What entitlement do you have to a financial interest in your home if you separate from your partner? Darren Higginson, Associate and property litigation expert at Coodes Solicitors, says the situation can be complex for unmarried couples.
Growing numbers of people now live with a partner but choose not to get married. So, what happens if things go wrong and you decide to go your separate ways? How do you work out what share of the property you are entitled to?
Many people are shocked to discover they do not have the rights they had assumed they would have. Here at Coodes, we are dealing with growing numbers of cases like this and, sadly, they often turn into disputes over who owns what. In most cases, it comes down to what was agreed in the first place, but many people are unsure what they signed up to.
If you bought a property with a partner, check what legal agreement you signed to make sure you know where you stand. When you bought the property you would have had to choose how this would be held; as either joint tenants, or tenants in common. The terminology can be confusing but this has nothing to do with being a tenant of rented property.
A joint tenancy agreement means that the co-owners are each entitled to the whole of the equity in the property. If one of them dies, their ‘share’ of the equity automatically passes to the other. It is usually the case that there is no more specific indication of what each person’s share is and so this can remain open to interpretation and can cause issues further down the line.
Being tenants in common means each owner has a distinct share in the property. The extent of each owner’s share is usually agreed at the outset. Many people, particularly couples, who buy together, opt for a 50:50 share but it can be held in any proportion that the co-owners choose. This is often seen as a better option than joint tenants for unmarried couples because it gives certainty and allows each co-owner to deal with their share of the property independently of the other.
Many people live together for years, or even decades, and of course situations can change in that time. A couple may have children, or perhaps one co-owner inherits money and uses it to pay off the mortgage. Clients are often keen to know if changes in individual circumstances are taken into consideration by the courts.
There are circumstances where the courts will consider whether the parties had a different intention at the outset to the agreement shown in the purchase documents, or whether that intention changed at some later date. If there is no new written agreement then the courts will scrutinise the parties conduct and decide whether something different or new was intended. If so, in the absence of any clear information about what share each co-owner would have, the courts will decide what is fair, having regard to the whole course of dealing between them in relation to the property. Financial contributions to the property are relevant but there are many other considerations.
The outcome of court proceedings in this area is often uncertain and it is much more sensible for co-owners to be clear about their respective shares in property and to update any relevant documents from time to time to reflect their current intentions.
It is very common for someone to move into a property already owned by their partner. Couples often make informal arrangements for the owner to continue to pay the mortgage, while their partner contributes to utility bills or other household expenses. Unfortunately, many people then find themselves with no right to a share in the property if the relationship ends.
Another common scenario that we see at Coodes is when a partner has moved in and spent both time and money renovating the property, only to then discover they have no claim to it after they separate.
If you move into your partner’s home and pay the mortgage it is likely that you will acquire a share of the property. If not, you run the risk that the courts will find that you have no interest at all, even though you may have paid other expenses.
If you are affected by any of these issues, please contact Darren Higginson in the Personal Disputes team on 01726 874700 or firstname.lastname@example.org