Unlike married couples or civil partners where there is legislation in place to help with the arrangements upon separation and protect the rights of both parties based on fairness and equality, this is not the same for unmarried couples who have lived together and shared finances.
When a married relationship or civil partnership ends, the Court in Financial Provision proceedings has the power of adjustment. This means that the court applies to principle of fairness and equality when dividing the family assets, often using discretion to adjust ownership between the couple.
When an unmarried relationship ends, the Court can only exercise a declaratory function. This means it divides assets on the basis of who already owns what, and not who should own what, no matter how long established the relationship.
There is no such concept as common law marriage and even if couples live together and share their assets and finances for many, many years, there is no automatic right to assume that those assets and finances will be shared equally on separation.
Dividing the assets of unmarried couples is a very complicated area and it is essential that legal advice is taken as soon as possible. It is governed under trust law, and legal advice should be taken at the earliest possibility to protect any rights each party has and prevent disposal of assets before those rights have been established.
In some situations, although one partner can be the sole legal owner of a shared home, the other partner may have a legally enforceable interest in the property by arguing that there is or has been a trust created. Similarly, two partners may jointly appear as legal owners of a home, but that does not necessarily mean that each owns an equal share.
Where a couple own a home jointly, if they expressly state at the time of purchase what share each of them has in the property and this is properly and legally recorded, this will be binding on them. This is usually done in the conveyancing process when the purchase is registered at the Land Registry or by entering into a cohabitation / living together agreement.
Where no such express declaration was made at the time of purchase, and a disagreement occurs upon separation, the Court can decide what share each owner has, by taking into account evidence of intention and contribution. For example the Court will consider who paid what towards the purchase of the home and what the implied intention was at the time of purchase. This is complicated trust law and requires expert legal advice.
If the home of an unmarried couple is in the name of one party only, the other Party would have to establish an interest in the property by one of the following: –
- A Resulting Trust – There is a legal presumption that if money is contributed to a property by someone who is not a legal owner, and the conduct of each party appeared to show there was an intention for the property to be shared, then the non-owner acquires a legal interest by way of a resulting trust to a share of the property proportionate to that contribution. The contribution could be a direct contribution e.g. by paying a lump sum towards the initial purchase price or by making payments towards the mortgage. However if it can be proved that the contribution was intended as a gift or loan, then no resulting trust arises.
- A Constructive Trust – If both parties agree that the non-owner will have a share in the home, and the non-owner relies on that by making financial contributions to the property, then the non-owning party can argue that a constructive trust was created giving them the benefit of a share in the property. The contribution to the property might be by paying the mortgage, or substantial renovations or repairs to enhance the value of the property.
- Proprietary Estoppel – Where the owner of a property makes a promise to the non-owner to give him or her a share of the property, or allows the non-owner to believe that he or she has or will have a share of the property, and where the non-owner relies on this promise or belief, to his or her financial detriment, the Court may believe it is unfair to prevent the owner from going back on the promise. This financial detriment could include, for example, a non-owner giving up his/her own property, undertaking renovations and / or financial contributions. It does not necessarily have to be expenditure on the house in question. However the remedy may be damages only, rather than a share of the house.
- A “temporary” interest – If no equitable interest can be shown by the non-owner, a Property Adjustment Order could be made in favour of the children of the relationship temporarily whilst they are minors, in some circumstances.
Sale of the Home
If a non-owner can establish that they have an interest or a potential interest in the home, Section 14 Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) gives the non-owner the right to apply to the Court for an Order declaring the extent of their interest, and whether the property should be sold and when.
In deciding these complicated applications, the Court must consider:
1) The purpose for which the home was bought e.g. was this bought as a home for both parties;
2) The intentions of the couple
3) The welfare of any children who do occupy the property or could occupy the property
4) The interest of any secured creditor i.e. mortgage company
Unless it can be proved that the reason that the home was bought still exists, usually a sale would be ordered by the Court. That purpose might still exist if, for example, the property was purchased specifically as a home for the children. In that case it might be possible to defer sale until the children are adults.
Alternatively, the Court could imply a “collateral purpose” by permitting a non-owning party reasonable time to find suitable alternative accommodation. The Court might be more persuaded to do this, if the needs of the non-owning party were significantly greater than those of the owner, or if a reasonable delay would allow one party to buy out the other.
Assets other than the home
Where and agreement cannot be reached about dividing up the contents of the home, it is possible to make a claim for a declaration where the Court is asked to say what beneficial interest each party has in household items and contents (known legally as “chattels”). However this could be an expensive action which would not be economically justified unless the contents were assets of particularly high value.
Unmarried couples cannot can claim maintenance against the other like married couples or those in civil partnerships can. This does not apply to child maintenance which is dealt with separately.
Unmarried couples cannot claim for a share of the other’s pension.
Because of the complexity of these proceedings, it is not possible to provide a find fee pricing structure, as each case will differ depending on the assets, circumstances and intentions. Instead hourly rates will apply and an estimate of likely legal fees will be provided at the outset.
It is possible to avoid problems like this at the end of a relationship by entering into a living together agreement at the beginning.
Living Together Agreement
This is contract drawn up between you and your future cohabiting partner which sets out the agreement about how you would resolve financial / children matters in the event that you separate and decide to live apart. It is drafted, agreed and signed before you move in together.
These agreements are not binding and can be overturned by the Courts, but on the basis that both parties have had independent legal advice, there has been full and frank disclosure and both parties have entered into the agreement freely and voluntarily, the Court would view the agreement as an important statement of evidence about your mutual intentions.
Living Together agreements are chargeable at hourly rates and a quotation will be provided to you at the outset. The current hourly rates charged by our fee earners are detailed on the main family page.
An example of the fees involved in drafting a typical living together agreement where there are no business assets, overseas property, substantial inheritance prospects, trusts or large pensions to consider will be between £500 to £1000 plus VAT and disbursements. The costs will vary dependent on the assets involved and the complexity of the circumstances. A full discussion will take place and fees will be agreed before work commences.
NOTE: The above is intended as a general overview for your information. It is NOT intended to replace proper legal advice. Each case is different and advice cannot be given without a proper analysis of your own circumstances.
THE FAMILY LAW TEAM
- Rebecca Sykes – email@example.com
Rebecca is assisted by Emma Anstey and Karen Lobley-Holland
- Leanne Gwinneth – firstname.lastname@example.org
Leanne is assisted by Kerry Welsh
- Hayley Jervis – Hayley.Jervis@dicksonssolicitors.co.uk
Hayley is assisted by Amy Williams and Karen Lobley-Holland
Please telephone 01782 26 24 24 for an appointment or alternatively email our team.