Cohabiting Families – Separation and Property

Cohabiting Families – Separation and Property

The purchase of property is often one of the largest purchases that many couples make and it is, therefore, often one of the greatest causes of contention, and disputes, when a relationship comes to an end. As the rights and actions available to unmarried couples upon separation vary significantly from married couples,  this guide sets out the principal claims and possible courses of action for unmarried couples’ property disputes. 

Declaration of beneficial interest

If there is a dispute over the extent of a person’s beneficial interest in property (whether the property is in joint names, or one person’s sole name) the court will seek to identify how the parties intended the property to be owned.

Upon purchase of a property the conveyancer will inform HM Land Registry how the property is to owned by the parties and, when there are multiple owners, the extent of their respective interest (or share). In brief, there is an assumption that a person’s beneficial interest reflects their legal interest in the property unless a person can prove otherwise. 

If a person can demonstrate that the legal interest (i.e. the written record of who owns the property and in what shares) does not reflect the parties’ intention, the court can declare an alternative beneficial interest, the burden of proof being on the person seeking to prove that the legal ownership does not reflect the beneficial ownership. Further where a person is trying to assert an interest in property that they do not legally own, they must show that there was an intention that they would have a beneficial interest using one of three means:

1. Resulting trust:

This arises where one person has made direct financial contribution to the purchase price and the payment was not made by gift, or loan. If the court find that there was an intention to own property under a resulting trust, the court will typically calculate the person’s interest in direct proportion to the financial contribution made.

2. Construction trust:

This arises where there is evidence, either express or implied, in the whole course of dealings between the parties (in their conversations and/or actions), that there was a common intention to share the property. If accepted, then the Court must then determine the appropriate % share. 

3. Proprietary estoppel:

This arises where a) a representation is made, or assurance given, to the person seeking a beneficial interest; and b) that person relies on the representation/assurance; and c) they suffer a detriment as a result of their reliance. 

If property is owned in joint names, but without a declaration of trust, the court will generally stand by the declared legal interest unless one party can successfully demonstrate, by reference to their whole course of dealings in relation to the property that a) they had a different common intention when they acquired the property, or b) that they later formed a common intention that their shares would change.

If the property is the subject of a declaration of trust the court generally cannot vary or go behind that declaration.

We reiterate, however, that this is a very complex area of law and there are significant costs consequences if an application to court does not succeed. If a person seeks a declaration of a beneficial interest in property that they do not own they should seek specialist legal advice in every case. . 

Property of engaged couples

If, during a couples relationship, they were a) engaged to be married, and b) the agreement to marry was terminated, either one of them can ask to the court to share property, over which they have a beneficial interest, between them as though they were married. 

This, in brief, gives the court power to distribute property between the parties in accordance with the principles of fairness and balance any injustice that may arise as a result of the parties having entered into the engagement (i.e. such as one party having to bear the responsibility for a large debt incurred in funding the wedding). 

There are some exceptions as follows:-

1. if a gift is made during the engagement period on the condition (express or implied) that it would be returned, in the event that the engagement is broken, then that person should not be prevented from recovering the property. 

2. there is a presumption that the gift of an engagement ring is an absolute gift, only rebuttable by the person proving that it was given on the strict condition that it would be returned if the marriage did not take place.

Order for sale 

If, on the breakdown of a relationship, one party seeks an order for sale and an agreement cannot be reached between the owners, an application can be made, to the County Court, to force sale of the property. 

This is not a straightforward matter, however, and the court must have regard to a number of issues when deciding whether a property should be sold, including why the property was purchased (and whether the reason for the purchase has come to an end); the welfare of any children and the interest of any secured creditor (i.e. mortgagee) or beneficiary.