Living ‘over the brush' could clean couples out on separation

Unmarried couples who buy a house together must ensure they have a written agreement, clearly setting out exactly who owns what. That's the latest advice from Rotherham's longest established law firm, Oxley and Coward Solicitors LLP, following some recent legal judgements.

In a recent Court of Appeal ruling, a woman was forced to hand over half of a house to a former partner, even though he had stopped contributing when he moved out. In the wake of the judgement in Kernott v Jones, a leading judge has already called for a change in the law, but cohabiting couples need to realise if they have no agreement in place, they could receive a nasty shock should they decide to separate.

In the case above, the unmarried couple bought a house in joint names, but when they separated, Mr Kernott moved out, cashed in the endowment policy in his name which was intended to pay off his part of the mortgage and did not make any more contributions to the household. Ms Jones carried on living in the house, paying all the mortgage payments and the costs of bringing up the couple's children.

As a general rule, when a couple buy a property as joint owners, they will own a property in equal shares - unless they make a declaration to say otherwise. But when this case ended up in court, (at both County Court and High Court hearings) the judges ruled that Ms Jones had earned herself a 90% share in the property, arguing that this displaced the general rule.

However, when the case finally arrived in the Court of Appeal, the judges disagreed, saying that only a clear declaration could displace the general rule. The Court found that the lack of contribution by Mr Kernott was not enough to conclude an agreement to change the ownership shares in the property, ruling that the property still belongs to the couple equally. While this may seem unfair on the face of it and indeed, one of the judges (Lord Justice Jacob) dissented and called for the law to be clarified, unmarried couples need to be aware that the only way to be sure is to have a formal agreement in place before it reaches the stage of going to court.

"It may seem the court went for certainty over fairness, but in this case and others such as Stack v Dowden, there were dissenting judgments," said Oxley and Coward Partner and Family law specialist, Sarah Scott. "Clearly the courts are uncomfortable with the position but the only safe option for an unmarried couple buying a property is to make their respective positions absolutely clear in a formal declaration of trust. If the situation changes and one of them leaves the property, they also need to agree and record any changes in the shares."

The family department at Oxley and Coward is headed up by Partner Sarah Scott and the firm undertakes a wide variety of legal work in family law and currently boasts the largest family department in Rotherham. The firm can advise unmarried couples on their legal position more generally, as well as in important areas where property and complex questions of ownership are concerned. There are currently 2.3 million cohabiting couples in the UK1, so there is huge potential for trouble when so few will have any agreement or understanding in place - often because they will feel they need no agreement.

"There is a common misconception that couples who live together are ‘common law husband and wife' and have the same rights as married couples, but this is simply not the case as this position does not exist in English Law," said Sarah. "It is different for married couples because the Courts have very wide powers to redistribute property between parties when they divorce. When an unmarried couple separate, the task for the Courts is to decide what each party owns, not how their property should be divided between them. This difference may seem like splitting hairs, but makes a huge difference in practice, as recent cases have highlighted. There is no notion of reasonableness or fairness built into the law in these cases and couples who choose to live together must appreciate these facts."

For a couple who live together as if they are married, the law treats them the same as it would two strangers who just happen to live under the same roof and for many couples, this concept can be difficult to grasp. The fact is that while a marriage can be more difficult to get out of, unmarried couples have none of the benefits and protection of matrimonial law, so putting together a cohabitation agreement with a solicitor, or a formal declaration of trust is the only way to ensure the best result for all parties should the worst happen.

If you would like some advice on the best way forward, contact the Oxley and Coward family department on 01709 510999 and take advantage of a FREE half hour appointment, or visit the website at www.oxcow.co.uk
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