What happens to their home and any other property they may have when an unmarried, co-habiting couple separate? Property rights in those circumstances can be very complicated.
The laws which protect married couples and which generally ensure a ‘fair’ split of the assets on divorce don’t apply to the home or property of unmarried, co-habiting couples which means that couples can sometimes live together for many years only to discover that at the end of the relationship there is a dispute between them about who owns what. What happens then?
There may of course have been a co-habitation agreement, but even if there isn’t it is still possible for the couple to agree what happens. We will always encourage parties who are separating to try to reach agreement between themselves wherever possible and to avoid court proceedings wherever possible. We can give advice and assistance on informal steps towards agreement or more formal methods of alternative dispute resolution, as it is known, including mediation and collaborative law.
However, it is not always possible for a couple who are separating to reach agreement. Sometimes one party will be adamant that they own the property the couple have lived in and the other will be adamant that they have a legal interest in that property. Sometimes the parties will agree that each has an interest in the property but then be unable to agree the extent of those interests. In those circumstances the issue is to establish what the intentions of the parties were so far as the ownership of the property is concerned.
The starting point is what, if anything, is written down. When the property was purchased what was said about the shares in which the property would be owned? For conveyances since 1998 there is a box in the form TR1 which is signed by the joint purchasers of a property in which the co purchasers of land are required to state their beneficial interests in the property. Where the property has been purchased in joint names the statement of the parties of their beneficial interests in the property will normally be conclusive.
A more difficult scenario, however, is that one party purchases the property in his or her sole name but the couple then make that property their home. What rights, if any, will the party whose name is not on the title to the property have in those circumstances?
The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) might offer assistance. If the parties intended that they would both have an interest in the property but the property is only owned by one of the parties then under TOLATA the Court can make a declaration which is binding upon the parties as to the shares in which they own the property. The Court can also in certain circumstances order the sale of the property, although in that case subject to considering the interests of any children who may be living in the property.
The key in those circumstances is to determine what the parties ‘intended’. Again, the starting point is always what is written down. If nothing is in writing what discussions did the parties have and what was agreed? Vague assertions of discussions and agreements may not withstand the type of scrutiny which may follow in these situations and the parties need to be clear about precisely what was said, when it was said, where it was said and the context in which it was said. Were there any witnesses to what was said who would be willing to give evidence? What the law is looking for in these cases is evidence of a common understanding or a reliance by one party on promises made by the other.
Financial contributions made either to the purchase price by way of deposit or towards the payment of any mortgage on the property or towards, for example, improvements to the property can be of considerable relevance, both as evidence of the intention of the parties that they should each have an interest in the property or in support of the contention that there was an agreement between the parties that each would have an interest in it. It is important, however, to be clear about the nature of the financial contribution and in the case of a lump sum that the payment was neither a gift nor a loan, in either case made without any intention of the party acquiring an interest in the property which he or she would otherwise not have had.
Sometimes the separating parties are clear about the shares in which they own the property. This might have been agreed at the time that the property was purchased. It might have been recorded in writing, in the TR1 or elsewhere. The parties might have reached agreement between themselves upon separation. What then happens however if one party wants to sell the property and the other doesn’t.
Again, the parties can turn to TOLATA. Under TOLATA the Court has the power to order the sale of the property if the purpose for which the property was purchased no longer exists. In circumstances where the property was purchased with the intention that it would be the parties’ home and where the parties have now split up it would normally be appropriate for the property to be sold so that the parties can realise their interests in it. The Court will however take into account the interests of any children who may be living in the property and where the children are of school age the Court may well refuse an order for the sale of the property where that would mean the children losing their home.
In this complicated area of law expert advice at an early stage. If you’re interested in any of the topics raised in this article, or for further information, please contact Geoff Buck. Alternatively, you can call to speak to one of the team on 0115 9888 777.