Property disputes between cohabiting couples on the breakdown of a relationship seem inevitable, particularly where the shared home is in the sole name of one partner.
Introduction
In the UK, the number of unmarried couples has twice increased since the middle of the 1990s. It rose to nearly three million, while the number of children living with unmarried parents has risen from 0.9 million in 1996 to 1.8 million in 2012 (Papworth, 2013, p. 1). Also, there are about 6,000 same-sex couples, who are not in a civil partnership and who have children.
Virtually, there is no significant change in how the law considers cohabiting couples and their property if they separate. Inherently, the UK law does not acknowledge in any respectful way a living-together relationship outside marriage or civil partnership. If a cohabiting relationship turns sour, there is very small protection for the weaker partner, usually the woman, who usually has children. As an outcome, some cohabiting families can find themselves confronting many difficulties once they split up, especially when there are children involved in the separation.
In England and Wales, when married couples divorce or civil partners dissolve their unions, both parties have a legal right to maintenance and their equal division of assets, including property and inherited property. The judiciary has total discretion under marital law to take into account all the circumstances and the history of the relationship when they decide on a fair division (2013, p. 3).
Cohabiting couples have no such property or equal rights, even when they stay together with several years and whether or not they have children. For instance, partner A moves into partner B's property (with the latter being the sole owner of the property’s deeds), they live together and may have children. If they split up, even after five or ten or even thirty years, partner A still has no right to personal maintenance from partner B even if she has always been financially supported (2013, p. 4).
Partner A also has no legal entitlement to a share of the property, even if he or she has added up to the mortgage or paid in other ways, such as residing at home to care for the children. Hence, unless partner B voluntarily agrees to a settlement, partner A could become without property or homeless unless he/she can fix it through court proceedings, which is also costly. Also, this has a limited chance of success.
In this case wherein there is no clear law, any attempt to claim part of the property is imbued with various challenges. All the courts can do is attempt to bring fairness using cobbled-together bits of other legislation on property, land and trust law. However, these are all legally and technically complex. Hence, it can cost a handsome amount of money to bring this in a judicial proceeding. In English law, if the cohabiting couples jointly own their family home, the property will instantly be divided into two, even if one partner has greater contributions for its purchase. An exemption would be is in the case that they made a written legal agreement at the time of purchase which stipulated that there is a distinct proportion to be followed. Again, if one partner intends to challenge this in court, it is likely to be very expensive and there is no guarantee this will win.
Despite the recommendations under the Law Commission in 2007 that the rights of cohabiting partners upon separation must be increased, nothing has changed much. The present government showed that it had no plans and political will to act on the proposed reforms.
Laws on Cohabitating Partners
Under the current laws of UK and Wales, unmarried couples or those who are cohabitating are not entitled to guaranteed rights to own each other partner's property as they separate their ways (Fairbairn, 2012, p. 4). If a cohabiting couple separate, the courts have no power to overcome the rigid legal ownership of property. They cannot divide it as they may do in the case of a married couple who separate and divorce. In the latter, a property will be inherently considered as a joint asset and this will be divided between the couple, even if it held in joint names or in the sole name of one of the couple.
In the case of the cohabitating partners, the courts may only make orders based on a determination of shares which have been secured in the property in situations where the laws on trusts or proprietary estoppel apply (2012, p. 5). These rules are technical but important, the party who has no legal interest in the home may be found to have an advantageous or equitable interest in the property. While money in the forms of bank accounts, savings or other investments which are contained in joint names can be totally divided between the two, there could not be any financial claims over assets held in the sole name of one former partner (2012, p. 5).
If the property is held in joint names, then, it will be divided between the joint owners depending on the share that they each have in the property. This implies that the property may be up for sale in the case that one partner is unable to “buy out” the share of the other. If there are dependent children residing in the property, then, it might also be considered that the sale of the property will be delayed until the children are of age (O’Callaghan, 2013, p. 1).
Hence, it is clear that in this study’s case of cohabitating partners, with one partner owning the property, the partner to whom the property is named will keep the property and it will be hard for the other partner to make a claim for a share. According to Jarvis Family Law LLP (2013, p. 1), there are conditions in which such a claim can be brought if:
- The other partner made a vital financial contribution towards the purchase of the property;
- The other partner made a capital contribution towards the improvement or modernization or extension of the property;
- The other partner financially contributed towards the property, for instance, by paying off the mortgage;
- There were some other arrangement which led to a unique agreement or understanding between the couple that the property was intended to be jointly owned, even though the title deeds had not been revised (2013, p. 1).
- The partner intending to make the claim to prove that evidences exist to justify them sharing the property. This can be hard and may require an application to be made to the Court.
The cohabitants may also enter into a “cohabitation agreement” and this can be a modifier for them to take into account what they would want to happen if the relationship turns sour (Douglas, Pearce & Woodward, 2012, p. 3). This legal document, or what is sometimes considered as a “living together agreement,” covers everything such as who owns the property or house in the relationship and it also stipulates how the partners will divide their assets, including property, its contents and savings, in the instance they separate (2012, p. 4). The agreement also covers custody and financial support arrangements pertaining to the children.
Cohabitation agreements have yet to be completely tried in court and so thus, it is not very clear if this would weigh legally. Both parties must initiate legal advice on the impact of any proposed agreement. For this agreement to be considered as legally binding; there should be a lawyer who will put together the contract, have a copy sent to each partner and then have each partner sign the contract in the presence of witnesses. The real mettle of this paper is if it ensures that the agreement stipulated will hold up in court, as each partner lay claims on the stipulations with their respective counsel/lawyer to ensure that the details are totally covered and no mistakes are committed.
However, according to Papworth (2013, p. 2), cohabitation agreement is legally binding. As long as it is properly applied, meaning each party got independent legal advice on the agreement; it will have full force of the law. Having one partner as the sole name in the property makes it difficult for the other party in a cohabitating relationship. Another measure is to have a will (Douglas, Pearce & Woodward, 2012, p. 7). This is because in English law, if one partner in a cohabitating relationship dies without leaving a will, then, their surviving partner will not instantly inherit the assets which are left behind. However, this is subject to inheritance tax since the parties are unmarried (2012, p. 8).
Generally, as there is no legal status in the English law as a common-law spouse or partner (Papworth, 2013, p. 1). In short, unmarried couples, such as those who are cohabitating (or living together), have no legal rights if they separate. Hence, if they have no cohabitation agreement, one of the partners could be left with nothing.
As it is, there have been various arguments and differing views between senior judges as to how property should be divided in the case of cohabiting partners who split up. A Supreme Court ruling in November 2011 for the case of Kernott v Jones further complicated the issue of property rights for cohabiting couples (Family and Divorce Website, 2013 p, 1.).
It was documented that the couple bought a house in joint names, with Miss Jones settling the £6,000 deposit. Later, Mr. Kernott enhanced the property through the payment of £10,000 for the property’s extension. As they split up in 1993, Miss Jones remained in the property with their children. She alone settled the mortgage and outgoings. Then, in 2007, Mr. Kernott tried to release his share of the property.
The lower courts decided to alter the equity and give Miss Jones 90% and Mr. Kernott only 10%, in order to manifest the former’s contributions (2013, p. 1). The Court of Appeal, however, disapproved of this decision and argued that since the property had been bought in joint names, thus, a 50-50 division seems justified. It argued further that there was no evidence to show that both parties tried to change the way they owned the equity. However, the Supreme Court has now overturned this decision and reverted to the lower courts’ decision that Mr. Kernott can only have 10% share of the property.
As the law stands, the primary solution for cohabiting couples who intend to protect their legal rights, particularly on their property, should they split up, is either to marry or enter a civil partnership (Douglas, Pearce, & Woodward, 2012, p. 8). According to the Fisher Meredith Law Firm (2013, p. 1), if the property is under the sole name of one partner, the other partner get nothing regardless of the number of years they stayed together. This could only be exempted if the partners can establish that they have a legal interest, often in the form of an “implied trust” (2013, p. 1).
This said trust is established if a Cohabitation solicitor manifests that there was a common intention between the cohabiting couple that they both must have a legal interest in the property (2013, p. 1). The non-owning partner should manifest that there were express discussions between them relating to the ownership of the said property.
Once this precious intention is established, it must also be evidenced that person relied on this to their detriment. Often, detrimental reliance means that they both shared money to the property in some form by paying for repairs or by paying the mortgage or in some special cases, carrying out important menial jobs themselves. This, however, does not include the basic caring for children or taking charge of the house.
Under these legal settings, the property is detailed according to its owner/s, in what proportion it will be divided, and it is also well documented. Other details which protect the couple include the partners’ personal belongings, savings and other assets which are stipulated into various arrangements should they separate. The agreement under these legal coverage also set out how the partners will manage their daily finances while they stay together, such as how much each pays for the mortgage and bills and life insurance (2013, p. 1).
Reforms under Part 15 of the Civil Partnership Act of 2009 against the Reforms under the Law Commission of England and Wales
The Civil Partnership Act of 2009 provides for the registration of civil partners and for the outcomes of that registration, to ensure the rights and obligations of cohabitants and to provide for connected matters. It specifically the sections under its Part 15, implements reforms for civil partners. This has various complex, legal issues in the context of the special protection which the Constitution guarantees to marriage and in relation to the equality rights protected by Article 40.1 of the Constitution (Fisher Meredith Law Firm, 2013, p. 1). The changes in this law provide legal recognition to cohabitant agreements allowing cohabitants to regulate their joint financial and property affairs. It provides legal certainty as to the status of cohabitant agreements made by couples who wish to regulate their financial and property affairs but who do not intend to marry nor enter a civil partnership and who do not intend to redress scheme applied to them.
The act’s provisions would apply to those who have lived together as a couple (both same and the opposite sex) for a continued period of two years or more. The partners should not be married to each other; they must not also be civil partners. They must not be within prohibited degrees of relationship to each other. Under this law, a family court is empowered to make financial settlement orders. Any application for a financial settlement order should be made within twenty four months after cohabitation ends. Several provisions can be asked by the court under a financial settlement order such as: lump sum settlements; periodical payments (including secured periodical payments); property settlements; the transfer of property; the sale of property and pension sharing ((Douglas, Pearce, & Woodward, 2012, p. 4).
Section 172 also confers power on the court to make a property adjustment order to consider the welfare of the other cohabitant or a dependent child of them in relation to a property owned by a qualified cohabitant. It enables the court to change the terms of a cohabitant agreement or another settlement relating to ownership of property, for the benefit of either qualified cohabitant or a dependent child (2013, p. 1).
This is the same with the provision guaranteed under the Law Commission which makes recommendations for reform of the law (Fisher Meredith Law Firm, 2013, p. 1). It examined the financial consequences of the termination of cohabiting relationships by separation or death. It established that the law which applied to conclude property disputes between cohabitating couples on separation was “obscure and complicated and leads to unfair outcomes” (2013, p. 1). The reforms acknowledged that separation “causes grave hardship not only to cohabitating partners themselves, but also to their offspring” (2013, p. 2). The Commission proposed the introduction of a new system of financial remedies which would lead to fairer outcomes on separation for cohabitants and their families. Other aspects of these reforms include the following: insolvency, next of kin rights, child support and parental responsibility, social security, and tax. It also mainly considered the plight of both parties relative to their status in life and their properties or any other obligations and responsibilities.
A provision which is similar with the above mentioned remedy of establishing “implied interest” such that cohabitants should meet eligibility criteria indicating a committed relationship i.e. who have lived together as a couple for a minimum period of five years (or less in cases of exceptional hardship), or who have a child together, must have a right to apply for certain financial orders if they split up. This right must be instant unless the couple selects to “opt out” (2013, p. 1).
This is likewise the same with the provision of the Civil Partnership Act of 2009 which stipulates that the court should be able to make the same types of orders as they presently do on divorce, but on a very varying level.
The provisions’ similarities basically lie in the presumption that the couple should be financially self-supporting as soon as possible. It also excludes the presumption of equal sharing of assets and claims must be limited to reasonable needs.
Both reforms take into account the circumstances of the couple and their children and ensure that the courts make a fair financial award. They both require the flexibility to make fair awards by considering all the circumstances of the cohabitating couples. Both reforms make sure that the welfare of the children is prioritized and they both take into account several factors such as the level of commitment to each other and financial and other contributions to the couple’s household, including taking care of the house and the children (The Family Law Review, 2008, p. 4).
Both reforms also address the special aspect of the financial consequences of the separation, namely, the extent to which they can be determined by an advance agreement (such as the case of a cohabitating agreement) before a separation is considered. The Law Commission published Cohabitation: the financial consequences of relationship breakdown in 2007. It recommended the introduction of a new scheme of financial remedies for separating cohabitants, even when it acknowledged that the cohabitants do not have the same rights as married couples and civil partners in the event of their separation.
The Law Commission’s 2007 reforms depend on redressing economic advantage and disadvantage at the termination of the relationship. It rejected the notion that cohabitation law must be equal in its legal rights to marriage but it allows cohabitants to make contracts in which they chose to the proposed scheme (Barlow & Duncan, 2000, p. 129). It is suggested that this is a model especially suits two free-thinking, independent who “select” their arrangement. Likewise, the Civil Partnership Act of 2009 also differentiates cohabitation from marriage. It considers that civil partnership is only for same-sex couples with marriage being only for opposite-sex couples. This enables the State to give rights to one group and not to the other and hence, put discrepancies as to the application of cohabitating couples.
In both reforms, the following conditions are considered in the financial settlement, particularly with regards to property laws:
- The welfare of any related child;
- The nature and period of commitment of the partners to each other;
- The contributions of the partners to the relationship;
- The respective economic advantage/disadvantage of the partners;
- The respective resources of the partners;
- The financial needs of the partners in the near future;
- The employment prospects of the partners;
- Any responsibility which the partners may have to support another person;
- Any written agreement or declaration of trust.
References:
Barlow, A. & Duncan, S., 2000. New Labour’s Communitarianism, Supporting Families and the “Rationality Mistake.” Journal of Social Welfare and Family Law 129–143.
Douglas, Gillian, Pearce, Julia, & Woodward, Hialry, 2012. A Failure of Trust: Resolving Property Disputes on Cohabitation Breakdown. Available through: http://lawcommission.justice.gov.uk/docs/Cohabitation_Cardiff_Research.pdf. [Accessed on 02 November 2013].
Fairbairn, Catherine, 2012. “Common law marriage” and Cohabitation. House of Common’s Library. London.
Family and Divorce Website, 2013. Changes in the Law for Cohabitating Couples Perhaps? Available through: http://familyanddivorcesolicitors.co.uk/family-law-solicitors-in-london/change-in-the-law-for-cohabiting-couples-perhaps. [Accessed on 02 November 2013].
Fisher Meredith Law Firm, 2013. “Cohabitation.” Available through: http://www.fishermeredith.co.uk/legal-advice/service/personal-services/family-law/cohabitation. [Accessed on 02 November 2013].
Jarvis Family Law LLP, 2013. “Unmarried Couples and Cohabitation Rights.” Available through: http://www.familysolicitorsharrogate.co.uk/unmarried-couples-rights-cohabitation.html. [Accessed on 02 November 2013].
O’Callaghan, Katie, February 6, 2013. “Unfair Laws for Cohabitating Couples Highlighted Again.” BBC News. Available through: http://www.bbc.co.uk/news/business-21337154. [Accessed on 02 November 2013].
Papworth, Jill, March 9, 2013. Why a Cohabitation Agreement is Essential for Non Married Couples. The Guardian Website. Available through: http://www.theguardian.com/money/2013/mar/09/cohabitation-agreement-essential-non-married-couples. [Accessed on 02 November 2013].
The Family Law Review, 2008. An Interim Report. The Center for Social Jsutice. Available through: http://www.centreforsocialjustice.org.uk/UserStorage/pdf/Pdf%20reports/CSJFamilyLawReviewInterimReport.pdf. [Accessed on 02 November 2013].
