Property ownership for cohabitees – common myths

Property ownership for cohabitees – common myths

A number of people to whom we speak initially have misconceptions about their legal rights in property when they are cohabiting rather than married.

Disregard entirely the law relating to marital breakdown

The following are the principle misconceptions many people hold and need to be corrected:

  1. There is no legal concept in English law of a common law man and wife. It does not matter how long you have lived together through thick and thin – it will not mean that you will acquire any more legal rights.
  2. If the house that you share is bought in one party’s name only, you will not acquire an interest in the property if you simply pay the utility bills or do some decorating or similar tasks around the house.
  3. If the house is bought in joint names this does not necessarily mean an equal division – it depends on how you bought the house.  A key question here is are you tenants in common or joint tenants?
  4. If one party contributes more to the purchase of the property than the other but it goes into joint names as joint tenants then you are not entitled to claim back the money you initially invested first and then split the equity equally. This means you may lose for example your initial deposit. This often comes as a big shock to one or both of the parties.
  5. If there are children of the relationship, this does not necessarily mean that the primary carer gets to stay in the house.
  6. It is not correct that maintenance can be claimed as of right from the other party, apart from child maintenance.
  7. It is not correct that a partner has a claim over any other assets of the other, unless those assets are in joint names or a direct financial contribution has been made.
  8. It is not true that if one partner dies the other automatically inherits, unless the deceased has made a Will naming them as a beneficiary. In the absence of a Will and under the rules of intestacy the surviving partner is not recognised as one of the categories of beneficiaries (although they may be able to make a claim under inheritance laws).
  9. Finally, disregard entirely the law relating to marital breakdown. There is no concept that everything you have is put into the pot to be divided using the principles of fairness and need (as is the case for married couples – see Finance Provision in Divorce Cases).

Take action just in case the rot sets in

This no doubt all sounds pretty grim to those of you who are living in a property with your other half which is in their name. You may have children and be the main carer and only work part time. See When Cohabiting Couples Separate.

When cohabiting couples separate

When cohabiting couples separate

The piece on Property ownership for cohabitees – common myths exposed sets out the common misconceptions people have concerning their legal status when they cohabit. Here we address what can be done to avoid problems when cohabiting parties separate. Note that there have not been any recent major changes of the law in this area. Cohabitees continue to have limited rights in comparison to married couples or those in a civil partnership. Many are hoping for primary legislation to redress the imbalance – but there is no sign on the horizon that our current Government has any wish to tackle this.

Buying a house together – what are the options?

A house is probably the biggest single item anyone will purchase in their lifetime. The critical question is: should this house be bought in the parties’ joint names or in the sole name of one? To keep it simple there are basically two types of joint ownership:

  • a joint tenancy where the legal and beneficial interest is held equally, or
  • a tenancy in common where the beneficial interest can be held in unequal shares.

If at the outset there is an unequal contribution to the purchase, the property should be held as a tenancy in common with a Declaration of Trust tacked on to record the parties’ respective shares. If the property is purchased in joint names the division is generally going to be assumed to be 50:50, even if one has contributed more than the other. There is a presumption in the absence of fraud or mistake at the time of purchase that the parties intended the beneficial ownership to be equal, and claims to the contrary after the event are unlikely to change that.

What if the house is in one person’s name only?

This is often where disputes arise, for example the parties initially bought the house together and for whatever reason it was placed in one party’s name or one party may have moved into a house already owned by the other. In these cases the burden falls on the non-owning party to prove they have acquired a beneficial interest in the property. How is this done?  The party claiming an interest has to prove that there was an intention that the property should be in shared ownership. This has to be based on evidence to establish that a Trust has arisen either from conversations the parties had and / or by reference to the contributions made by the parties both at the time of the purchase and subsequent to it. The whole ‘course of dealings’ between the parties will be scrutinised. This does not boil down to ‘well I paid for the food and holidays and he paid the mortgage therefore I should be entitled to a share of the house’. The contributions need to be made to the mortgage or to the property and the intention to share has to be there.

We lived together for 20 years and had 2 children – surely I should get something?

The short answer is probably not, if there was no intention to share, no contribution towards the purchase of the property or to the mortgage payments and no major financial input into the property. In this situation, there will be no day of reckoning for the party whose name is absent from the property title. This is a sobering thought.

What should be done when buying a house together?

The emphasis is on getting it right at the outset.  It may seem cold and clinical to talk about who should own what shares when buying a house together. It is not expected that the relationship will end in tears but one has to be realistic. If you are contributing unequal shares, then have a Declaration of Trust drawn up to reflect this (assuming this is what you want). If the house has to go into one party’s name (maybe because the other cannot go on the mortgage) then consider having a Cohabitation Agreement prepared setting out your intentions as to the beneficial ownership of the property and who will be paying the mortgage, etc.

What happens if it all goes wrong?

Disputes between parties over property are brought under the Trusts for Land and Appointment of Trustees Act 1996. Generally a declaration as to ownership is sought as well as an order for sale. These disputes can be protracted and costly. They are generally dealt with in the County Court and costs orders can be made against the ‘losing party’.  Before embarking on any court proceedings legal advice needs to be sought as to the merits of any application.

The other more extreme option is to look to buy your property in Scotland. In Scotland they have the Family Law (Scotland) Act 2006 which provides that a claim can be brought on the grounds of ‘economic disadvantage’ suffered as a result of the breakdown of the relationship. No such remedy lies in English law – not yet anyway.
Some cases
There have been some interesting cases in this area, including Kernott v Jones (2011), Aspden v Elvy (2012) and Geary v Rankine (2012) for those who wish to research further.

Divorce and Cohabitation: Impact of Cohabitation on Divorce

Divorce and Cohabitation: Impact of Cohabitation on Divorce

Divorce and cohabitation are relatively common bedfellows (no pun intended). Cohabitation is a long standing living arrangement which to all intents and purposes is similar to a marriage, except there is no marriage licence. Cohabitation is relevant in divorce proceedings in the following ways.

Did the couple cohabit prior to marrying?

When divorcing, it is necessary to know if the parties cohabited before the marriage. If cohabitation seamlessly traversed the great divide into married life then the period of cohabitation is taken into account when considering how one should deal with the division of assets on divorce. It is sometimes the case that parties may well have cohabited for years prior to the marriage only to find that once married the relationship falls apart. In these situations the court would look at the length of the relationship as a whole and not just the length of the marriage.

Have the parties cohabited post-separation?

The issue of cohabitation becomes more opaque when the separated parties enter into a relationship post separation. When does the boyfriend/girlfriend become a cohabitee and does it really matter? The answer to the latter is yes but proving it may be tricky. If, for example, the ex-wife has a maintenance order in her favour and one of the terminating events is her cohabitation with another, then it is likely that she is going to want to maintain the facade that she is not living with the boyfriend as that would result in the termination of her maintenance. The court would look at the reality of the situation: how many nights does the boyfriend spend at the wife’s house? Is he involved in the children‘s child care? Does he financially support or contribute to the wife’s outgoings?

Cohabitation does not automatically end maintenance claims

The fact of cohabitation does not automatically bring one party’s maintenance claims to an end, unless it is specifically referred to as a condition in any Court Order. In the absence of any reference being made in an Order as a triggering event for termination, it is likely however to form the basis of an application by the payer back to the court for a variation of the maintenance arrangements.

How does cohabitation affect the division of assets on divorce?

The short answer is that it should not make a great deal of difference to the sharing principle. Even if one party is living with another, they may have no right or claim over their new partner’s assets or income.

However, it would make a difference when assessing their income needs. It is obvious that if there are two incomes coming into a household and the costs are being shared then the income needs (i.e. maintenance) is likely to be adjusted accordingly.

How do you prove a party is cohabiting if they deny it?

In divorce proceedings, the Form E financial statement requires the parties to state whether they are cohabiting or intending to cohabit. This statement is endorsed with a statement of truth. If one lies in the form then they have committed perjury, which is clearly a serious matter. The parties are under an ongoing obligation to make full and frank disclosure and to be honest.
Therefore, following on from the Form E, questions can be raised concerning the new partner. In some cases the new partner could be joined into the proceedings. A production appointment could be applied for relating to any documents or financial information about the new partner which would prove helpful to the court.

In a nutshell the parties need to be honest with their dealings with the Court and the information presented. The truth generally prevails and if a person were found to have been less than truthful, they would find the consequence somewhat severe .

Related articles:

When Cohabiting Couples Separate addresses what can be done to avoid problems when cohabiting parties separate.
Property Ownership for Cohabitees – Common Myths puts to rest the principle misconceptions many people hold in this area of law.