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Supreme Court gives greater direction to cohabiting couples

The Supreme Court in November made an important ruling providing further guidance for unmarried couples on how Courts will divide jointly owned property should their relationship fall apart.

Many unmarried couples believe they have protection as a common law wife or husband. This is unfortunately a myth and it is not uncommon for one partner, often the woman, to leave the relationship with little or nothing irrespective of whether they have been living together for two or 20 years.

When an unmarried couple split up each partner can keep whatever is in their own name. This applies to the family home, with the partner named on the deeds and who has paid the mortgage keeping the property. Unless the home is registered in both names it is up to the other party to establish that it was intended that they should have an interest in it, and this is often an uphill struggle.

Background

The recent Supreme Court case of Jones v Kernott addressed the issue of jointly owned homes. Mr Kernott and Ms Jones owned their house jointly but did not set out in writing how they intended to own it. They shared the upkeep and mortgage costs for about eight years after buying their home, at which point they separated. Mr Kernott moved out and bought his own property. Ms Jones continued to live in the house, paying for its upkeep and raising the couple's two children. Thirteen years later Mr Kernott decided to claim a share of the property.

The first set of Court proceedings awarded Ms Jones 90% of the property and 10% to Mr Kernott. He appealed, and the Court of Appeal concluded that he was entitled to a 50% share because at the time they separated, the couple intended to own the house 50:50 and neither of them had done anything since to change that situation. The Supreme Court was then asked to decide whether this was fair given that Ms Kernott had paid the entire mortgage for the past 13 years. The Supreme Court Judges upheld the original decision of the lower Court: Mr Kernott received a 10% share of the property.

What does this case mean for unmarried couples?

Where a couple buy a home in joint names, it is presumed they intend to own it equally unless there is contrary evidence. If there is no clear evidence or evidence which can be inferred of how they intend to own it, the Court will make a decision based on fairness, looking at the couple's behaviour during the period of ownership. Although financial contributions are important, non-financial contributions will be taken into account, including looking after the home and children.

If couples do not document their intentions as to ownership from the outset and then separate and a dispute arises, it could result in costly litigation. It is important to remember that as a result of this case, even though a home is registered in both names, the Court is permitted to make decisions based on fairness, which may mean that a split is not necessarily 50:50. A court hearing is likely to require an extensive examination of the history of the relationship and the couple's conduct, including evidence as to who said what and when.

This case also has important implications to friends or family who decide to buy a house together.

How can you protect yourself?

Buying a house together with a partner or with family or friends is exciting. It is also a big financial investment. Whilst this Supreme Court decision offers greater guidance to the Courts the best way to protect your financial interests is through a formal document such as a cohabitation agreement or a declaration of trust. These can both be prepared by family lawyers to ensure that each person's shares are recorded, and need not be expensive.

Such agreements will record who has contributed what at the point of purchase and what will happen to the property if it is sold or if a relationship falls apart. It is also possible to record the contributions - both financial and non-financial - that each party will make.

Until the Government decides to give cohabiting couples greater protection in law, cohabitation agreements and declarations of trust remain the easiest and most efficient way to part company without costly litigation.

This article by Katie O'Callaghan first appeared on Coutts Woman in January 2012.

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