The number of cohabiting couples has increased over recent years. It may be the case that a house is purchased in joint names as your relationship progresses or it may the case that one person moves into the other partner’s home.
If you are in a cohabiting relationship which sadly comes to an end there can be disagreements about what should happen to the home. This is understandably a stressful time and it is important to understand the legal position and what your options are.
Where the house is owned in joint names the starting presumption will be that the equity in the property is to be shared equally unless you have entered into a Declaration of Trust or other deed which provides for an alternative position.
If your home is owned in joint names you should also check how you own the property and whether you are “joint tenants” or “tenants in common”.
There is a difference between the two and if your relationship comes to an end your views may change about the type of ownership you wish to hold in the interim.
- “Joint tenants” means that you each own the whole of the property. This means that in the event that something happened to you, your share in the property would automatically transfer to your partner.
- “Tenants in common” means that you each remain joint owners but that your financial interest in the property is split. This means that you can leave your share to a beneficiary in a will and your partner can also do the same.
It is simple to change a “joint tenants” ownership to a “tenants in common” ownership by appropriate notice to the other person and application to the Land Registry.
It is possible for arguments to be made that an equal division would not be appropriate if there is sufficient evidence but the principle of equality is difficult to overcome and full advice should be taken before embarking on this pathway.
Where the house is jointly owned consideration will need to be given as to whether one of you wishes to remain living at the property or whether the house should be sold. Of course if one of you wishes to remain living at the property then the remaining partner will need to be able to release the other person from the mortgage and pay a lump sum which reflects their interest in the property. If that is not achievable then the property will need to be sold.
Where the house is owned in one partner’s name the starting presumption is that all the interest in the home belongs to that person. However, it is possible for the non-owning partner to make a claim in respect of the equity in the property in certain circumstances.
It is possible for the non-owning partner to make a claim on the basis that a financial contribution has been made towards the home. This could be by way of payment towards the mortgage or by contributing to work to the home (such as building an extension etc). Decorating is unlikely to form part of such relevant contributions. The Court can also consider the discussions which you have had and whether there is an understanding that the non-owning partner has an interest in the home.
If an interest can be successfully established then the owning partner would need to take steps to raise an appropriate lump sum to pay to the non-owning partner an appropriate sum. The Court can impose an order for sale if the owning partner raise such sum.
What if we don’t agree
In this situation it is possible for an application to be made to the Court for an order for sale or to ask that the Court consider how the equity in the property should be divided. An application to the Court should be a last resort as there are potential costs consequences in making such an application. Advice should be taken about your individual circumstances before making an application to the Court. Alternate dispute resolution, such as mediation, should also be considered prior to any application being made.
We have children, does this change the position?
Having children does potentially change the position. It is possible to make a claim under Schedule 1 of the Children Act. The Court do have the power to allow the home to be preserved for the children. This might mean that one party remains in occupation with the children and the other party moves out. The interest in the home would not be realised until the children were older or if there was a change in circumstances which improved the primary carer’s situation.
The Court would need to examine both of your financial situations to include your income and available capital and also what your ability to rehouse is taking into consideration borrowing capacity and affordability. The children’s needs must come first and the Court will be mindful of this in their decision making.
It is also possible to make wider claims under Schedule 1 and advice should be taken if this is relevant to your situation.
It is incredibly important that you take advice, ideally at the point of purchasing the property or at the point your partner moves into your home. It is possible to enter into agreements which clarify your intentions to avoid dispute at a later date which can prevent dealing with these issues at the end of your relationship which is a time that is already stressful.
If you require any advice on the above issues you should contact the family team at Langleys for a free initial appointment so that we can provide bespoke advice to your situation.