Trusts of land claims – What will happen to our house if my partner and I separate?
Many couples live together in stable, often long-term, relationships outside of marriage. Indeed over the last decade this type of arrangement has increased by over 25% and now accounts for over 3.4 million households. Some cannot marry, whereas others choose not to do so. Sadly, these relationships can still break down, and when they do, questions invariably arise about the occupation and ownership of the family home. Many still believe that in these situations, particularly if the relationship has been a long one or one where there are children, that they will be treated as if they were married, believing in the long perpetuated myth of a ‘common law spouse’. This is not the case. Instead, these situations are governed by the same property and trust law provisions that apply to business partners.
This article examines the things that need to be considered in those situations where the family home is owned by one or both of the parties. A separate piece will consider the relevant concerns in respect of rented properties.
Who is the registered owner?
The first step is to establish the legal position regarding ownership of the property. Most people know whether or not their name is listed on the legal title to the property, but if you do not then this can easily be checked with the Land Registry.
If the property is registered in yours and your partner’s joint names, then both of you will have an interest in the property. Precisely what this interest amounts to will depend on the discussions and decisions made between you and your partner when the property was purchased as well as any discussions there have been since.
It is most likely that a jointly owned property will result in people having equal interests in the property, but is not always the case. For example, if one of you contributed a greater proportion of the purchase funds you may have agreed that that person has a greater share in the property. It may be that you and your partner entered into an express declaration setting out the ownership of the property when the property was acquired detailing your respective shares. If this is the case, then that is often going to be an end to matters.
If you cannot recall what was agreed when the property was purchased or whether you have a express declaration, it may be necessary to check what the transfer document says and / or obtain a copy of your conveyancing solicitor’s file from when the property was bought, as these should shed light on the situation.
Property in the name of one person
If the property is registered in the sole name of one person only, as a starting point it will be assumed that this person owns the entirety of the property alone. This can often create difficulties for the other person. All is not lost, however, as it may still be possible for the non-owning person to demonstrate that they have an interest in the equity. This can be done in a number of ways. Most commonly by demonstrating that there was always a ‘common intention’ that the non-owning person would have an interest in the property. Such an interest can be inferred from how you and your partner have acted in relation to the property (ie do you both make payments towards the mortgage?). To evidence an interest in the property in these types of cases it is necessary for there to be a detailed and careful analysis of all of the circumstances surrounding the purchase of the property and the conversations / actions that have taken place since. Simply being someone’s partner will not be sufficient to provide you with an interest in their property.
Alternatively, it is possible to obtain a declaration that the owning party should be prohibited from denying that the other has an interest. This can happen when the owner makes a promise to the other person that they will have an interest in the property and the recipient of that promise acts to their detriment in reliance on it. Recent years have seen a rising number of successful cases in circumstances where people have promised a property is ‘our home’ or ‘for the both of us’ being held to this promise.
Can I buy out my partner’s interest and keep the property or will it have to be sold?
Ultimately, the only orders that a court can make in these types of disputes are declarations confirming each person’s precise interest in the property and / or an order that the property be sold and the net proceeds of sale divided according to each person’s respective interest. That does not, however, mean that in every situation the property will be sold. Many people are able to come to an agreement with their partner about one of them retaining the property and buying the other out. This is often the case where there are children and everyone is seeking to do their best to limit the disruption to them. Whether or not this is possible will, however, come down to your particular circumstances. Firstly, you will need to have sufficient funds or access to funds to enable such a buyout. Secondly, this is something that you and your partner will ideally need to agree. Therefore, if there is any dispute between you about who should retain the property or whether it should be retained at all, it is worth remembering that in most cases the court will order that the property is sold on the open market, which could put you and your partner in a bidding war with each other. The court does have a discretion to make an order which enables one person to buy out the other but because it is a discretion it cannot be relied upon.
If you are concerned about your situation and would like some further advice then please contact a member of our specialist family and matrimonial team who will be able to assist you.