The law relating to cohabitation and property ownership is complex and at times unclear. Cohabiting couples must be very careful to ensure that measures are taken to protect their position when purchasing a property, the reasons for which are illustrated below. This can be done in the form of cohabitation agreements and documents such as declarations of trust, to record how they wish to own the property. The law that relates to cohabitating couples is somewhat different to the law that relates to married couples. If you are cohabiting, or considering cohabiting and purchasing a property with your partner, it is important that specialist legal advice is taken. Hart Brown have teams of dedicated family and property lawyers who can advise you in relation to your situation.
A landmark case concerning cohabiting couples and the ownership of property has recently been decided by the Supreme Court.
Ms Jones and Mr Kernott met in 1981 and had two children together. They purchased a house in their joint names in 1985 for £30,000.00. Ms Jones put down a deposit of £6,000.00 and there was a mortgage in joint names which they both paid. The couple did not marry, but lived together in the property with their children.
Sadly, in 1992, the relationship broke down and Mr Kernott moved out of the property and later purchased another property of his own. Ms Jones remained living in the original property with the two children and paid the mortgage. Over time, the property increased substantially in value, and by 2008, was worth £245,000.00. Mr. Kernott wished to claim his share of equity from the property.
Ms. Jones maintained that she owned the entire beneficial interest in the property arguing that she had paid the mortgage on the property during the 14 years since separation. Mr Kernott’s argument was that they purchased the house in joint names and the intention was that it was owned in equal shares.
There then followed contested proceedings. The lower courts found that Mr Kernott was entitled to only a 10% share of the property, on the basis that the intentions of the parties had changed over time. Also, the parties had not entered into any specific agreements at the time of purchase about their shares in the property.
Mr Kernott then appealed to the Court of Appeal, who allowed his appeal and overturned the ruling of the lower courts, ordering a 50/50 share of the equity.
The case was then heard by the Supreme Court, who upheld the original decision of the lower courts, awarding Mr Kernott a 10% share. The basis for their finding was that in the absence of evidence of their shares in the property, the court would have to decide the shares. The parties’ original intentions that they would live in the property as a family home and own it in equal shares had clearly altered over time. The court decided that it had to examine the facts of the case and consider what a fair outcome would be, taking into account the financial contributions the parties made to the property, and what had happened during the years following the breakdown of the relationship.
In summary, if a property is owned jointly by an unmarried couple, it cannot be presumed that on the couple’s separation, the equity will be divided equally. The recent case of Jones –v- Kernott clearly illustrates that the court is willing to alter the shares of each party, depending on the circumstances. Such a decision may open the floodgates for more applications of this nature by cohabitees to ask the court to determine the shares in which their property is owned. However, in recent years, changes in the documents used in property transactions mean that the shares of each purchaser can now be specified at the outset, a facility that was not afforded to Mr Kernott and Ms Jones at the time of their purchase.
If you require further advice in relation to your cohabitation, please contact the Family team at Hart Brown.
Anne Thomas, Family Department
