Property rights of cohabitants

Property rights of cohabitants

Recently released official statistics reveal that, for the first time, there are now more households where the partners live together unmarried than those who are married. Clearly, there is a growing preference in society for the relative informality and ease for cohabitation outside marriage. Unsurprisingly, there is renewed pressure on Parliament to bring the law relating to cohabitants in line with those who are married.

Unmarried partners face a very different future to their married counterparts on a breakdown in their relationship relating to the distribution of the financial resources belonging to the couple. There remains a very common misconception that a “common law marriage” is part of the law in this country.

It should be stressed that, where partners are not married and their relationship ends, there is no legal right for either partner to apply to the court for a “fair” division of assets which have been acquired whilst they were together. However, as is mentioned below, there has been a recent development which might well give non-owning partners some additional help.

What follows relates only to the property where the parties have lived during their time together.

The property owned only by one of the cohabiting couple

The starting point is to emphasise that living together, for however long, does not give to a partner, who is not a joint owner of the property, an automatic right to share in the value of the property.

Take the fictional (but common in real life) example of John and Janet. They were unmarried and lived in a flat which was bought after they started living together. At that time, Janet had enough money for the deposit on the flat and the rest of the purchase price was raised from a mortgage. Janet was earning a good income and could obtain the mortgage in her own name.

John and Janet had been together for several years. During that time, John contributed towards the general expenses of the home, although nothing was specifically agreed between them as to how those expenses were to be met. Problems arose between the couple and eventually they decided to split up. John moved out of the flat but Janet remained there.

John imagined that because of the time that they had been together, and the contributions which he had made towards expenses, he would automatically be entitled to a share of the value of the property. He was wrong.

The property owned in both names

When a property is owned in joint names, then the value of those shares will usually be specifically stated in the deed by which the property was purchased or some other agreement e.g. each owner has a one half share. In the above example of John and Janet, if that agreement said that they were each entitled to 50%, then, when they split up, each of them would be entitled to one half of the value after the mortgage had been paid off.

Sometimes, parties agree that, although a property is in their joint names, the shares can be unequal e.g one owner has three quarters and the other a quarter (usually to take account of the different proportions in which the original purchase price was contributed).

Can a non-owning partner ever claim a share of the value?

The answer to that question is yes. To make a successful claim, the non-owning partner would have to show clear and convincing evidence that the parties had agreed, either specifically or by their joint actions, that the value would be shared. Such evidence might be, for example:

  • a written agreement between the parties stating that although the property was only in the name of one of the parties, it was their intention that on sale, they would own it in the proportions stated in the agreement.
  • an understanding between the parties, not recorded in writing but clear in the way that they dealt with e.g. the mortgage payments or other expenses, that the non-owning partner would have a share in the value of the property.

The way that result can occur is when it is agreed between the parties, or the court decides, that the legal owner was holding the property in their sole name but on trust for both parties.

In a recent Scottish case which reached the Supreme Court, the President of the court make some comments which could well be relevant to English and Welsh cases now, even under the current law. Lady Hale said:

“In principle, if one party has derived a clear and quantifiable economic benefit from the economic contributions of the other, it may be fair to order what is, in effect, restitution of the value of that benefit. But sometimes the benefit will result from non-financial contributions or be very hard to quantify.

In some cases, it may be entirely fair to expect the better-off partner to compensate the other in full for the losses she has sustained as a result of their relationship: as, for example, where a rich widower persuades a widow to give up her secure tenancy and widow’s pension to move in with him and can well afford to put her back in the position in which she was before their cohabitation began. In others, this may be impossible or quite unfair.

A remedy such as this is both practicable and fair. It does not impose upon unmarried couples the responsibilities of marriage but redresses the gains and losses flowing from their relationship”.

One of the most interesting aspects of this judgment is that it refers to the possibility that the ‘contribution’ of the non-owner could well be ‘non-financial’. Such a contribution might be, therefore, childcare.

Is the law likely to change to simplify these difficulties?

For some years, pressure groups have tried to persuade Parliament that the time has come to treat unmarried partners in the same or at least a similar way to those who are married when their relationship breaks down. A change in the law would make matters much simpler and clearer

Meanwhile, as explained above, there may well be circumstances in which a non-owning partner can claim a share in the property which the non- owning partner shared with the sole owner.

These are obviously difficult and sometimes complex issues. Sometimes a great deal of money can be at stake. We recommend that legal advice should be taken during the breakdown of a relationship to clarify the situation.

If you or anyone you know, are affected by the issues raised above and would like more information or some preliminary, confidential advice, please contact one of our experienced experts in our Family Law team by e-mail or telephone.