Co-habitees who contribute ‘towards the house’ of their partner should formalise the agreement to avoid a costly dispute if they separate.
The warning follows a Court of Appeal ruling in a case where a woman paid £500 a month to her partner who had a mortgage on the property they shared. The home owner told the woman that £200 of that amount went ‘towards the house’.
The court found that the woman’s financial contributions meant she had a beneficial interest in the property. The judge in the original case had awarded the woman more than £33,000 equity in the property and interest at three per cent, which was upheld by the Court of Appeal.
Graeme Stenson, a partner in dispute resolution with Langleys Solicitors, said the case highlights the need for written agreements between co-habitees at the outset, to deal with what should happen in the event of a relationship breakdown.
He said: “Many people will recognise this scenario where one co-habitee pays the other a regular financial contribution towards the house. If a co-habitee intends to have an interest in the property by making a regular contribution, it is advisable to seek advice on the drawing up of a specific agreement to make it certain.
“Likewise, the property owner who doesn’t want their co-habitee to have an interest in the property but is taking a financial contribution should also take legal advice.”
The Court of Appeal said that oral assurances, asserting that financial contributions made by one party to the other ‘towards the house’, were, on the facts, sufficient for an interest in the property to arise.
It was reasonable for the woman in the case to understand that the payments she made would result in a share in the property, said the court.