The law in relation to unmarried couples on separation is very different to the legal principles that apply to married couples when dividing up their assets.
When it comes to 'real' property (land and buildings), this is a complex area involving trust law, which is ever changing. T
his article seeks to provide an overview of the legal framework where there is a dispute between a couple over property when there is no executed cohabitation or living together agreement.
When looking at the financial interests of the couple in a property, the starting point is to check the official Land Registry copy of title early on to establish how the property is held.
The title can be held in one of the parties’ sole names or held jointly as joint tenants or as tenants in common.
Sole name case
Where one of the parties’ names is solely on the title, the starting position is that they own all the legal and beneficial interest in that property absolutely.
However, there are often scenarios where a ‘non owner’ has made financial contributions to the property, for example, making a payment towards the purchase or deposit, or making payments towards the mortgage or household bills and outgoings.
In these scenarios, it may be possible for the non-owning party to challenge the position of 100 per cent ownership by proving a beneficial interest in the property and by establishing a constructive trust.
The cases of Oxley v Hiscock [2004] EWCA Civ 546 and Capethorne v Harris [2015] EWCA Civ 955 have shaped the law. A two-stage test applies:
1. The Claimant has to prove that the cohabitees shared a common intention that he or she would have an interest in the property. If there is no evidence of express discussions regarding this, then the intention can be inferred from conduct, such as making direct financial contributions to the property either at the time of acquisition or via mortgage payments.
Couples may presume that indirect contributions might result in them acquiring an interest in a property. For example, one person may have carried out extensive DIY work or may have stayed home to be the main care giver to dependents and maintain the family home, but these contributions alone are not necessarily sufficient to infer a common intention.
2. Once this first part of the test has been met, the property must be divided by way of a percentage allocated to each person. If it is difficult to determine specific percentages but if it can be shown there was an intention to share, the court can infer or impute a fair share based on the whole course of dealing between the couple in relation to the property. There is no presumption of a 50/50 starting point.
In addition to claiming a beneficial interest in a property by way of a constructive trust, a cohabitee may be able to bring a claim based on proprietary estoppel if, for example, the property owner made a promise to them that they would have an interest in the property and they can demonstrate that they acted to their detriment based upon that assurance.
