Expert advice: Making sense of cohabitee disputes
More than six million couples in the UK cohabit, according to the Office for National Statistics – more than double the number 20 years ago. However, contrary to popular belief, a common-law spouse or partner carries no legal status in English law.
This means the distribution of cohabitees’ assets can end in lengthy and costly disputes. So, if your relationship breaks down, you cannot rely on the matrimonial legislation that would allow married couples to claim against one another.
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The law relating to the separation of cohabitants is extremely complicated and during the exciting period when you are purchasing your property together, understandably, you would not normally consider your relationship breaking down. However, it’s important to understand that the laws governing cohabitees are completely different to those which provide protection to married couples or couples in a civil partnership.
It’s crucial to get the financial side sorted before you cohabit with a partner. If you’re considering buying a property with your partner and you are not married or in a civil partnership, it’s important to discuss and agree from the outset how you wish to own the property.
Cohabitation agreements set out who owns what from the beginning, including savings, property and personal belongings. They can also set out how much someone has contributed to the mortgage deposit and repayments.
Dealing with cohabitation cases when an agreement has not been drawn up can be extremely costly and complicated. The court fees and legal fees to deal with such a complex area of law can quickly reduce any equity that you should receive from the property should a dispute arise which results in a court application.
The most common agreement that couples come to is that the property will be jointly owned. In this case, you cannot sell the property without your partner’s consent and vice versa. You and your partner can negotiate to buy out the other’s interest in the property. This will likely involve raising a lump sum, often through a re-mortgage or other means, and transferring the property from joint names into the name of the party buying out the interest.
However, in the instance that the property is held in the name of your partner, it is also possible to apply to the court for a declaration of the extent of your beneficial interest in the property. You can ask the court for an order to force the sale of the property or alternatively, to order a lump sum be paid to you on the basis of the division decided by the court.
In this case, you would need to prove that you have financially contributed to the purchase of the property, or significantly increased its value, for example by paying the deposit, contributing to the mortgage, substantial renovations and other outgoings on the property.
We know that people do not enter buying a home with their partner lightly and with the expectation of the relationship ending. However, it’s always sensible to take legal advice before you buy and take legal advice if you split. By seeking the advice of a professional in either circumstance, you can ensure that both parties’ best interests are adhered to and avoid the need for a potentially stressful and damaging negotiation process.