Cohabitation - Frequently asked questions

Couples may want to make cohabitation agreements prior to moving in together to ensure you both understand what will happen if the relationship breakdowns as disputes over property and finance often arise. For advice in relation to cohabitation, whether looking to draft an agreement or involved in a dispute call our specialists on 0203 816 0548.

Agreements & financial settlements

Cohabitation

With regard to ownership of property (houses) there are two elements of ownership in each case – the legal ownership and the beneficial ownership. The owner of the legal estate in property is the person or persons registered/named on the proprietorship register at the Land Registry (if the land is registered), or, if the land is not registered, as named on the conveyance.  

The legal owner may also be the beneficial owner in equity (and usually this is the case). However, it may be that the beneficial interest in the property is held by someone different entirely to the legal owner, or by one or more people in addition to the legal owner. It is the beneficial ownership of property which is vital as it is this which determines who is actually entitled to any equity/money in a property.

Where a property is held by two or more persons in equity it can be held as either Joint Tenant (which means as no specific sub-divided shares in the land, but rather co-ownership of the whole) or as Tenants in Common (in which case the beneficial shares can be held in equal proportions or unequal proportions. There are implications with regard to who gets the property in the event that one of the owners dies, depending upon whether the property is held by them as Joint Tenants or as Tenants in Common. If the property is held as Joint Tenants then the survivor automatically gets the property, whereas if it is held as Tenants in Common then on the death of one of the joint owners the deceased’s share does not automatically go to the survivor but rather will pass either in accordance with the deceased’s will or the intestacy rules if there is no will.

Property is held in the joint names of more than one person

My partner and I legally jointly own a property, however when it was bought, we did not enter into any formal legal document to say how we owned the house. The TR1 (Transfer Deed) doesn’t say anything about shares. What share do we each own in the property?

Recent case law (namely Stack v Dowden and Jones v  Kernott) has clearly established that in the vast majority of cases, equity will follow the law i.e. the beneficial interest in the property will be equal, if the property is legally owned in joint names. It is possible to rebut this presumption of equality, but it will be a very unusual case where this is done. The facts would need to be very unusual, and the mere fact that there were unequal contributions to the purchase price would not normally be sufficient.  If a joint owner seeks to rebut the presumption of beneficial joint tenancy, the task is to ascertain the parties’ common intentions as to what their shares in the property would be, in the light of their whole course of conduct in relation to it.

My partner and I own a property legally and beneficially. However is it possible for our joint shares to subsequently change/vary so that one of us is entitled to more than 50% of the equity?

If there is an express trust in the transfer document, or a separate declaration or deed of trust, the parties will be bound by those terms in the absence of any claim for rescission based on fraud or misrepresentation or for rectification based on mutual mistake.  

It is possible to go behind a declaration of trust by:

  1. Establishing that the Declaration was invalid or incorrect or should be set aside
  2. Establishing that there has been a subsequent variation
  3. Establishing that it should be rescinded or set aside on the grounds of fraud, material misrepresentation, undue influence and Non est Factum (i.e. the partner claims that they had no idea what the were signing)

Cases where it is possible to rescind or set aside a Declaration of Trust, will be very rare and will depend on the circumstances of the particular case.

With regard to variation of beneficial interests, it may be possible to show that there has been an express or implied subsequent renegotiation. The court can imply a renegotiation from subsequent actions which are so inconsistent with what agreed as to leave the conclusion that there must have been a variation or cancellation of the agreement. This usually happens when one person leaves the property and there is an agreement at that time about who will pay the mortgage and what that means. 

My partner and I own a property jointly (legally and beneficially). He moved out sometime ago and I have continued paying the mortgage on the property and have carried out improvements to the property. Am I entitled to a greater share of the net equity when it’s sold?

No. On the face of it this does not entitle you to a greater share of the equity. A court may however say that you should be compensated for some of the money you have spent. This is usually to be taken out of your ex-partner’s half share. This boils down to the principle of “equitable accounting”.  Even where shares are fixed, equitable accounting may be used to make adjustments, usually as follows:

  1. A claim of one party in occupation to pay occupation rent to the other party after separation
  2. A claim of the party in occupation to get credit for some payments of mortgage interest
  3. A claim for the party in occupation to get credit for reducing the balance outstanding on the mortgage or paying an endowment policy
  4. Claims in respect of repairs or improvements if the works have increased the value of the property

Generally, as a rule of thumb, one cancels out two i.e. any claim for occupation rent is cancelled out by the party in occupation paying the interest element of the mortgage. With regard to any reduction in the capital element of the mortgage, usually the person paying it, will be entitled to credit back for half of such reduction (the other half being theirs in any event).  Issues of equitable accounting arise only after the date of separation.

Under Section 13 of the Trusts of Land and Appointment of Trustees Act 1996, the Trustees can impose conditions on the occupier, including paying any outgoings affecting the land, and under section 13(6), paying compensation to a person whose right to occupy has been restricted or excluded.  In considering the matter, the court will have regard to the factors set out in Section 15 (1) of this Act.  Essentially the court must do justice between the parties, but must do so with due regard to the relevant statutory considerations and in particular (where applicable) the welfare of any children, the interest of secured creditors and the circumstances and wishes of the beneficiaries specified.  

With regard to any improvements, you would be entitled to credit back for half of the lesser of the following – either the amount you actually spent on the improvements or the amount by which the improvements increased the value of the house by.

My partner and I jointly own a property. There is no dispute that the legal and beneficial interests are jointly owned, however upon purchase I put in a large deposit from my own money.  We have now separated.  Am I entitled to more of the equity because I paid the deposit?  

The simple answer is no. As stated above, if the property is jointly owned legally and beneficially, the parties respective contributions either at purchase or subsequently are irrelevant unless it can be shown that the shares have been varied for any reason or that when the property was purchased, there was any duress or undue influence or mistake. This is very difficult to prove and such cases will be extremely rare. Both parties, in particular the party paying the deposit should have been appropriately advised when the property was being purchased by the conveyancing solicitors. If they have not been advised with regard to the fact that the property is to be jointly owned and the fact therefore that they are making more of a financial contribution is irrelevant, then there may be a potential claim against the solicitors for negligence.  The conveyancing solicitor’s file would need to be obtained and considered in detail.

My partner and I jointly own the property (legally and beneficially).  We have now separated.  I have moved out but I want to realise my interest in the property, but my ex-partner is refusing to sell it and cooperate.  Is there any way I can force a sale of the property?

This is a classic case which would fall under the Trusts of Land and Appointment of Trustees Act. You are entitled to apply for an order for sale.  The court has a discretion to order a sale, and in doing so must consider:

  • The intentions of the person or persons (if any) who created the trust
  • The purposes for which the property subject to the Trust is held
  • The welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the Trust as his home
  • The interests of any secured creditor or any beneficiary

Section 14 (2) of the Act provides that, on application for an order under this section, this court may make any such order (a) relating to the exercise by the Trustees of any of their functions (including an order relieving them of any obligation to obtain the consent of, or to consult, any person in connection with the exercise of their functions) or (b) declaring the nature or extent of a person’s interest in property subject to the Trust, as the court thinks fit, having regard to the Section 15 check list factors (listed above).

Before any application is made to the court, the Civil Procedure Rules state that the potential claimant needs to set out his or her case in sufficient detail first to allow the Defendant to be able to respond i.e. a letter of claim. Failure to do this and to act in accordance with the pre-action protocol, may result in costs sanctions.

My partner and I jointly own the property (legally and beneficially). We have now separated. I am continuing the live in the property with our two young children. He wants to sell the house, but I don’t as I am concerned that we would have nowhere else to live.  Can I prevent a sale until our children are older?

As set out in the answer to the question above, one of the factors the court takes into account when exercising its discretion to order a sale of a property is the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust of his home. Each case turns on its own individual facts however, and it is not guaranteed that you would be successful in persuading the court to postpone the sale of a property until your youngest child reached 18. It will depend on all of the facts, and an important consideration of the court would be how much equity is in the property, your ability to maintain the mortgage payments and your borrowing capacity.  If there is sufficient equity in the property combined with your borrowing capacity for you to re-house yourself and your children, this is likely to lead the court to order a sale of the property. These cases, in court proceedings are very costly, and if your partner has legal representation, and he is successful in securing an order for sale, and you contest the matter to a final hearing, it is highly likely that the court will make a costs order against you such that you will be responsible for paying your partner’s costs of the proceedings. It is very important for you therefore to obtain legal advice and to think very carefully about contesting the matter on the basis of your children alone.

If I was to leave the property which I jointly own with my partner do I forfeit any rights?

Whether or not you are residing in a property does not affect the extent of your interest in it. If you vacated the property you do however remain jointly and severally liable for the mortgage (provided of course it is in joint names) such that if it is not being paid the mortgage lender will come after you and/or your partner for repayment.  

Every case is different and it is very important that you and your partner discuss who is going to continue to pay the mortgage. If you leave the property then clearly you are going to have your own new housing costs to pay which may mean that you cannot afford to pay any contribution towards the mortgage as well. A common arrangement therefore is for the party who remains in occupation of a jointly owned property to continue to pay the mortgage instalments. If they do so, then the doctrine of equitable accounting is likely to be relevant which means that provided the mortgage is a capital repayment one will be entitled to credit back for half of the amount they have reduced the capital element of the mortgage by since the point they have paid it solely to the point of sale/resolution of the matter. 

If you do leave the property you need to make sure your mortgage lender can contact you. You also need to check that the mortgage is being paid.  If the mortgage goes into arrears this is likely to affect your credit rating. The mortgage is still your legal responsibility regardless of any agreement you have with your ex-partner.

My partner and I own a property together. We have separated. She has moved out. I have made an offer to my ex-partner to buy her out of her interest in the property for an amount equal to half of the equity but she will not accept. What can I do?

You have no legal right to buy out her share if she is not prepared to sell it to you. However, it would make good sense for her to do so as it would avoid the property being sold (which have the uncertainties of how long it would take the property to sell and at what price) and also to avoid court proceedings becoming necessary if you cannot agree.  

It is important that you try to discuss this matter; you would need to discuss the value of the property (do this either by getting an average of three estate agents valuations of the property which would be free, or alternatively if a price can still not be agreed you would need to instruct a chartered surveyor to properly value the property and prepare a report). You would then deduct the costs of sale from the value of the property ie estate agents fees plus VAT plus solicitors costs plus conveyancing solicitors costs, less of course the outstanding amount on the mortgage (you would need to obtain from the mortgage lender an up to date mortgage redemption statement) to calculate the net equity in the property. If you agree that the property is owned in equal shares, then whatever the net equity is you would divide by 50%.   

Clearly you would need to make enquiries with the mortgage lender as to whether they would agree to transfer the mortgage and the legal title of the property to your sole name including raising a further borrowing if necessary, to buy out your partner’s interest in the property as calculated above.  If the mortgage lender will not agree to the transfer of the mortgage and the property into your sole name even if you and your partner do agree upon a figure, then unless your partner is prepared to wait until such time as they will agree, then it appears inevitable that the property would need to be sold.  

My partner and I have separated. We both want to retain the property. We cannot therefore agree as to whether she would buy out my interest or I buy out her interest. What can we do?

Ultimately if an agreement cannot be reached then it is for one of you to make an application under Section 14 of the Trusts of Land and Appointment of Trustees Act 1996 for an order for sale. The court is likely to make an order for sale, and if they do then if you and your partner still wish to buy the property, then there is nothing stopping you from bidding for the property and ultimately it will go to the person who is able to pay the most for it.

Property is held in the sole name of one person

I have just separated from my partner with whom I have lived with for 7 years in a house which is owned by him in his sole name. We were together at the time of the purchase, we went to look at the property together, and it was agreed that he would purchase it in his sole name, as I was a student at the time and I could not get a mortgage in my name. Consequently the legal and beneficial title of the property and the mortgage are in his sole name. I have however resided in the property since, and have contributed to the mortgage payments. We have separated. Am I entitled to anything from the property?

You will only have a beneficial interest in the property if you can prove that there was a common intention that you should have such an interest and that you relied on that common intention to your detriment. The first stage is to try and establish that there was an express common intention i.e. you would need to prove that there was a conversation which gave rise to an express “agreement, arrangement or understanding” that essentially the property was jointly owned.  This means that there were express discussions you should have a share, and that you relied on this understanding to your detriment (here payment of the mortgage would be sufficient). Hopefully your partner will agree, however, he may in fact state that there were never any express discussions and it would be up to you to prove to the Court that there were. 

If you cannot prove that there was this express agreement, then the court can imply that there was an agreement by looking at the parties’ conduct in relation to the property and all the circumstances of the case. A constructive trust can arise either at the time of purchase or at any time thereafter. Essentially you would need to prove that you have made a direct contribution towards the purchase price or a direct contribution to the mortgage repayments or possibly an arrangement where you have paid more than your fair share of the other bills which therefore allowed your partner to pay all of the mortgage, as evidence from which the court could infer a common intention. In the absence of any such conduct, it is simply not possible to infer a common intention. However the mere fact that such conduct is present does not inevitably lead to the inference being made, for example if inferring a common intention would be inconsistent with a positive finding as to what you and your partner did actually intend.

Once a constructive trust has been established that you do have an interest in the property, then the next stage is to determine what the size of your interest is. It may be 50% or it may be more or less. If it can be found that there was an express agreement as to the shares, then that will be conclusive. If there was not an agreement then the court will give you both such shares as are fair and reasonable taking into account all the circumstances of the case and the whole course of dealings between you.

I am residing in my partner’s house owned solely by him however I have spent some of my own money on improvements, including a conservatory.  If we separate, can I get that money back or assert an interest in his property?

It would not be easy to succeed in having an interest in your partner’s property simply because you have carried out work to it. English law is clear. A person who improves the property of another person does not, in the absence of any agreement, then have a share in the property. It is likely that if a person does work by way of improvements to their partner’s property without a clear understanding as to the financial basis on which the work is to be done, they do so at their own risk. Consequently we must look at whether there was any express discussion between you and your partner that you would have an interest in exchange for doing or paying for improvements. Case law would suggest that mere improvements are not sufficient on their own to infer a common intention that you acquire an interest but will be relevant to the quantification of any pre-existing beneficial interest. 

You may however be successful in making a claim for, not an interest in the property, but the money you have spent back. In a recent case, where the man paid for about £130,000 worth of improvements to his partner’s property, the Court of Appeal stated that the money he spent was not a gift. The obvious inference was that the monies were a loan repayable within a reasonable time after demand.

I am living in my partner’s house which is legally in his sole name. However we agreed that I have an interest in the property and I have been contributing towards the mortgage. How can I best protect my interest in the property in case we fall out and separate?

In this situation it is imperative that you protect your interest in the property. A cohabitation agreement at the very least is advisable as this would record the express agreement between you both that you have a beneficial interest in the property and also in what share (frequently 50%). This is a contract between you and your partner, and provided that you can later establish an intention to create legal relations, and the agreement complies with the necessary requirements for a valid contract the agreement will be valid and enforceable.  

A cohabitation agreement can deal with many different aspects of your cohabitation not just in relation to the ownership of the property. It is important that it is drafted by way of a Deed and states that you intend it to have legal force. Importantly in this area is that fact that any Deed would be clear evidence of your intentions so that if in the future the court needs to establish what your intentions were, there is a clear document which records this in writing. Any dispute arising from the Agreement would come before a Judge dealing with non-family disputes and would be decided by applying contractual principles. It is important that you and your partner each receive independent legal advice.

In addition, it is advisable to register a restriction against the property with the Land Registry such that there is a record on the official copy entries in relation to the property that you have an interest in it which will state that your partner cannot solely dispose of the property unless he has a Court Order.

It is also advisable to have a trust declaration deed which would also be registered at the Land Registry and which would make a clear declaration as to the ownership of the beneficial interest in the property and is clear evidence of your express intention that you have a 50% beneficial interest in the property. This will then be conclusive, unless it can subsequently be shown that it has been varied in any way.  

Finally, it is also important that you both have Wills, as, unlike married couples, you and your partner will not automatically inherit each other’s assets.

My boyfriend has recently moved into my house which I have owned for many years prior to us starting a relationship.  Will he be able to make a claim for some of my house if we separate in the future?

It is very important for you to set out your agreement now.  If you do not wish your partner to have any interest in the property, then it is important to have an express discussion with him with regard to this, and also then to record it in writing. To this end it is important for you to enter into a Cohabitation agreement (see the question above for more details).  

It would also be important for you to keep your finances separate, so ensure that you continue to pay the mortgage out of your sole account. It would be important for you to consider the effect of any improvements your partner does or funds to your property. This can be covered in the cohabitation agreement such that you expressly agree that if he does carry out any improvements it would not give him any interest in the property.

My partner and I have separated. What happens with regard to the contents of our property and any bank accounts? 

With regard to items in the property, anything which was bought by you is yours and anything which was bought by your partner is theirs.  Anything which was a gift to you belongs to you. Anything which was purchased by you jointly is owned jointly and should be divided by way of agreement. Anything which is in a bank account in your sole name is yours and anything in a bank account in your partner’s sole name is theirs. Any money in a joint account will be divided in equal shares and any items bought with funds from the account will be regarded as jointly owned property. Of course this presumption can be rebutted by evidence showing a contrary intention either express or implied and in both circumstances the funds will be held in proportion to the contributions made.  

It is important to take action as soon as there is a breakdown in your relationship to ensure that the funds in any joint accounts are not removed unilaterally by your partner. If you alert the bank the account will generally be frozen so that neither party may withdraw funds without the consent of the other. Be careful that taking this action does not lead to the mortgage or other outgoings not being paid.

Any disagreement about contents/banks accounts will need to be determined by the court. If there is really no alternative but to invite the court to decide the ownership of disputed chattels, the correct procedure is to apply for a declaration or enquiry as to the beneficial interest of those assets in dispute in your local county court.  When resolving any dispute, the court will have regard to the usual trust principles.   The court can be expected to take a more “broad brush” approach when dealing with furniture and other personal affects. The court may make an order that merely declares each parties’ beneficial interests in the property/chattels and it may order the sale of the property or for one person to account to the other for the value of that beneficial interest.  

I have lived for a number of years with my partner we have two young children. We separated a few months ago and he moved out. He has now met somebody else and wants me to move out of the house with the children in order that he and his new girlfriend can move in. Can he force me and the children to move out?

The short answer is no, not without a court order. You do not say whether or not the property is in his sole legal name or your joint names. Either way, he would need to go to court to apply for an occupation order (i.e. an order of the court regulating the occupation of a property). The court must have regard to all the circumstances of the case, and the exact factors they take into account would slightly vary depending upon whether or not you do jointly own the property. However, even if you do not legally jointly own the property, the court must consider all the circumstances of the case, and would not automatically make an order for you to leave. The factors the court would take into account include the behaviour of the parties, the needs of any children and the financial resources of the parties. 

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