Coming to terms with a relationship breakdown is almost always challenging, especially if you have been living with a partner for many years and your whole financial future suddenly becomes uncertain.
Separating unmarried couples can often be shocked to learn that the law does not offer them the same protections as married couples, particularly when it comes to property ownership.
In a recent article for The Yorkshire Post, Silk Family Law partner Margaret Simpson touched upon this – the “common law marriage myth” – and its wider family impacts when family property and businesses, in particular farming businesses, come into play.
In this blog post, I will be focusing on how separating unmarried couples can resolve disputes over a property in their joint names. (My colleague Wayne Lynn will cover what happens when only one person is named on the property deeds in separate blog post next week.)
I will cover answers to some common questions that we (as family lawyers) are asked. Then go into some detail on the ways the legal system can help to make these decisions.
Can I stay in the house or force my ex to leave?
In the event of relationship breakdown where there is a property in joint ownership, and a dispute over what will happen with the property, this is how the court (or alternative dispute resolution (ADR) process) will consider the case.
The first consideration will be the purpose for which the property was initially bought. If it was to be a shared home, and the relationship has broken down, the court will usually order that the property is sold.
However, the court must take into account various other factors in making this decision, including:
- whether the property is home to children under 18 – the court needs to be satisfied that no children will be left homeless
- interests of any secured creditor of any of the owners (mortgage provider, CCJ etc)
If one party wishes to buy the other out, the court will usually this.
If we sell the house, how will the proceeds be split between us? I/my family put more money into the house – do I get the lion’s share?
Everything depends on express declarations as to ownership. Ideally the property deeds or a declaration of trust will provide clear evidence of the shares that each party owns in the property.
However, let’s imagine in this case that there is no documented agreement. Under the Trusts of Land and Appointment of Trustees Act 1996 (“ToLATA”) the Court cannot award or adjust shares of a property in the same way that matrimonial law does, simply to achieve a fair outcome.
To stem the tide of unwelcome litigation involving unmarried parties and to give certainty to those purchasing property together, changes were made to standard property conveyancing forms in 1998 that were intended to avoid a situation whereby people could routinely own property together in unspecified shares.
Since then, the form used to register a transfer of ownership (the TR1) requires joint owners to specify how they own the property together. This can be either as “joint tenants” (deemed to be 50-50 but with each party owning the whole property meaning that in the event of the death of one of them, the survivor will inherit the deceased’s share), or “tenants in common” tenants in common can own the property either in equal or unequal shares. If they state an intention to own in unequal shares, then a declaration of trust deed is usually prepared at the time of purchase which clearly sets out ownership for the avoidance of any doubt whether relationship to fail. Unlike joint tenants, tenants in common owner specific share in a property, which can be sold, transferred or otherwise dealt with independent from the other party’s share. This means that one party can also leave their share by will to their chosen beneficiaries – there is no automatic right to inherit the other parties share upon death.
- Shares of property ownership have been agreed and/or recorded
In these circumstances, the Court will generally conclude that the property is owned by the parties in the expressed shares and it would be very difficult for a party to argue otherwise, save for on extremely limited grounds.
2. Shares of property ownership have not been agreed and/or recorded
An example of this would be an unmarried couple who bought a property together pre-1998 as joint tenants, who then ended the joint tenancy so came to own their property as tenants in common, in unspecified shares.
Joint owners who have not declared a trust will be taken in the vast majority of cases to own the property in equal shares. The court will again start from the view that the beneficial interest in the property follows the expressed legal interests, which, if the parties are both named on the deeds without any other information, will be assumed to be equal shares – 50/50, in the case of 2 parties. This will usually be the case, regardless of any difference in the respective capital contributions made by the parties to the purchase price.
That presumption is capable of being challenged, however, with evidence.
If a party wants to assert to the court that they are entitled to a larger share than the other party, they will either need to prove that the parties had a different intention at the time of purchase or that at some time following the purchase, the parties’ intentions changed so that they owned the property differently to how it was registered at the time of purchase.
In one landmark case, one joint owner had moved out of the property and essentially abandoned the property for many years, leaving the other party in occupation to pay the mortgage and general upkeep of it. In that case the court did adjust the parties’ shares to give effect to what the court determined their intentions to have been from their conduct.
General advice about buying a property with another person
When buying property with another person or contributing to the costs of another property, you should always:
- Know your rights and protect your interests.
- Consider and communicate with any co-purchaser about what you will do ‘if things go wrong’.
- Explain your own financial circumstances and understanding with your conveyancer and do not rely on the other purchaser(s) to do this on your behalf.
- Make sure you understand the implications of all the documents you are signing at the time of a purchase.
- Seek independent legal advice before contributing monies towards a property with another person, at any time, in any circumstances.
Remember, any relationship (including those between family members) can fail or sour. Under ToLATA courts are not given the power to correct or address the behaviour of a party in terms of their dealings with property or funds which the other party may consider to be immoral or unjust. ToLATA recognises transactions, not the relationships which gave rise to them. All litigation is expensive and carries risk – so prevention is always better than cure!
If you’d like advice on any issues covered in this blog, you can contact me on 0191 406 5004 or by emailing firstname.lastname@example.org.
Image credits: Photos by Fred Moon, Eric Ward and Terrah Holly on Unsplash.