Cohabitation and living together
At the end of a relationship, unlike married couples, cohabitees and those who have lived together without marrying are unable to benefit from the flexible and discretionary provisions of divorce law. Where there is a dispute over property ownership or rights over jointly owned property the principles of property law will apply
Unlike a spouse or a civil partner, a cohabitant whose name does not appear on the title deeds to the property has no automatic rights if there is a dispute. It is therefore crucial for interests in property to be properly documented and registered. There are two different types of interest: legal and beneficial. If both cohabitants have a legal interest in the property, they will usually be either “joint tenants” or “tenants in common”. These concepts are explained in the leaflet entitled “Legal ownership of the home”.
If property is held in one cohabitant’s name, that individual owns the whole of the legal interest, and is the “legal owner”. In order to share in the value of the property, the other cohabitant must establish that he or she has a beneficial interest in the property and therefore that the legal owner holds the property subject to that beneficial interest. The simplest and most effective way to do this is by ensuring that the interests held by each person are expressly stated in a deed of trust. In a dispute, this document, if properly drafted and not varied by subsequent events, will be conclusive. If there is no deed of trust, then the nonlegal owner co-habitant must establish an interest by virtue of either a “resulting trust”, a “constructive trust” or “proprietary estoppel”.
Ideally, at the time a property is bought for cohabitants to live in, or (if owned by one cohabitant beforehand) at the time cohabitation begins, a deed or declaration of trust should be drawn up. Such a deed or declaration will specify the terms of the cohabitant’s ownership of the property, whether the property is held in the name of one of them only, or both.
If the non-legal owner cohabitant has contributed to the purchase price of the property, purchase costs, or is a party to the mortgage, a resulting trust may be established recognising that he or she has a beneficial interest. Money provided in the form of a gift or loan, or used to purchase furnishings or even house improvements will usually be insufficient to establish this sort of trust. The extent of the beneficial interest will be determined by the extent of the contribution.
If the non-legal owner cohabitant can show that there was a common intention to share the ownership of a property, and that he or she acted to his or her detriment in relying on that intention, a court can infer a constructive trust. For example, if the legal owner cohabitant said to the other “the house is half yours” and the non-legal owner paid the bills and outgoings on the property, whilst the legal owner paid the mortgage, this may be sufficient for the non-legal owner to establish a beneficial interest, depending on all the circumstances of the case.
If the owner of a property promises his or her cohabitant that he or she may have an interest in the property, and in reliance on that promise the non-legal owner cohabitant acted to his or her detriment, this may be sufficient for the cohabitant to establish a beneficial interest in the property.
Once a beneficial interest has been established by a constructive trust or proprietary estoppel, then the court decides the extent of the beneficial interest in the property.
The basis for division of other assets (for example, furniture) is the same as that in relation to property.
Cohabitants have no right at present to receive maintenance for themselves from their cohabitant after a relationship breakdown. However, a cohabitant may be entitled to receive maintenance and/or a lump sum for the benefit of any children. The court may also order that property be “settled on trust” for the benefit of a dependent child. See further the leaflet entitled “Financial provision for children” for details.
The law provides some additional protection for cohabitants and former cohabitants from violence and threats from violence (as well as other forms of abuse). For more information see further the leaflet entitled “Domestic Abuse”.
Wills, pensions and insurance policies
It is essential that cohabitants make Wills to ensure that property will pass on their death in the way intended. If a married person dies without a Will, then their spouse benefits automatically to a certain extent under the rules on intestacy. That is not the case in relation to cohabitants, although cohabitants may have a claim under the Inheritance (Provision for Family and Dependants) Act 1975 and may retain jointly owned property. The leaflet entitled “Why make a Will?” provides further details. Many pension schemes and life insurance policies differentiate between cohabitants and spouses on the death of the pension member. Cohabitants must check the small print for details of the benefits available to cohabitants and should ensure that appropriate nominations are made.
A cohabitation agreement provides important documentary evidence of cohabitants’ intentions in relation to their property, which can be critical in the event of a dispute about ownership. It must be in writing. There is no guarantee that a cohabitation agreement will be enforceable, but it is the best method available legally at present to regulate a cohabiting relationship and to provide for what should happen in the event that it breaks down. It should be used in conjunction with deeds or declarations of trust in relation to property, and the making of a Will and appropriate nominations in relation to pension death benefits and life policies.