These articles gives a general overview only and the legal position at the time of writing them. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print.
Cohabitation and Interests in Joint Property
Whilst there is a long established legal framework to deal with the division of marital assets, particularly the family home, on the breakdown of a relationship there is no equivalent framework for cohabiting couples and the Government has recently declined to implement the Law Commission’s proposals for reform in this respect.
Cohabitants have therefore been left in the unfortunate position of having to rely on case law, much of which is inconsistent and some of which conflicts with the result that they cannot embark upon litigation with any great degree of certainty as to the outcome.
The recent Supreme Court case of Jones v Kernott has provided some guidance but does not provide the clarity many cohabitants and practitioners had been hoping for.
In Jones v Kernott Miss Jones and Mr Kernott, who had two children together, bought a property (“the House”) together in 1985. As set out above, they did not enter a declaration of trust setting out their respective shares.
The relationship broke down and in 1993 Mr Kernott moved out and in 1996 bought his own home. Following this he made no real contribution to the House. Miss Jones continued to meet all of the outgoings, including the mortgage.
Approximately 13 years later Mr Kernott indicated that he wished to claim an interest in the House. The value of the House had substantially increased. Miss Jones applied to court for a declaration that she owned the entire beneficial interest.
The County Court held that the initial common joint intention of the parties to hold the House in equal shares had changed and decided that Mr Kernott was only entitled to a 10% share. Mr Kernott appealed to the High Court on the basis that it was wrong for the judge to infer or impute a change to the parties’ common intention and to substitute a division he believed was fair. Whilst the High Court dismissed his appeal, he subsequently appealed to the Court of Appeal which allowed it, holding that the House should be split equally between the parties. Although the decision appeared to be unfair, the Court of Appeal had felt bound by the Supreme Court’s decision in an earlier case, Stack v Dowden.
Perhaps understandably, Miss Jones appealed. The Supreme Court unanimously allowed Miss Jones’ appeal and restored the County Court’s original Order splitting the parties’ beneficial interests in the House 90/10 in her favour.
In reaching its decision the Court took account of the following principles:
- Where a property is held in joint names with no declaration of trust, the starting point is that the parties hold the property in equal shares
- A challenge to this presumption should not be lightly embarked upon
- This presumption may be overcome by evidence either that it was not, or that it ceased to be the common intention of the parties to hold the property in equal shares
- Common intention will be objectively inferred from the conduct and dealings of the parties
- Where it is clear either that the parties did not intend a joint tenancy at the outset or they have changed their original intention but in the absence of direct evidence or where the court cannot infer the parties’ actual intention as to their shares, the court can, in certain circumstances “impute” such an intention. This may be an intention the parties never actaully had (i.e the court will attempt to reach a “fair” result having regard to the whole course of dealing between the parties in relation to the property)
- Financial contributions are relevant but there are many other factors which the court might consider in deciding what shares were either intended or fair
- Each case will turn on its own facts
It is important to note that the case concerned a property which was not subject to an express declaration of trust and which was bought before the introduction of the (mandatory) conveyancing form TR1 in 1998. Indeed the paragraph in the judgement setting out the applicable principles begins: “In summary, therefore, the following are the principles applicable in a case such as this, where a family home is bought in the joint names of a cohabiting couple who are both responsible for the mortgage, but without any express declaration of their beneficial interests” (our italics).
For conveyances from April 1998 onwards, The TR1 form includes a Declaration of Trust setting out how a property is to be owned as between joint purchasers. Where the TR1 has been correctly completed (or any other case where the parties have entered an express declaration of trust), and in the absence of a subsequent written agreement altering the parties’ shares, the courts will in the writer’s view be very reluctant to go behind it and hold that a property should be held in different shares to those set out on the TR1.
However, the judgement in Jones v Kernott does appear to suggest, at least according to some commentators, that there may be scope in certain circumstances to go behind an express declaration and alter it, although until the point is tested in court the position remains unclear.
An intention can be "inferred" from the parties' conduct and the evidence in this respect. Where this is not possible (for instance in the absence of any direct evidence or evidence from which the parties' common intention might be inferred) the court will instead "impute" an intention to the parties (i.e the court will effectively construct and attribute an intention to the parties, even if this is an intention they never actually had) with a view to achieving a result that is fair having regard to the whole course of dealing between the parties in relation to the property.
If you would like to receive more information from Lemon&Co and be kept up to date with legal and statutory updates please register here.
Link to this article:
If you wish to link to this article, please paste the following code into your web page:
<p><strong><a href="http://www.lemon-co.co.uk/article_joint-property.php">Cohabitation and Interests in Joint Property</a></strong><br />
...</p>
Lemon&Co is the trading name of LemonSolicitors LLP which is a limited liability partnership
registered in England and Wales with number OC362818. The registered office is 34 Regent Circus,
Swindon, Wiltshire SN1 1PY and is authorised and regulated by the Solicitors Regulation Authority whose rules can
be found at www.sra.org.uk/code-of-conduct.
A list of the members of LemonSolicitors LLP
is available from the registered office.
We use the word LLP Partner or Partner to mean a member of LemonSolicitors LLP.
Tel: 0800 135 7917, Fax: 01793 614168, Email: enquiries@lemon-co.co.uk
Copyright © LemonSolicitors LLP 2012. All rights reserved.
Sitemap.