When a couple have been living together and that relationship comes to an end, they are often surprised to discover they may not automatically have an equal share in their home; in particular, where the legal title is in the sole name of only one of them.  The person without legal title may need to issue a cohabitation claim in order to address whether or not they can show that they have a beneficial interest in the property.

The first part of the test will be to find evidence of a common intention of both cohabitees that the cohabitee without legal title should have an interest in the property.  This can be inferred by means of either oral evidence or of written statements.  If evidence of a common intention is established, the second part of the test will be to show the proportions of each party’s shares in that beneficial interest.  Again, this can be established from surrounding evidence.

It is very important, at the outset of making such a claim, as much information is gathered at the early stages as possible.  This will include such things as full statements from the cohabitees, obtaining conveyancing files, the transfer deeds, mortgage applications and bank statements.  Any contemporaneous notes made at the time of purchase are alos extremely useful or other documents written at the time of the purchase.  The oral evidence of the person wishing to establish the beneficial interest can also be exceptionally important in court.

Any person contemplating such an application needs to consider the matter carefully as such claims can be extremely costly.  The court encourages the cohabitees to make offers to settle at an early stage of the process, to keep costs down. A duty to mediate is imposed on the parties at an early stage to ensure that all avenues of settlement have been exhausted before such matters proceed to the courtroom.  Any cohabitee who refuses to engage in this pre-action mediated approach, is likely to risk considerable cost consequences to them if the matter is pushed to court unnecessarily.

The process of the pre-action stage and the applications themselves are complicated and any person considering such applications would be well advised to seek legal advice in the preparation of any such claim.

Declaration of Trust

The extend and uncertainty of successfully bringing a claim for a beneficial interest in the property, could be lessened by the cohabitees giving careful consideration to drawing up a declaration of trust which sets out the percentages in which the property is to be owned.

The advantage of such a document is that it can set out precisely the intentions of the cohabitees and the reasons for purchasing the property.  It can deal with other issues such as how the property will be sold and set out what will happen if the relationship breaks down.  It can set out who will pay for what on the property and deal with changes, for instance what will happen if a child is born to one of the parties.  It can set out formulas for changing the shares if there are later contributions by one of the cohabitees.

It can provide a backup plan in the event of the mortgage not being paid.  This list is not exhaustive but demonstrates the breadth and versatility of the trust deed.  Since the trust deed is drawn up at the outset of the relationship and even before the parties have moved in, it is important to handle the matter very sensitively.  Solicitors such as ourselves are used to dealing with these matters and understand the need for sensitive handling of them.  The declaration can be simple or complex but it is important to seek good legal advice in the drafting of them.  Find out more about declarations of trust

At Stephens Scown, we have a wide breadth of experience in dealing with these matters and would be happy to offer assistance to any couple who may be considering buying a property together, or who are already living together and wish to add security and certainty to that relationship.