Unmarried couples and property rights.

There are two aspects to the ownership of property; the legal title to property and the beneficial interests in it (the right to receive the profits or income from a property or the right to live in it). Both may be vested in the same people, but this is not always the case. 

Unmarried couples and property rights; joint tenants or tenants in common

Beneficial ownership in a property can be held as joint tenants or tenants in common.

Joint tenants have equal rights to the whole property.  If one joint tenant dies the whole of the property automatically passes by the rules of survivorship to the co-owning joint tenant. 

As tenants in common, each party holds their own separate and distinct share in the property and on death their share will not automatically pass to the surviving co-owner. Instead it passes in accordance with their Will, or if no Will under the Rules of Intestacy.

From 1 April 1998 the Land Registry form used to complete the transfer of a property (Form TR1) gives purchasers the option of one of the following declarations:

  1. To hold the property on trust for themselves as joint tenants;
  2. To hold the property on trust for themselves as tenants in common in equal shares; or
  3. To hold the property on trust for themselves as tenants in common in some other share.

If joint purchasers don’t want to hold the property in equal shares, they can insert the percentages in the TR1 Form or alternatively they can enter into a separate declaration of trust (also known as a deed of trust). Parties may also declare their beneficial interests in a cohabitation agreement.     

An express declaration of trust will be conclusive of the beneficial interests

In the absence of fraud, mistake, or undue influence an express declaration of trust will be conclusive of the beneficial interests. So, for an unmarried couple with an express declaration of trust declaring the beneficial interest as joint tenants they will equally be entitled to the profit (equity) or income from the property and equally have the right to live in it.

Tenants in common will be entitled to the profit or income from the property either equally if they hold the property as tenants in common in equal shares or if they declared it would be held in some other share they will be entitled to the profit or income in accordance with their declaration of trust.

What if there is no express declaration of trust?

Where there is no express declaration of trustjoint legal owners will be presumed to hold the beneficial ownership in equal shares unless it can be shown there was a contrary intention.

This situation is most likely to apply to purchases pre-1 April 1998 and before the introduction of Form TR1 requiring parties to declare their beneficial interest at the time of purchase.

Where a property has been purchased in joint names there is a presumption that the beneficial ownership is held jointly in equal shares. This presumption can be displaced if it can be shown that the parties had a different common intention at the time, they acquired the property or they later formed the common intention that their respective shares would change. 

If it is not possible to ascertain by direct evidence the extent of the interest the court may either infer the parties’ shared intentions in relation to the property in the light of their whole course of conduct in relation to it or impute an intention that the claimant is to have a fair beneficial share in the property.  The court will assess the quantum of the fair share having regard to the whole course of dealing between the parties in relation to the property.

What if only one party owns the property?

Where there is sole legal ownership, a claimant must show that there was an agreement that they should have a beneficial interest in the property and have acted to their detriment.

A sole legal owner will be presumed to be the sole beneficial owner unless the contrary can be shown by the non-owning claimant. A claimant will first need to show that there was an agreement that they should have a beneficial interest in the property, which may be expressed or inferred from conduct. If an agreement can be shown to have been made, then absent agreement about the extent of the interest the court may either infer the parties’ shared intentions in relation to the property by reference to their whole course of conduct in relation to it or impute an intention that the claimant is to have a fair beneficial share in the property.  

The standard of proof is the balance of probabilities.  The burden of proof rests on the party who seeks to show that the beneficial ownership is different from the legal ownership.

When quantifying the beneficial interests, the court will assess each party’s share as that which it considers fair, having regard to the whole course of dealing between them in relation to the property.

What is the difference between an inferred and an imputed intention?

Lord Neuberger in Stack v Dowden [2007] UKHL 17 gave the accepted definition of inferred and imputed intention as follows:

An inferred intention is one which is objectively deduced to be the subjective actual intention of the parties, in the light of their actions and statements.

An imputed intention is one which is attributed to the parties even though no such actual intention can be deduced from their actions and statements and even though they had no such intention.  Imputation involves concluding what the parties would have intended, whereas inference involves concluding what they did intend.

What  are the factors to consider in assessing the parties’ whole course of dealing?

In Stack v Dowden Lady Hale set out a non-exhaustive list of factors to assist in assessing the parties’ common intention :

  • Advice or discussions at the time of the transfer which cast light on the parties’ intentions at the time.
  • The reasons why the home was acquired in joint names.
  • The reasons why (if it is the case) the survivor was authorised to give a receipt for the capital monies.
  • The purpose for which the home was acquired.
  • The nature of the parties’ relationship.
  • Whether they had children for whom they both had responsibility to provide a home.
  • How the purchase was financed, both initially and subsequently.
  • How the parties arranged their finances, whether separately or together or both.
  • How they discharged the outgoings on the property and their other household expenses.

Domestic contributions, such as making family meals and providing for a child’s care and upbringing are also factors that the court will have regard to when establishing beneficial interests by way of a constructive trust (Graham-York v York and others [2015] EWCA Civ 72). The claimant was awarded a 25% beneficial interest in the home she had lived with her deceased former cohabitee where her financial contribution was insignificant, but she had made domestic contributions by cooking family meals and jointly bringing up the parties’ daughter during 33 years of cohabitation, 27 of which were at the property. The property was solely owned in the deceased’s sole name.

What adjustments can be made to take account of unmatched mortgage payments or other payments towards a property?

Once parties’ beneficial interests have been determined the court can be asked to adjust their share of the net sale proceeds to take account of unmatched mortgage or other payments such as maintenance or improvement costs towards the property.  This process used to be called ‘equitable accounting’.

The time from which these compensatory payments can be claimed will usually be from the date of separation, however, they might extend into the period of the relationship if this was the common intention of the parties.

Claims may also be made for costs in association with being absent from the property (known as occupation rent).  The court has the power to order a party in occupation of the property to make payments to the other co-owner(s) whose entitlement to occupy has been excluded or restricted.

What is proprietary estoppel?

Proprietary estoppel arises from the courts’ equitable jurisdiction to ‘adjust’ rights over property if the assertion of strict legal rights is found to be unconscionable.  It arises most commonly where a property owner encourages another to act to their detriment in the belief that they will obtain an interest in the property. 

A claimant seeking to rely on proprietary estoppel must establish: –

  1. A representation made or assurance which encourages or allows the claimant to believe that they have or will have some right or benefit over the property;
  2. Reliance by the claimant on the representation or assurance;
  3. Some detriment incurred by the claimant as a consequence of that reliance;
  4. It would be unconscionable for the property owner to go back on their representation or assurance.

The detriment need not be financial, so long as it is something substantial. A claim for proprietary estoppel can be pleaded independently or in the alternative to a constructive trust. It can also constitute an exception to the general rule that an express declaration of trust is conclusive of the beneficial interest.

What property rights do engaged couples have?

Engaged couples may have additional remedies to claims under trust law and proprietary estoppel.    

Engaged couples can make an application under section 17 of the Married Women’s Property Act 1882 provided that no more than three years has elapsed since the agreement was broken off.   There may be an advantage to bringing a claim under section 17 as the definition of property is wider than simply land or buildings and it can also apply to property abroad.  If a respondent has disposed of an asset in respect of which a claimant has a valid claim the court can also order payment to the applicant to represent the value of their interest in that asset or order the transfer of an asset into which the original property can be traced.

Section 37 of the Matrimonial Proceedings and Property Act 1970 (MPPA 1970) is also available to an engaged couple and can be used where a party has made a substantial contribution in money or money’s worth to the improvement of real or personal property, whether or not that person has a beneficial interest in the property.  Property under section 37 is again given a wider definition that simply land and buildings and subject to any agreement to the contrary, there is the advantage of an automatic presumption of an interest compared with having to establish the tests under trust law principles. 

Unmarried couples and property rights; conclusion

For unmarried couples, the law governing the determination of  property rights is a complex area of law.  If you are in a cohabiting relationship, you should review the legal and beneficial interests in your property to ensure any previous declarations and agreements still reflect your common intention. 

Cohabitation agreements enable you to make financial and practical arrangements and can also provide financial provision for one or another or your children in a way that would not be required by law.  They can also ensure that the interests of you and your wider family are safeguarded, particularly if family businesses, trusts or inherited assets or family gifts are involved. 

The team at Watson Morris Family Law specialise in all types of family law, including unmarried couples and property rights. We can help you determine your property rights and help you negotiate a settlement agreement. For a no obligation initial free appointment to discuss how we can help please contact us.  

Written by Caroline Watson

April 4, 2023

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