Cohabitating couples – what happens when it all falls apart?
Contrary to popular belief, legally there is no such thing as a ‘common law marriage’. Couples who have chosen to live together, rather than marry, often do not realise that they have fewer rights when they separate than their married counterparts even where there are children.
On separation, cohabiting couples often have to seek a declaration under the Trusts of Land and Appointment of Trustees Act 1996 to determine what their share of the property is, and whether it can be sold. The order is based on each person’s contributions to the purchase or their intentions, usually at the time that the property was purchased or it may be based upon how they hold the property.
If the cohabiting couple have children, an application can be made under the Children Act 1989 for the house to be sold only when the children have grown up or for a lump sum to buy an alternative property to live in with the children. Often this lump sum has to be given back when the children are adult.
Couples should therefore:
- Consider entering into a cohabitation contract at the outset, setting out how the property would be divided if they separated
- each take their own legal advice
- ensure that they own the property as ‘tenants in common’ so that each person has a specific share in the property which becomes part of the person’s estate on their death and does not automatically transfer to the other owner of the property.
If separation is being considered, the couple’s intentions in relation to the property are important if there is no written document.
There is no statutory protection for unmarried couples. The Government has come under some pressure to pass legislation to protect unmarried couples, but it has not yet done so, and at the moment, legislation does not appear likely.
In April 2007, the House of Lords heard the case of Stack v Dowden and considered the rights of unmarried couples in their home if they separate.
The parties’ current home was in their joint names although there was no document which set out how they actually held the proceeds of sale of the property if it was sold (referred to in such cases as the ‘beneficial interest’).
The man sought an equal division of the proceeds of sale whereas the woman maintained that she should receive 65% on the basis of her contributions.
The House of Lords agreed with the woman. It was relevant that the couple had kept their finances completely separate despite the long relationship. The Court found that how a property’s proceeds were divided depended on how it was purchased. It was recognised however that this could lead to unfairness so the Court will also consider other factors such as contributions and intentions of the parties.
An earlier case of Oxley v Hiscock found that the court would consider the ‘whole course of dealing’ between the parties in relation to the property.
If you are thinking of moving in with your partner, or if you live together and are thinking of separating then it is a good idea to take legal advice.