

By way of example, if the co-owner who is living in the property is paying the mortgage, then this may offset a claim for occupational rent and vice versa.  Whether this is appropriate depends upon the facts of the case.

Conclusion

Equitable accounting is a discretionary process and is highly fact specific.  I would also reiterate that equitable accounting is not a mechanism which allows the court to change the proportions in which a property is owned. Obtaining legal advice from a specialist is the best way of exploring whether equitable accounting is appropriate in your circumstances.

Chris Maulkin is a Family Law Specialist based in our Brighton office. To discuss your situation confidentially, please contact us.

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