Property Disputes and Unmarried Couples
When an unmarried couple live together in a property owned by one of the couple, the legal ownership of that property remains with that person – as per the title deeds. Should the couple split up, the person who is not on the title deeds will usually have no rights over the property.
However, there are some limited cases where the person could claim that they have a ‘beneficial interest’ in the property that gives them a financial share. To do this, the person needs to ‘prove an agreement’ that you would ‘share the beneficial interest.’ Unless such an agreement can be demonstrated, it’s incredibly doubtless that such a claim would succeed. It is worth understanding that a ‘beneficial interest’ is not automatically achieved by moving into someone’s house even if that person has undertaken work and spent money on the property; an agreement has to exist.
If a person succeeds in proving a ‘beneficial interest’ agreement, then they have to establish ‘detriment’- that’s to say the provision of evidence that they have carried out works on the property. However, this can be countered by the property’s legal owner by them showing that person was living rent-free and making no financial contributions to the mortgage and related utility bills. This means that the person has to successfully win with both proof of ‘beneficial interest’ and ‘detriment’ to win a share of your property; to fail either one aspect means that any such claim will fail.
Should a claim be successful, the court then moves to the next stage. This would be to ‘consider quantification;’ this is where a decision is made on the share of the property (its value) that the person is entitled to.
Caution should be applied to anyone considering making ‘beneficial interest’ claim. Such cases are very difficult to prove – particularly if there isn’t a legal, written agreement, signed by both individuals. Therefore the court process can be both protracted and costly, particularly if you lose.
A True Tail of Caution!
In a recent case, brought by an ex - unmarried spouse seeking to prove ‘beneficial interest,’ they lost facing not only the homeowners costs of £35,000, but also, their own legal bill, thought to be in the region of £60,000! What was particularly unfortunate, for this individual, was that prior to them embarking on a legal action, their ex and owner of the property had offered them a settlement of £40,000!
What we would always advise:
If you are unmarried and move into a home that your spouse owns, ensure that you establish a formal ‘beneficial interest’ agreement and keep records / details of all monies spent relating to the property.
If it’s a serious, long-term relationship, you should both consider having joint names on the title deeds. A cohabitation agreement would help to establish the degree of wealth / equity in the property that your partner has, prior to you moving in. This helps to save costly disputes should you split up in the future.
If it’s a serious long-term relationship and you don’t wish to get married, in conjunction with the above point 2, you should seriously consider ‘mirror wills.’ Without doing this, you could find yourself homeless, should your partner (the homeowner) suddenly die.
If a serious long-term relationship, you could consider marriage. You are looked upon more favourably (in the UK), in terms of the property, should you separate /divorce. Marriage also helps with your Inheritance Tax (IHT) liability on your estate. As a married couple, sharing a home / main residence, you would enjoy a joint IHT threshold of £1million!
For help with a relationship split and property issue OR for a cohabitation agreement, get in touch with RJS Family Law