It is a common misconception that a “common law marriage” is recognised in UK law; it is not. Regrettably, irrespective of the length of your relationship or the time you have been living together or whether you have children, there is still no legal recognition of this status and it can leave you vulnerable upon separation or death of one party, if you make inadequate provisions.
- I am not married or in a civil partnership what protection do I have, if any?
- If we separate will I be entitled to a share of my partner’s property?
- We are joint owners or we have Deed can I claim more than this share?
The most frequent and distressing impact of this is on property ownership. If you do not buy the property jointly and register it as such at the Land Registry, then the presumption is that the single registered owner legally and beneficially owns 100% of the property. This presumption can only be rebutted if you can establish that the property is held on trust for you both as a result of your contributions to the purchase price, renovations or mortgage payments for example.
Should agreement between you not be reached on separation, your share may have to be determined by a Court. This can be very costly and time consuming for all concerned. Trusts and advice on ownership rights early on in a relationship or when moving in or purchasing a property is imperative. Understand how you own the property, the importance and relevance of a Deed of Trust even consider a cohabitation agreement.
Although a cohabitation agreement is not strictly legally binding, it is very persuasive and helps you both understand your intentions on how one another’s assets should be held. This will prove very helpful to a Court in determining shares of property on separation.
Need to go to Court?
Such property disputes must be resolved under the Trusts of Land and Appointment of Trustees Act (TLATA) 1996. This is a civil (not a family court) so be aware that one party maybe liable to pay another’s legal costs if one party is successful over another.
Initial evidence gathering for any claim or defence.
Those that own the property jointly or hold a trust deed:
The first consideration is to the main home’s ownership and so it is important your solicitor obtains a copy of the original conveyancing file from when the property was purchased and any executed trust deeds. The file should include the Transfer Deed (TR1). The TR1, the Land Registry form in use since 1 April 1988, has a box in which the parties are required to declare whether they are to hold the property on trust for themselves as Joint Tenants or Tenants in Common:
- Joint Tenants means you hold the house 50:50 and upon ones death it automatically passes to the other and upon its sale the presumption is that you are due 50% of the net proceeds.
- On trust as tenants in common can be in equal shares or otherwise as documented in trust deed. The courts will not find it easy to look beyond the deed if you have both executed this knowingly.
The ways of owning the property have different implications. Joint Tenants own the property without divisible shares so if one party dies, even without a Will, the property automatically passes to the surviving Joint Tenant. Upon separation, one party will need to serve notice of severing the Joint Tenancy and thus making ownership, Tenants in Common.
Tenants in Common means each party owns their own share of the property. This can be done in any percentage chosen by the parties on purchase. It can be supported by a Declaration of Trust document which can also provide explanation as to the parties’ intentions on sale and split. Setting aside a Trust can only be done for very specific reasons and it is advisable that legal advice on how property is held, is taken fully when purchasing.
Property Solely owned by one partner
The Court will look at the intention of the parties and whether it was intended to be a shared ‘home’. It will look at contributions and intentions from the outset to see if a trust was established through conduct. This is where a cohabitation agreement would also be considered by the court. It is a costly and involved exercise to go down this route so it really is better to hold joint ownership or have some recorded Declaration of Trust when you initially purchase or move in together.
As is the case with all litigation, the Court’s encourage settlement as a way to reduce costs and time for the parties. Although feelings may run high on the subject matter, it is important to remember what you are seeking and balancing the costs of that against the outcome. It is cheaper and usually better for the parties to make a reasonable settlement offer before costs and ill-feelings escalate. Whether the property is sold and an agreement reached on the division of the proceeds or one party agrees to buy the other one’s equity and remain at the property this is the sensible and cost effective means of resolving these matters.
Deeds of Trust
These deeds should only be finalised and executed (signed and witnessed) as you complete on the property (or as one partner moves in and/or monies pass to buy into the equity or you are placed on the mortgage or land registry deed). This is because a deed not only documents the party’s intentions, but also the actual events/activities that have taken place for example: the sums each party has paid towards the house. Obviously your solicitor would draft these deeds in anticipation of completion or otherwise, but they should only be signed when the transfers take place in case things change and less monies are paid by one party, then documented in the draft deed for example.
This may seem obvious, but if you sign a draft deed and it’s incorrect because of a change of circumstances before the purchase, unless you destroy this and create a new one this Deed will remain in force. As such, even if your partner did not pay 50% of the purchase monies, but the deed says he/she did then the court cannot look behind this even where you can evidence this didn’t happen.
This is called Estoppel and sadly Trust law is complex , but strict and so if something didn’t happen , you can show it didn’t happen, you lose out financially if it’s not set aside the deed, the court’s hands are tied.
Whilst there is increasing pressure for cohabitees to have the same rights as married couples, there is no imminent plan for change. This means the position for co-habitees on death and separation will continue to be precarious. It is imperative that the parties are advised and clear on their intentions from the outset, to avoid these costly and detailed Court proceedings. We are able to advise at the outset and draft Cohabitation Agreements, Declarations of Trust and should the worst case ensue, commence and conduct Trusts of Land and Appointment proceedings.
For more information contact us…
0207 426 0382