Shared home - shared rights?

Updated January 2012

Cohabitation is the fastest growing family type in the UK. Almost two million dependent children are living in cohabiting couple families. It is predicted that by 2031, one in four couples will be cohabiting and not married or in a civil partnership. Yet, despite these figures and the notable decline of marriage, the law governing property rights for cohabiting couples takes no account of family needs on breakdown of the relationship nor does it consider contribution in anything but financial terms.

In practice this means that when there is a dispute the court will look at the evidence of the couple's intentions when their property was purchased. If the property is registered in the couple's joint names there is a presumption that they are entitled to equal shares. If only one of them appears on the title documents the presumption is that he or she is solely entitled. These presumptions can be rebutted. There may be a trust deed which sets out how the sale proceeds are to be divided.

So far so good, but what if there has been a change in circumstances which would make the division permitted by the title documents or trust deed unfair? The answer is that the court can find that there was a "common intention" to vary the arrangement in order to achieve a fair outcome. How does the court do that? First, there will be a wide-ranging enquiry into the background and the conduct of the couple during the course of their relationship. In some cases it will be clear that there was a common intention to vary the terms of ownership and the court will find accordingly. In others there will be no such evidence and it will be for the court to make its own determination of what is a fair outcome. This process has been explained and clarified by the Supreme Court in the case of Jones v Kernott [2011] UKSC 53.

Jones v Kernott

The facts of Jones v Kernott whilst unremarkable in themselves are a clear example of how focusing exclusively on the title documents can produce an unfair outcome.

Ms Jones and Mr Kernott met in 1980. They had two children together. In 1985 they purchased a house in their joint names. The purchase price was £30,000. Mr Kernott provided the deposit of £6,000 from the sale of his previous home. The balance of the purchase price was raised by an interest only mortgage. There was no trust deed. Ms Jones and Mr Kernott made an equal contribution to the mortgage, outgoings and upkeep of the property.

The relationship broke down and they separated. Ms Jones stayed in the property with the children after Mr Kernott left in 1993. A joint insurance policy was surrendered and divided equally enabling Mr Kernott to purchase another house which he bought in his own name. From that time Ms Jones met all the outgoings on the property including the mortgage and the endowment policy premiums. She supported the children with little assistance from Mr Kernott.

In 2008 Ms Jones brought proceedings to define her interest in both properties. By that time the jointly owned property was valued at £245,000. The county court judge HHJ Denman found that the property had been purchased as a home for the family and that the intention had been to share it equally. That common intention had changed in 1993 when Mr Kernott left and no longer made any contribution to the mortgage or upkeep of the property. He found that Ms Jones was entitled to a 90% share in the jointly owned property but had no interest in the property that Mr Kernott had purchased.

Although Mr Kernott's appeal to the High Court was dismissed, his subsequent appeal to the Court of Appeal was successful, the court directing that the interests in the property remained equal.

The Supreme Court decision

The Supreme Court roundly rejected the approach of the Court of Appeal. The Justices found that there had been a common intention to vary the terms of ownership when Mr Kernott left. Using a figure of £60,000 for the value of the property in 1993 and £245,000 as the value in 2008, Mr Kernott's share was determined as half of the 1993 value leaving Ms Jones with £215,000 or 88% of the total value. This figure was broadly in line with what had been decided in the county court and so the original order was restored.

What does the future hold?

On the facts this was clearly the right decision and it does provide a solution for clients in Ms Jones' position. But it also highlights the lack of certainty in this area of the law. Best advice for unmarried couples will be to ensure that what they have agreed about ownership of their property is clearly recorded. If there are changes they should be incorporated in their agreement. But this will not always be possible. The Law Commission's proposal to introduce legislation to regulate cohabitees' rights on separation will not be implemented leaving many vulnerable to unfairness and injustice.

David Wheeler is an accredited specialist in private law children, advanced financial provision and child abduction. He is also a contested probate specialist.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2012. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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