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Property disputes – Cohabitation

 Our Middlesbrough Family Solicitor explains the law in property disputes;-

A property may be owned in the sole name of one partner or may be owned jointly.

If you are the sole owner: you have a right to stay in the home. However, your partner may be able to claim a ‘beneficial interest’ in the property – see below.

If you are joint owners: you and your partner have equal rights to stay in the home. If you have children, you can ask a court to transfer the property into your name. The court will only do this if it decides that this would be in the best interests of your children. It is usually only done for a limited period of time, for example until your youngest child is 18 years old.

If your partner is the sole owner: you may have no rights to remain in the home if you are asked to leave. However, if you have children, you can ask a court to transfer the property into your name. The court will only do this if it decides it is in the best interests of your children. It is usually done for a limited period, for example, until your youngest child is 18 years old.

If you don’t have children and your partner is the sole owner: the only way you may be able to claim long-term rights to the property is if you are able to show you have a ‘beneficial interest’ in it. This is a way of getting a court to formally recognise the financial contribution you have made towards the home. The court could also recognise an understanding you may have had with your ex-partner when you bought the home that you would have a share in it if it were sold.

If you are able to prove you have a beneficial interest in the home, you may be able, for example, to get the right to live in the home, get a share of the proceeds if the home is sold or prevent your partner from living in the property.

You may be able to ask a court to make a decision about who has the right to stay in the home on a short-term basis. This is called an occupation order. You can also apply for an occupation order to allow you to return to the home if you’ve left. You can apply for an occupation order if you’re the sole owner, joint owner, have a beneficial interest or are the partner of a sole owner. However, if you’re not the owner or joint owner, you can only apply for certain types of occupation order. An occupation order only usually lasts for a limited period of time.

How do you own your home?

To understand what interest you may have in the property you must first understand how you own your property; whether you have separated or are in a relationship it is crucial you understand how you own your home as this sets out what entitlement to the property you may have. If you are still in a relationship then this will determine if you hold the property in the best way for your circumstances.

Owning a home as Joint tenants means:

  • You own it jointly and equally. If you split up you would normally get half, no matter what amount you put in.
  • If one of you dies, the other inherits their half. It cannot be left to anybody else in a will.

Is this right for you?

  • Yes – if you are paying the same amount toward the deposit or mortgage, or want to treat it as if you are. And you want the home to go to your partner when you die.
  • No – if you are paying more of the deposit or mortgage than your partner, and would want more than half if you split up. Or if you want to leave your half to somebody else when you die

If it would be fairer to own your home as tenants in common, you can easily change it. If you both agree, you can also change the shares you each own. You should speak to a solicitor before you do this.

Owning a home as Tenants in common means:

You can own it in any shares that you agree (70/30, 60/40, 50/50 etc).

Is this right for you?

  • Yes – if you are paying different amounts toward the deposit or the mortgage, and want a fair return on your money if you split up. Or, if you want to leave your share of the home to your children or somebody else. If you would want your partner to inherit your half, you must make a will.
  • No – if you want your partner to receive half the home if you split up. Or if you want your partner to inherit your share and you don’t want to make a will.

If you have unequal shares in your home and it doesn’t seem right to you to anymore, you can change this, provided you both agree. If you both make a will leaving your share to your partner, you will have the same protection as joint tenants do.

If one of you dies, their share goes to whoever is named in their will. If there is no will, it will go to their closest blood relative (not your partner unless you are married or civil partnership).

What does the law say?

The law relating to cohabitation is a law of trusts. This is a very complex area of law, but can be simplified as follows;

1. Do you have legal ownership of the property i.e. Is the property in your name?

This is usually a straightforward point to ascertain – most people will know if they are a joint or sole owner of the property, but this should always be checked with the Land Registry to make sure. We can carry out a search with the Land Registry on your behalf and advise you on the information contained in the title deeds for the property. This will tell us if you are a joint or sole owner and how you own the property, as explained above. This information will help establish if you have a legal ownership of the property. However this is not always a true reflection of how the property is really owned. For example – Ms T undertakes a land registry search which reveals that the property is in the sole name of her partner of 30 years, Mr X. Ms T put down 50% of the deposit for the property, but her name is not on the mortgage. She has also contributed to the upkeep of the home for thirty years, along with bills and mortgage payments. 

2.  So, If you don’t have a legal interest, do you have a beneficial interest? 

The court may, on the basis of the evidence before it, consider a number of different principles when deciding whether you have a beneficial interest in a property. These include the following:-

An Implied Trust will be found to exist in circumstances where the court is satisfied that, by virtue of some conduct between the parties in relation to the property, the legal owner of the property will be deemed to hold the property, or part of the property, on trust for the other. Implied trusts typically arise in the guise of either a Resulting Trust or a Constructive Trust.

A Resulting Trust – In the case of a Resulting Trust, the court may assume the parties had a particular intention in relation to a property because one party has made a direct financial contribution to the property. For example, at the time of purchase a property might be placed in the sole name of one person yet paid for by another. A similar scenario may arise, for example, if major improvement works have been carried out and paid for by the otherwise non-owning party.

So as per our example, Ms T would be able to claim a Resulting Trust, arising from her contribution to the deposit but what if she had not contributed to the deposit and only to the mortgage repayments?

3. What are the other options? Constructive Trust and Proprietary Estoppel

 Constructive Trust;

In the case of a Constructive Trust, this will arise where the court is satisfied that the parties had a common intention to share the beneficial interest in a property and that, in reliance on that common intention, the non-owning party has acted to their detriment. Such a common intention may be found, for example, by a non-owning party’s modest contribution to mortgage repayments and a practical contribution to the construction or renovation of the property in question.

 In these types of cases the court may consider the whole course of dealings between former cohabitees throughout their relationship.

Proprietary Estoppel

Whilst in some ways similar to the principles relied upon in Constructive Trusts, the principle of Proprietary Estoppel may be employed by the court to prevent one party from enforcing their strict legal rights against their former partner. The court will act if a promise has been made to the non-owning party, they have then acted to their detriment in reliance upon the promise, and now the owning party seeks to renege on that promise.

Proprietary Estoppel may arise in particular in cases concerning former cohabitees where a property is acquired by one party before commencement of cohabitation and contributions made by the non-owning party are, therefore, only made against the background of assurances or promises by the sole legal owner.

For example, this may arise in circumstances where, in response to, and in reliance, on assurances by the legal owner that a shared home was to be considered jointly theirs, the non-owning cohabitee has invested money into the property on repairs, improvements and re-decoration.

 So again, in our example, under the last scenario Ms T would be able to claim a beneficial interest in the property under a constructive trust. To do this she would need evidence that she had paid the mortgage or made a contribution to the property. If she had done this, on the agreed understanding with Mr X that by doing so she would own half of the home then this would be argued under Proprietary Estoppel.

Whilst this provides a summary of the main principles employed by the court in determining beneficial interests in property, such applications turn, to a significant extent, on the evidence placed before the court. This has become more apparent following recent landmark case rulings that have been through the Appeal courts and the Supreme Courts.

 Unfortunately, this area of law whilst adapted to cohabitees is not specific to the needs and circumstances of a relationship breakdown that you would see when dealing with finances from a divorce. Really, until the law changes then this is the system that we must continue to use and wait to see whether future case law will develop a clearer system.

Can I get Legal Aid?

Unfortunately cohabitation disputes are not covered by Legal Aid and therefore we offer competitive fees to make our services easy and affordable.

Court fees are payable. You may not have to pay them, or you might be able to pay a reduced fee, but this will depend on your individual financial situation, such as whether you are on benefits e.g. income support. HM Court Service also provides information about court fees, and what to do if you can’t pay them. We can offer advice and assistance on the payment of the court fees.

We can discuss all funding options with you during your free initial consultation.

Our expertise in Cohabitation Cases – Thompson v Hurst

The case was widely reported in the news and media and made its stance on this area of law, setting a precedent for future cases.

Brief summary of Thompson v Hurst [2012] EWCA Civ 1752 (30 March 2012):

 The facts in this case were that from 1983 Miss Hurst had been the council tenant of the property which was the subject of the dispute.

In 1985 Mr Thompson moved in and they lived there as a couple. In 2001 Miss Hurst purchased the property from the Council. The purchase was bought in her sole name, as Mr Thompson could not get a mortgage. The couple kept their finances entirely separate, with Miss Hurst paying the rent/mortgage and the utility bills, and Mr Thompson contributing towards the housekeeping.

In first instance, the District Judge found that there was a common intention that the Mr Thompson was to have a beneficial share in the property, but there was no common intention about what the shares of the beneficial interests should be. She therefore determining what would be fair having regard to the whole course of dealing between the parties in relation to the property, and found that Mr Thompson’s beneficial interest was 10 per cent.

 Mr Thompson appealed, claiming that the District Judge had failed to apply the principles in Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53, and that he should have been acknowledged to be entitled to a 50 per cent beneficial interest.

Giving the leading judgment in the Court of Appeal, Lord Justice Etherton dismissed the argument put forward on behalf of Mr Thompson that this should have been treated as him being a joint legal owner case, as the property would have been purchased in joint names if Mr Thompson had been able to get a mortgage. The Judge confirmed that the District Judge had proceeded correctly and in accordance with the principles in Stack and Jones applicable to sole legal owner cases, and her determination of the parties’ respective shares had been carried out “in a careful and exemplary fashion”.

Accordingly, the appeal was dismissed meaning our client retained 90% of her property and successfully defended a lengthy appeal process.