3rd January 2018
Whilst married and civil partners are still the most common family type in the UK and also the USA, more and more couples are choosing to live together outside of marriage. Whilst some US states recognise such unions as common law marriages, that term has no meaning in the legal system of England and Wales. It’s a well-quoted, but inaccurate urban myth.
This can come as a nasty shock to some cohabitees at the end of their relationship and there is widespread misunderstanding about the gap in legal protection.
If a married couple separates, they can both make wide-ranging financial claims against each other under the Matrimonial Causes Act 1973. Orders can cover maintenance, property and even split a pension. The judge at Court has wide discretion to make orders to ensure that both husband and wife and their children will be properly provided for and generally no one walks away empty handed.
But is no unified body of law in this country that protects cohabitants and it is possible for couples to live together for decades and raise children together, then for the financially weaker partner to be left in difficulty if the relationship finishes. There is no right to maintenance or other personal claims between former cohabiting partners and this can cause severe injustice after a long relationship. This is currently the focus of a campaign for reform and you may have seen mention of this in the national press.
However, the law does offer some protection to cohabitees’ rights to live in or share in the value of their home via the Trusts of Land (Appointment of Trustees) Act.
When couples buy a home together in this country, they will be asked by their conveyancing solicitors if they want to own the property as Joint Tenants or Tenants in Common. This is important and the terms have difficult meanings and implications that they do in some states of the US.
In England and Wales, Joint Tenants own equal shares and have automatic survivorship rights. This mean that if one owner dies, the survivor would automatically inherit the deceased’s share in the property. Tenants in Common can own unequal shares and their do not have automatic survivorship rights. That means if one partner dies, their share would become part of their testamentary estate to be divided up according to their Will.
If cohabiting partners are making different and unequal financial contributions towards the property, it is absolutely vital that the documents prepared at the time of the purchase describe them as Tenants in Common and set out what their respective shares in the property are agreed to be.
This can be done either on the Land Registry forms at the time of purchase or in a separate contract called a Deed of Trust. A Deed can also set out what the owners want to happen in the future in respect of additional financial contributions (perhaps if one partner pays for an extension on the home) and/or what they have agreed should happen if they separate and whether one should have the right to buyout the other’s share in the future or the circumstances in which the property should be sold.
It’s never too late to deal with this but it must be done properly – a verbal agreement or a scribbled note on the back of the cornflakes packet is not enough. I have a specialist practice in cohabitee cases and I see many clients who were not aware that they needed to formally deal with their agreement and they can end up in litigation as a result. But the law can assist and this is where the Trusts of Land Act comes into play.
This is a complicated area of property law and it is easy for non-lawyers to become confused by the plethora of legal terms that they may meet, such as constructive trust, resulting trust, proprietary estoppel and beneficial interests.
But essentially the law provides that if the ownership of the property does not properly reflect either the parties’ joint agreement about their respective shares or one party’s unilateral belief that they have a share but where the home is registered in the name of their partner only, a claim can be made under the Act. The Court will try to rectify the situation and can declare the proper split of the equity in the property (i.e. who owns the balance of the value after the mortgage has been deducted) or order a sale.
There is also another option if the couple have children and a claim could be made under Schedule 1 of the Children Act 1989, for an order providing that the parent with care of the children can stay in the property until the children reach adulthood or that the financial stronger party has to assist them with the cost of rehousing. This would be on a trust basis, and the money would revert back to the other parent when the children are grown. The Court can also make orders relating to maintenance and other expenses such as school fees.
This is again a complicated area of law and it is essential to take legal advice.
Judith Fitton is a Partner in our leading Family department at Mundays and is our expert in cohabitee matters and any disputes between non-married couples as to their property interests. Judith has been accredited as a Specialist in the fields of Cohabitee Disputes and Complex Financial Remedies in high net worth asset cases by Resolution (the national organisation of family lawyers). Judith can be contacted on 01932 590557 or firstname.lastname@example.org
The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2018.
Andrew Knorpel looks at a recent case where a teacher was fired for showing his pupils a 18-rated horror film
Sophie Banks highlights the importance of having provisions governing when notice to terminate takes effect in the employment contract, and employers should review and update their contracts if necessary.
Sophie Banks discusses the employer reference and how it has diminished over the years to minimise the risk of a claim being made