A cohabitation dispute is a disagreement between people who own property together, but are not married.
This usually involves couples, friends or family members who are living together and there has been a breakdown of the relationship and they cannot agree on how to deal with the property.
The most common form of a cohabitation dispute is when un-married couples that live together wish to separate. It can also arise where both cohabitants wish to sell their interest in the property but cannot agree on a share distribution.
These disputes often require legal help to resolve especially if there are disagreements regarding: –
The rules are different for married couples / civil partnerships as they are afforded more protection under the law, namely family law. The biggest difference arises when one of the members of the relationship passes away or there is a divorce/separation.
For cohabitants, they are not afforded the same level of protection and there are often disputes on how things should be divided up. It is common for cohabitants to be shocked at how little protection they are afforded by the law. There is common mis-conception that a ‘common law husband and wife’ have protected rights, but this is not the case in England and Wales.
The position of unequal contributions is ultimately determined by how the parties choose to hold the property, whether they wish to own it under a joint tenancy or as tenants in common.
How tenants choose to own a property is often dictated by their circumstances.
A joint tenancy is where two or more tenants share the property equally and wholly with each other. They do not own a separate share of the property but rather share the whole of the property. When two or more owners purchase a property in equal shares, the presumption is they will hold the property together as joint tenants.
If the property is to be held as tenants in common, each tenant will own their share individually. The shares do not have to be equal, for example, one tenant may own 70% of the property while the other tenant owns the remaining 30%. They may also choose to leave it to whom they wish in a Will, as this arrangement falls outside of the rules of survivorship.
There are two presumptions when it comes to how owners hold their shares. If they each own 50% it is presumed that they will hold the property as joint tenants and if they hold shares in different amounts, tenants in common is presumed. However, this presumption can be challenged (see below)
If there is only one legal owner of the property then the legal presumption is that they also own all of the beneficial interest. This essentially means that only one person owns all of the property. This can be argued however and it falls to the other person to raise this argument.
This can be done by showing the Court that it was not the intention of the parties for the property to be held this way. This can be done by conduct or promises or showing contributions were made to the purchase price or by one party putting themselves into a financial detriment to improve the property or pay its bills. All of these scenarios could create a trust which can be used to support a claim for a beneficial interest in a property.
A Declaration of Trust is a binding agreement between cohabitants of a property which confirms how much of the beneficial interest each party owns. This essentially protects each person’s interest in the property and, should it be sold, protects the amount of the proceeds due to them. This document can be very useful in disputes between cohabitants as it quickly resolves what the beneficial interest split is between the parties.
It would be worth noting however, that the Declaration of Trust only deals with the beneficial interests in a property, which is different to a cohabitation agreement.
A cohabitation agreement deals with each person’s rights and responsibilities in relation to the property but also how they intend to live together, what their financial arrangements will be and also what will happen in the event of separation.
A cohabitation agreement is a useful tool in helping to prevent and avoid litigation. It is a tool that should also be considered when considering a declaration of trust.
If a cohabitation dispute does arise, and one cohabitant wishes to make a claim to the property, they will need to do so by using the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). TOLATA will look to determine the correct ownership of the property and you do not need to be holder of the legal or beneficial interest to bring a claim.
In terms of the remedies that you can claim, the courts have the power to make the following orders:
Equitable Accounting is a mechanism used to give credit to a person for things they have done which have increased the value of a property. It is in place to prevent one party receiving a windfall from the actions or financial contributions of another party.
The most common types of scenarios where Equitable Accounting are claimed are scenarios where there have been contributions to the mortgage and/or where significant renovations or extensions have been paid by one of the parties or one party has had sole use of the property.
If a claim is successful, the Court will look to ensure that the parties receive a fair outcome should they separate and ensure the parties responsible for the payments or upgrades to the property enjoy the benefit from them.
Children being involved in a cohabitant’s dispute have their own set of rights which adds complexity to the matter and may render it unsuitable for a common law claim.
If this is the case, we would advise you to seek out the advice of a family solicitor as the matter could be more appropriate for the family courts.
The best time to seek legal advice is when you are purchasing a property and you are deciding how to split each party’s share of the property.
Significant changes in personal or financial circumstances may also mean that you should take immediate advice.
In the absence of a contractual agreement, it is imperative that you seek advice as soon as a relationship of cohabitants breaks down.
Assessing your rights early on will allow your solicitor to put your options to you going forward and be able to assist in navigating you through any property litigation which may arise.
Darwin Gray’s expert property disputes solicitors regularly advise on cohabitation disputes. Contact one of our team today for a free no-obligation call on 029 20829 100 or via our contact form.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
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