When unmarried co-owners of property separate, a main concern is what can they each expect to get back from the sale of the property. This article focusses on interests in property of unmarried couples only. Different rules will apply where couples are in a marriage or civil partnership.
I was once misquoted on this issue in a national newspaper, as saying that I think “People should get back what they put in”. What I actually said was; “People often think they should get back what they put in.”
Sometimes a client will detail financial contributions made to the property during the relationship with a real sense of injustice if their payments go unrecognised. In the ordinary case of equal joint owners, however, the final distribution of money between parties may only be expected to take account of what has been spent after the relationship has ended. It is highly fact specific.
With a jointly owned property, Land Registry documents will commonly reveal if there has been a written declaration of trust at the point of purchasing the property. There may be several documents to sift through to establish this point and it needs to be checked carefully.
What if there is a declaration of trust?
The leading court cases are clear that a signed declaration of trust setting out how the beneficial title is held is definitive, unless there is good enough evidence that the declaration should be set aside, for example because of undue pressure by one party at the time.
Intentions can also change over time and care is needed to look at whether there is any evidence that the joint owners intended to alter their beneficial interests, perhaps by a later trust deed or other type of agreement.
Exceptionally perhaps if the later agreement is informal or oral, it may be possible to enforce it if a party acted on the agreement to their own detriment.
The important point to take away is that there must be evidence of agreement of both parties. An intention by one party only is never enough. Where couples are unmarried, the law does not reassess parties’ shares on the basis of what is considered ‘fair’.
As such, the mere fact that one party has spent time and money on improving the property during a relationship will not normally be sufficient evidence for the court to find that the intentions of both parties changed. Great care is needed on reviewing the evidence and each case must be treated on its own facts
There is a sharp distinction in the ordinary case of joint owners making financial contributions during the relationship and then after separation. This is because after the relationship, the common arrangement previously enjoyed will have ended and the parties may then have the ability for their payments after separation to be recognised. There are often complicated circumstances to take into account when considering these matters and to do so will need specialist advice.
It is important to note that there may also be other claims that can be brought, particularly if there are dependent children under the age of 18, but these are outside of the scope of this article.
Summary
The leading court cases on jointly owned property show why it is vital to have the benefit of proper legal advice at the earliest opportunity. The law surrounding this area is subject to review and my colleague Joel Tyson has written recently on the proposals for change to legal provision for cohabitees in some circumstances.
The Resolution organisation of family lawyers continue to lobby parliament for change in this field. Links to further information and to their work can be found here.
This is a complex area and is provided for general information only. Before making any decisions in relation to jointly owned property specialist legal advice should be sought.
At Fisher Jones Greenwood, our team of family law experts have a wealth of experience in dealing with all aspects of financial matters and will provide clear advice to guide you through this process. If you know anyone would like advice, please contact our Family Team by calling 01206 700113 or contact us.