Wealth Warning! Co-owning Cohabitees Beware
An appeal hearing in the case of Jones v Kernott has commenced this month in the Supreme Court which may affect you if you own property with your partner but are unmarried.
People moving in together make all sorts of assumptions about property ownership; that because they are partners, everything will somehow be divided 50/50 or “fairly” if the relationship comes unstuck.
Lawyers have to break bad news (or good, depending on which side of the fence you sit) time and time again; namely, that the law for unmarried couples does not include “fairness” but sticks pretty strictly to property and trust law, unless you have had the foresight to enter into a Cohabitation Agreement of Declaration of Trust. At present, property shares largely follow your title deeds: if when you bought a house and decided to own as “joint tenants”, this means that if you split up you are each entitled to 50% – regardless of who paid the deposit, the mortgage or improvement costs.
In Jones v Kernott, the chap left the home some 12 years before he brought his claim, leaving his ex-partner to maintain the mortgage. The courts decided his share was 50%, regardless of his disappearance and lack of financial upkeep of the property. It was not the court’s role to impose a retrospectively “fair” outcome when a couple had chosen to own as joint tenants.
The Supreme Court is being asked to reconsider that; the result will be a judgment which lawyers and the courts have to rely upon as vital authority in future disputes about property between unmarried couples (until, perhaps, a government brave enough decides to give unmarried couples better legal rights).
You can own your property in unequal shares: if you are paying a whopping deposit and your partner is not, you can choose to own the property as “tenants in common” in whatever proportions you agree – 60/40, 75/25 and so on. That is reflected in your title deeds (and can be changed as your circumstances change).
Additionally, you would be well advised to arrange a Cohabitation Agreement which regulates your financial relationship; too many people shy away from discussing money, yet it is such a fundamental part of any relationship and often plays an important part in relationship breakdown. If you cringe at the thought of the “unromantic” nature of discussing brass tacks with your loved one, flip that on it’s head and ask why on earth you would feel comfortable moving in together but not comfortable about discussing how you own the most expensive asset in your life.