More and more couples are now choosing to live together as opposed to getting married or entering a civil partnership. Many of those couples who live together (cohabitants) often mistakenly believe they have some form of legal status or protection after a certain period living together, like those of married couples or civil partners. That belief is unfortunately wrong, however, as sadly there is currently no legal status England and Wales afforded to “common law” husbands or wives. This is the same for those in same-sex partnerships.
The harsh reality is that if cohabitants wish to pursue financial claims on separation, they will find they have few rights, irrespective of the length of time they have lived together and will likely need to rely upon a jumble of legislation to achieve a resolution. Many couples do not realise this until it is too late. Whilst it is not possible to acquire the same rights as married couples, there are, however, steps that can be taken and we at DTM can provide you with specialist advice in this area.
During the relationship
If you have or are planning to purchase a property together, it will likely be one of if not the biggest asset you own. As such, it is important to determine whose name the property will be in, the value of each party’s contribution and how this is reflected.
You may wish to consider entering into a Cohabitation Agreement, whether you are considering cohabiting or are already doing so. It can also be updated if there is a change of circumstances such as having children or buying a new property.
A co-habitation agreement is an agreement, or contract, drawn up by cohabiting couples which can set out how assets are owned and any practical arrangements, both during the relationship and in the event of a separation. They can also be as detailed or as straight forward as you wish.
A Cohabitation Agreement can be tailored to your individual needs and circumstances but often can include arrangements for during the relationship such as:
- Who owns what at the outset of the relationship;
- How any property acquired during the relationship will be treated; and
- Any financial obligations and who is to pay what.
It can also provide a framework for what will happen if the relationship breaks down in that it might include:
- Who is to remain in the property until it is sold and within what time frame should the other party vacate the property;
- How agreement is to be reached how equity in property will be divided be that on sale or if the property is to be transferred into one party’s name to include payment of any tax liabilities;
- provide for maintenance payments; and
- Specify who is to pay the mortgage and outgoings pending sale/transfer and also any joint debts.
It may seem unnecessary and rather unromantic to have an agreement whilst a relationship is going strong and indeed, hopefully any such agreement once competed can be placed in a drawer and forgotten about but equally, in the event of a relationship breakdown, having an agreement in place can help reduce tension and uncertainty at an already difficult time and help resolve issues swiftly.
As highlighted at the outset, married and unmarried couples do not have the same rights and sadly there is no corresponding legislation to provide for dividing assets as there is on divorce. Instead, each asset in dispute would have to be dealt with separately by using a hotch-potch of trusts and property law.
While the family set-up may be very similar to those seen in a divorce or civil partnership dissolution case, the relevant law and procedures are not. We at DTM have a wide range of experience dealing with issues for co-habitees.
Cohabitation disputes can often be fairly straightforward. This would likely be where a property is owned jointly, and the ownership documentation is clear on this. It therefore follows how the equity should be divided.
Where the ownership is unclear, however, and there is a dispute as to the intentions of the parties, this becomes much more complex and may require the collation and analysis of significant evidence.
The majority of disputes can be resolved by negotiation or through some other form of alternative dispute resolution.
If couples are able to reach an agreement, we would recommend entering into a Separation Agreement. This can set out the financial decisions you have reached provides evidence of such if they were to come under attack in the future.
Like a co-habitation agreement, a separation agreement can also deal with arrangements for any property, particularly pending any sale or transfer along with how any disagreement on valuations and tax issues are to be dealt with. Separating couples can also include any financial provision to one another and also the arrangements and financial provision for any children.
Whilst a separation agreement is not legally binding in that it is not a Court Order, it is still a formal legal document that, if properly drafted, can give rise to contractual rights providing it has been entered into voluntarily with the benefit of legal advice, there has been disclosure of relevant financial circumstances and that the terms of fair.
Where agreement cannot be reached, however, and the involvement of the court is required, we can assist in instigating or defending an application on your behalf. These proceedings can be started under the Trust of Land and Appointment of Trustees Act 1996 (ToLATA).
This Act gives the Court powers to make decisions on:
- Ownership of a property
- Who can remain in the property and/or whether it should be sold.
Claims can be made even if you’re not named on the legal title to the property.
Proving the extent of someone’s financial interest in a property will often involve very technical legal arguments and can become extremely costly so it’s important that you get expert advice from the outset.
DTM Legal has vast experience in dealing with such TOLATA claims and resolving them without the need to take each matter to Court. We are well able to deal with matters before the Court, however, should that be the only option. For further advice please contact Helen Davies or email email@example.com