A recent case sends warnings to unmarried couples who are living together in a property that is in the sole name of one person.
More and more of us are choosing to co-habit well before marriage and recent National Statistics suggest that 1 in 4 couples who are co-habiting intend to go on and get married. When a couple choose to live together, this often involves one person moving into a property that is already solely owned by the other person. The non-owning cohabitee may go on to contribute towards the bills, upkeep or mortgage repayments. Furthermore, the non-owning cohabitee may rely on the strength of the relationship and decide not to save enough for their own deposit should the relationship break down. So, what happens if the relationship does breakdown?
The law tends to suggest that each case should turn on its facts and the burden is on the non-owning cohabitee to show that the owner gave assurances about living in the property, which the non-owning cohabitee relied upon and has suffered a detriment as a result of the breakdown of the relationship. In the recent case of Southwell v Blackburn, a non-owning cohabitee was awarded £28,500 representing a slice of the equity in the property where the couple had lived.
The key point of this case is that even if a property that a couple both live in is purchased by one cohabitee and the other has not made any significant contributions to the purchase price or outgoings, the non-owning cohabitee could still successfully claim to have an interest in the property following the breakdown of the relationship.
The way to preserve both parties’ respective interests in the property and set out clear intentions about how the assets should be dealt with if the relationship breaks down is to enter into a cohabitation agreement or declaration of trust. These legal documents will give clarity about what will happen if a couple who are living together separate. For those people who own a property in their sole name and cohabit with a partner should remember that without a cohabitation agreement or declaration of trust, they are at risk of the non-owning cohabitee making a claim for some of the equity in the property if the relationship breaks down. Cases will remain to be fact specific, but it is a case that will be increasingly significant due to the number of couples co-habiting.
We prepare a number of cohabitation agreements and declaration of trusts that are specifically tailored to suit your needs and set out your clear intentions.