Unlike married couples, there is no one statute that governs the division of financial interest in property when cohabiting couples separate. There is no such thing as “common law husband and wife”.

In order to make a claim against property that you and your former partner have cohabited in, you have to establish a beneficial interest there are a number of ways in which you can prove this:

1. Where the property is in your joint names if there is an express declaration of ownership, this is conclusive. The declaration can state whether the ownership is on a 50:50 basis or some other combination of shares.

• If there is no express declaration, the court can imply a constructive trust and the starting point will be 50:50
• If there is no express declaration, the court can look at who contributed what and allocate beneficial ownership accordingly. This is called a resulting trust. Contributions can either be paying the deposit or being a party to the mortgage.

2. Where the property is in the sole name of one of the parties, if it was bought as a joint home, the court will look the common intention between of both parties before the property was bought.

• Again, the court can imply a constructive trust based on that common intention.
• The court can look at who contributed what and allocate beneficial ownership accordingly. This is called a resulting trust. Contributions can either be paying the deposit or being a party to the mortgage.

3. Where the property is in the sole name of one of the parties, the court has the discretion to award the other person a range of interests or rights under the doctrine of proprietary estoppel. These rights can include granting a beneficial interest, granting a sum of money or granting somebody the right to live in the property for a specified time. This doctrine can arise if:

• The claimant mistakenly believes they have a right in the property and,
• The claimant does something to their detriment as a result of believing that they have a right in the property and,
• The owner knows that their ownership is inconsistent with the claimants right and,
• The owner knows that the claimant mistakenly believes they have a right and,
• The owner either encourages the claimant to act to their detriment (for example spending money on the property) or indirectly by not stating their ownership.

It is a fact of modern life that many couples choose to live with their partners rather than get married or enter into a civil partnership. It is so important to consider how your assets and any assets you acquire during your relationship will be affected. Ideally, you should decide this before you co-habit. One particular aspect that will need to be addressed is what would happen if you have children.

At Prince Evans we can help you to reflect your arrangements in a Cohabitation Agreement. Although English law does not formally recognise cohabitation agreements there is no reason, in principle, why the courts should not uphold such an agreement.

In order to give a cohabitation agreement the best possible chance of being upheld the following points should be taken into account:

• Both parties must recognise that they intend to create a legally binding document
• Neither party should feel pressured into entering the agreement, it must be voluntary and of your own free will
• Both of you need to be separately and independently advised by a lawyer
• If the reasons for entering into an agreement are intended to avoid litigation under any future legislation that gives cohabitees the right to apply for discretionary financial provision, there should to be full, frank and honest disclosure of your respective assets and liabilities.
• Again, if the reasons for entering into an agreement are intended to avoid litigation under any future legislation that gives cohabitees the right to apply for discretionary financial provision, the agreement should be fair. What is fair after a short period of cohabitation with no children will not necessarily be fair after many years together and with a family to consider.

It is always advisable to have important legal documents drafted by an experienced lawyer. At Prince Evans we can advise you and guide you through this process and prepare skilfully drafted documents reflecting your instructions and requirements. Please contact Elizabeth Kornat for further information.

 

This material does not give a full statement of the Law. It is intended for guidance only and is not a substitute for individual professional advice. Prince Evans can accept no responsibility for loss occasioned as a result of any person acting or refraining from acting.

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