In recent years we have seen a rise in the number of couples living together outside of marriage or civil partnership. However, it is important to note that such cohabitants have significantly less rights than married couples or civil partners. This is particularly true in determining each person’s individual share in a property in the event that the relationship breaks down. In the absence of a formal legal relationship, this situation is generally governed by a combination of the principles of land law and the law of trusts. If there are children in a relationship this gives the parents (often the mother) rights to make applications for the child.
Property held in joint names
Where both names are included on the title documents there is a presumption that the property is owned in equal shares. Nevertheless this presumption may be rebutted if there is evidence to the contrary. For instance, if there is a written agreement outlining the different shares held by each party in the property, then the court will have little difficulty in upholding its validity. However the situation as regards oral (sometimes called verbal) agreements is less clear cut.
Section 14 of the Trust of Land and Appointment of Trustees Act 1996 allows a person who has an interest in a property under a trust to make an application to the court in order to have their beneficial stake determined by the judge. Therefore, if one of the parties can prove satisfactorily that they made a greater contribution to the purchase, upkeep or improvement of the property, then the Court can make a determination that they hold a larger share of the ownership.
Property held in a single name
Where the property is held in the sole name of one of the parties, the non-legal owner can still apply to have their interest in the property recognised on the basis of either a resulting or constructive trust. A resulting trust occurs can arise where the non-legal owner made a direct contribution to the purchase price of the property. In these circumstances it is adjudged that the legal owner holds either all or part of the property on trust for the benefit of the non-legal owner in proportion to their contribution.
A declaration of trust may also be given even if the beneficial owner made no direct contribution to the purchase price. A constructive trust will be implied if there is satisfactory evidence of a common intention to share the property. Mortgage payments or contributions to improvements of the property may be deemed sufficient to show this common intention, however the payment of household expenses alone will not suffice.
If there are children
In such cases the position is even more complicated. There is a right for a parent to apply for a lump sum or a transfer property order for the benefit of a child. This can often mean that the parent caring for the child can apply to the court under Schedule 1 Children Act 1989 for an order. In appropriate cases the court will make an order that the child has the right to live in a property until they cease to be in tertiary education. Properties are normally held upon trust. Substantial lump sums can be awarded to enable the parent caring for the child to furnish and equip a home and even purchase a car. When the child completes tertiary evidence the property reverts to the parent who was ordered to make the transfer of property.
Difficulties with this system
The law in this area is dominated by case law and is fraught with uncertainty. As opposed to the strong legal protection afforded to married couples and indeed civil partners, the rights of cohabitants are severely lacking. Therefore it is prudent for cohabitants to consider drawing up a cohabitation agreement in order to ensure the fair distribution of property in the event of a break up.