It is increasingly common for couples nowadays to put the idea of marriage on the back burner, instead prioritising setting up a home together. Some may not want to marry, being content to live together. Often one of the couple will move into a property already owned by the other, or they may buy a home in one of their names. This means that if the property is owned in the sole name of one party, the other has no legal entitlement to a share of the property, even if they have spent considerable sums on improvements and upkeep.
This means that if the property is owned in the sole name of one party, the other has no legal entitlement to a share of the property, even if they have spent considerable sums on improvements and upkeep.
They may open a joint bank account, combine their finances, purchase furniture and undertake renovations to the property, often blissfully unaware that there is no such thing as a ‘common law marriage,’ or rights for cohabitees.
This means that if the property is owned in the sole name of one party, the other has no legal entitlement to a share of the property, even if they have spent considerable sums on improvements and upkeep.
This article will briefly explain the legal position arising out of this scenario, and then detail the practical measures you can take if you find yourself in this difficult situation.
The law
The law that applies in this scenario is general property law. There is no specific law which governs couples who live together.
It is set out in the Trusts of Land and Appointment of Trustees Act 1996 (‘TOLATA’) which creates legal principles based on the law of trusts. The question is who owns the beneficial interest in the property, and therefore an interest in the equity in the property?
The starting point is that the beneficial interest will follow the property title. Therefore, if a party is named on the title (they are named as the registered owner with the Land Registry), this constitutes an express trust and they will have the legal and beneficial interest.
The problem above arises when the property’s title is held in one party’s (‘A’) sole name, but another person (‘B’) has invested their own time and money into the property and view it as their home. The other party, B, will then have to establish a beneficial interest by way of a constructive trust, in order to establish an interest in the equity in the property To establish a constructive trust, B needs to show all of the following:
- A common intention between the couple that B was to have an interest in the property, and not just that they would live there;
- B acted to their detrimentor altered their position in reliance on the common intention; and
- It would be unconscionable for A to deny B’s interest.
‘Common intention’ is usually expressed during conversation and it does not need to be a formal offer and acceptance. For example, if A says to B “what is mine is yours”, or “you will always have an interest in this house”, that would constitute an express intention. Sometimes behaviour in itself, such as opening a joint account and combining finances, may not in itself constitute common intention although it is still useful to refer to as it shows a pattern of behaviour.
‘Detriment’ is a concept subject to the discretion of the Judge if the dispute were to proceed to court. Improvements and upkeep to the property are likely to qualify, depending on the level of detriment incurred. Re-decoration or low cost general maintenance is less likely to qualify; however, financing a new kitchen or replacing a roof, for example, is more likely to be considered as detriment.
It must then be decided, taking into account all of the above, whether it would be unconscionable (i.e. unjust or unfair) to deny B’s interest.
Practical steps
If you find yourself in this situation, how, you may wonder, do you go about meeting the three-stage test in practical terms?
Litigation in this area can be very expensive, especially because these claims are dealt with by the civil courts, rather than family courts. Claims are potentially ‘high stakes’ due to the risk of paying your ex’s legal costs as well as your own because, in civil cases, the general rule is that the loser pays the winner’s costs.
Unlike family courts, civil courts are less interested in the concept of ‘fairness.’ Their role is not to adjust interests in a property, but rather to determine and declare interests. The status of your relationship bears no weight however long you have been living together (unless you are engaged, which means you may benefit from protection under the Married Women’s Property Act 1870).
TOLATA litigation is front-loaded, and as a claimant you would be required to set out your case fully at the outset, with as much supporting evidence as possible. Often these cases can seem like ‘one word against the other,’ so a paper trail or other corroboration is key.
To evidence common intention, any written correspondence such as text messages should be produced. Was there a conversation before any improvement work took place on the property? Was there an understanding that if you paid for the improvements, that was your ‘contribution’ to the property?
What discussions took place when the house was purchased or when you moved in? Were promises made in the presence of, or were they repeated to third parties? Consider the reasons why you were not on the legal title if there was a common intention you would have a share. Was it intended that you would be added to the legal title at some point in the future, but you simply never got round to it?
To evidence that you have incurred detriment by paying for improvements and upkeep for example, you should produce the relevant bank statements and invoices.
An alternative
As people are becoming more conscious of the expense and risk of starting formal court proceedings, they are increasingly open to attempting mediation as a much cheaper and more conciliatory option. Indeed, the courts will have expected you to have tried mediation before starting proceedings. Rather than being subject to the decision of a judge, bound by the strict statutory framework and inability to adjust interests, it is often preferable to discuss matters directly with your former partner with the assistance of an independent third party. This can be beneficial, especially where there are children from the relationship.
