Capital Assets and Cohabitation Separation
The end of a relationship creates emotional turmoil and the rules applied by the Courts in determining asset division are technical. The Court has no obligation to consider what is fair and reasonable.
Property Case Law – Cohabitation Rights
The rules have developed on a case by case basis and legal advice on cohabitation property disputes is based on an estimation of what the Court is likely to do.
Property Dispute – Common Law Wife/Common Law Man and Wife
When cohabitation breaks down there is often a dispute as to who owns the home the parties have shared and in what proportion. There is no cohabitation law. The matter will be governed by the law of contract which has roots which stretch back over 600 years.
Property Owned by One Cohabitee – Living Together Agreement
The Court will consider:
- Has the “owner” of the asset made a legal contract to pass or share ownership to the cohabitee?
- Does “equity” make intervention appropriate?
If a legal contract exists, one party can apply to the Courts for an order compelling the other party to comply with the terms of the contract or pay compensation for failure to do so.
What is a Legal Contract?
A contract arises where there is agreement, complying with any prescribed formalities (for example, statute requires that any contract relating to land be in writing or evidenced in writing), between two, or more, people to enter into legal relations for “good consideration”.
Each party must either make a financial payment or do something to his or her detriment. This does not include gifts and promises.
No Legal Contract
If a legal contract to share or transfer the property has not been made the Court can still intervene if:
- There is an understanding between the owner and the cohabitee seeking a share of the property.
- The cohabitee applying for a share in the property has acted in reliance of that understanding to his/her detriment. (Constructive trust)
Property Owned Jointly
If the property is owned jointly, the first consideration is whether there is a document stating how the parties own the property.
If such a document exists (Express trust), it is almost certainly binding. It is imperative that couples purchasing a property together are advised by their conveyancing solicitor as to the alternative forms of ownership.
Property Ownership Dispute – No Cohabitation Rights
If there is no written evidence as to respective shares in the property the Court will consider:
- The parties’ actions. What did they agree? What were their intentions?
- If no discussions took place what agreement can be implied from their actions?
- Who purchased the property and in what proportions? (Resulting trust)
- Who paid the outgoings on the property and for any improvements/repairs?
- Why was the property bought and who lived there?
What the Court will not Include
- Contributions towards bringing up children.
- Payment towards household expenses.
This is harsh, but payments made directly towards the mortgage can infer that the owner intended the cohabitee to acquire a share in the property. Payment for food and utility bills can be made for many reasons, a lodger, for example, would make such payments. It is therefore not possible to conclude that the owner intended the cohabitee to obtain a share in his/her property because he/she contributed towards their joint living expenses.
Legal Advice on Splitting Up – Cohabitation Separation
This is a complex area of law, and the costs of litigation are expensive. It is important to receive comprehensive legal advice on your rights when cohabitation breaks down.