Many people embark on a relationship and soon start living together perhaps in a property owned by one of the partners before the relationship started or during the course of the relationship they may purchase a property together. What happens if they subsequently separate? This has always been a thorny legal issue but in this article we take a look at a recent case.
If a property is purchased in joint names by an unmarried couple there is a presumption in law that they own the property equally.
If, however, evidence can be provided to satisfy the court that the couple had a contrary intention, the court may decide that there is an unequal ownership of the property. The most recent and widely reported case was that of Jones v Kernott. It was decided by the Supreme Court (formerly known as the House of Lords), the highest court inEnglandandWalesin 2011. In this case Miss Jones and Mr Kernott bought a property together in 1985. They had children together. Mr Kernott moved out of the property in 1993. Miss Jones continued to live in the property together with the children and she paid all of the household expenses herself, including the mortgage and no further contributions were made by Mr Kernott. In 1995 the property was marked for sale but was then withdrawn from the market. The parties at that time agreed to cash in a joint life insurance policy and the proceeds were divided between them. Mr Kernot used his share to pay the deposit on the purchase of a property in his sole name.
In 2007 Miss Jones began legal proceedings to claim a Declaration under Section 14 of TOLATA, the legislation which governs disputes relating to separated, unmarried couples. Miss Jones sought to obtain a Declaration from the court that she owned the entire beneficial interest in the property. In the alternative, she sought a Declaration that she had a financial interest in the property Mr Kernot had purchased in his sole name if it was concluded by the court that he had retained a share in the property they had purchased together in 1985. The first Judge to hear the case decided that Miss Jones had a 90% share of the jointly owned property and Mr Kernott had 10%. This was a local case, the first hearing taking place in the Southend County Court.
Mr Kernott objected to this decision. He appealed to the High Court. He argued that it was wrong for the Judge to infer an intention that the couple’s financial interest in the property had changed after their separation. The High Court rejected the appeal. Mr Kernott then appealed to the Court of Appeal who allowed his appeal declaring that the parties owned the property as Tenants in Common in equal shares.
Miss Jones then appealed to the Supreme Court. The Judges at the highest court in the land supported the original Judge’s decision that the ownership of the property was held 90/10 in Miss Jones favour. The Judges endeavoured to express some helpful principles as follows:-
- The starting point in a case where a property has been bought in joint names is that joint owners own the property equally.
- The starting point can be displaced if it can be proved to the court’s satisfaction that the parties (a) had a different intention at the time when they purchased the property or (b) that at a later date or perhaps upon separation they formed a different intention.
- Their intentions would be decided objectively based on their conduct.
- In cases where it is clear that the couple did not intend to own the property equally at the outset or they had subsequently changed their original intention, but, it was not possible to establish the shares in which they each owned the property, the court could decide the percentage split based on fairness.
A review of all the recent cases decided in the past decade is outside the scope of this article. We also do not deal with the law relating to property purchased in one person’s name but lived in for many years by a couple but where one partner’s name is not on the title deeds. However this judgement makes it clear that each case is decided on its own facts. Undoubtedly Miss Jones and Mr Kernott had each run up huge legal bills which may have exceeded the value of their share of the equity in the modest property they were arguing about. Had Miss Jones and Mr Kernott resolved matters conclusively when they separated in 1993 or when they split the endowment policy in 1995 by transferring Mr Kernott’s share of the property at that time to Miss Jones, many years of expensive court proceedings could have been avoided. Of course the couple have still have argued about what was a fair division in 1993/1995. Such arguments could have been avoided had the parties taken legal advice as the time of the purchase of the property.
Whenever an unmarried couple are considering purchasing a property, it is in their interests to ensure that they think about what will happen if they were later to split up. Many couples, especially young people in the first throes of romantic love, will not give proper consideration to these issues. However a Trust Deed could be prepared to avoid future arguments and uncertainty.
Gepp & Sons Family Law Team are here to help you with these tricky aspects of the law. We have considerable experience in representing client’s who find themselves facing court proceedings following a breakdown in their relationship. We are also here to assist couples who are about to embark on a new relationship and we can advise on the drafting of a Cohabitee Agreement which will seek to protect the couple if their relationship later fails.
If you would like legal advice on this complex area of the law please do not hesitate to contact a member of our Family Law Team on 01245 228106 or email firstname.lastname@example.org
The above is not legal advice; it is intended to provide information of general interest about current legal issues.