In an era of rising divorce and falling marriage rates more and more couples choose to live together rather than following a more traditional route of marrying first.
Although steps are being taken by the Law Commission to provide rights for cohabitees these changes may be a long way off and clients should be advised to seek protection in the meantime.
A recent case has highlighted the potential dangers of purchasing a property with a partner without making advance plans as to what would happen if they separated (which understandably is usually the last thing they want to think about!).
The couple, Patricia and Leonard, met in 1980 and had a daughter together in 1984. They bought a house in 1985 in joint names for £30,000; Patricia paying the £6,000 deposit. They borrowed additional money in 1986 to build an extension and had a further child in 1986. Throughout the cohabitation they shared the payment of all expenses including the mortgage.
In 1993 they separated and Leonard left, leaving Patricia and the children in the property.
In 2006, more than 12 years after the separation, Leonard commenced proceedings to claim his half share of the equity in the property. It was agreed that, had he made this claim when he left 12 years previously, he would have been entitled to a 50% share however Patricia argued that he had not contributed to the mortgage or expenses since leaving the property and she should therefore be entitled to a larger share. The value of the property had risen considerably in that time and was now worth £245,000.
When the case first appeared before the Court the judge agreed with Patricia and ordered that Leonard should only receive a 10% share. On appeal the High Court further agreed but the Court of Appealed overturned the verdict stating that he should receive 50%. The view was that if they had wanted the split to be anything other than 50/50 they should have formalised this.
As you are aware a severance of tenancy creates the automatic assumption that the shares are equal and that a Deed must be drawn up supporting the severance if the property is to be held in unequal shares.
Likewise, a couple who cohabit and wish to specify what is to happen to a property (or any asset) on separation should have a cohabitation agreement drawn up.
