What are the property rights of couples who live together?

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We take a look at one of the most frequently asked questions, ‘What are the property rights of couples who live together?’

The myth of the common law wife

Living together, or ‘cohabiting’ as lawyers call it, was once relatively rare, but as marriage has fallen out of fashion it has become the preferred arrangement of millions of couples in the UK. People tend to assume that couples who live together benefit from the same rights as their married counterparts, but that’s not correct.

There is also the myth of the ‘common law’ wife or husband which contributes to people’s misunderstanding of the true legal position.

It is therefore important for people to appreciate that couples who live together do not enjoy the legal protection that comes with marriage. We will take you through the actual legal position of those who live together, but it does get rather complex so please bear with us and forgive the unavoidable legal jargon!

Property ownership and cohabitees

The way in which the law treats married couples differently from those who live together can have far reaching consequences, especially when it comes to property. If the property you are sharing is in the name of your partner, don’t assume that living there and helping to fund the mortgage will guarantee you an interest in that property if you later decide to separate and sell up.

And if you are buying a place together and contributing unequal amounts to the purchase price, don’t assume you’ll get your proportionate share when the property is sold.

The Trust of Land and Trustee Act 1996

The starting point for those who live together is that the property belongs to the person who owns it. If you are not named on the property title then you aren’t the legal owner and have no automatic right to receive the proceeds of any sale. If you are a cohabitee whose name isn’t on the title and you want to claim an interest in it then you’ll have to apply to the court under the Trust of Land and Trustee Act 1996 for the court to decide whether you have a valid interest, and if so how much it is worth.

To do this successfully you will have to establish that a trust has arisen and that your partner (or ‘ex’ partner), the property owner, is holding the property on trust for you both.

Resulting trusts, constructive trusts and estoppel

If you contributed to the purchase price you could argue that you should have a corresponding interest in the property’s value – this is called a ‘resulting trust’. Alternatively if you can show that it was intended that the property was to be jointly owned and in relying on that intention you have acted to your detriment you may be able to argue that a ‘constructive trust’ has arisen. If your partner has assured you or led you to think that you have (or will have) rights in the property and you have either changed your position or acted to your detriment in reliance on that promise a Court may declare that the owner is prevented or “estopped” from denying you an interest.

Tenants in Common and Joint Tenants

None of these options offer any guarantee of success. They are also remedies that will be both financially and emotionally expensive to pursue. So, if you are just about to start to live together and expect to have an interest in a property then the best advice is to make sure the legal ownership is clarified from the outset. Never invest in a property that you don’t legally own without ensuring that your interest is going to be properly and legally reflected.

So how do you do that? Property can be jointly held in two ways. If you own a property as Joint Tenants there’s a presumption you own it equally, however much you each put in to it. If either owner dies while the property is still jointly owned their share will pass automatically to the other by survivorship, even if they made a Will leaving their estate to someone else. If there’s an express declaration that the property is owned as Joint Tenants then on any dispute the starting point will be that they own the property equally and if one party wants to suggest otherwise the burden is on them to show why there should be an unequal division.

If you’re contributing unequally to a property then consider owning it as Tenants In Common. There’s no automatic survivorship in this instance; if either owner dies while the property is jointly owned their share will pass in accordance with their Will or the intestacy rules. You may decide to agree at the outset unequal percentage shares. Alternatively you can have a Declaration of Trust drawn up which sets out how the proceeds are to be divided on a sale – this might be used where one party has paid the deposit and the agreement is that they get it back before any division of proceeds. If you’re going to own property this way it’s essential that you then make a Will as that will thereafter dictate what happens to your share if you die while owning the property. You should also consider how this might leave your partner if you were to pass away, as if they are not adequately provided for they may be entitled to make an Inheritance Act claim.

Parents beware

It’s not only disputes between cohabiting couples that arise. A special word of warning for parents helping their children get on the property ladder is appropriate here. If you’re a parent helping out with a purchase and you want to ensure that the money stays within your family, then make it clear at the outset that you expect to have a charge against the property so that if there’s a sale your money comes back to you. Think about a formal loan agreement so that there’s no room for confusion. That may sound cold hearted but it’s an awful lot better than the alternative. We see too many cases where parents provide a deposit, sometimes more, to an unmarried couple setting up home together. The property is bought as Joint Tenants with no reflection of the parental contribution. The couple separate and the parents expect to get their money back if only to enable their child to start again. But with nothing written down each party is entitled to claim half the proceeds and the parents will face a long and costly struggle if they want to achieve a different outcome.

It’s never too late to take advice

At Slee Blackwell our lawyers are happy to help with either prevention or cure. We can advise you on property ownership if you’re moving in with your partner or on securing your contribution if you’re a parent helping out your child. We can draft declarations of trust and help with Wills.

And we’re also here if things have not been done properly in the first place. Our specialist litigation lawyers will provide cost effective advice on whether you are entitled to claim an interest in a property, even if you’re not the legal owner. We are often able to do this on a No Win, No Fee basis.

We operate a free legal helpline. Give us a call on 0808 139 1606 or send us an email at [email protected]