Cohabitation

Cohabitation Agreements….are they a “must have” for cohabitants?

The recent Supreme Court case of Jones v Kernott has answered the important question of whether a Court can infer an agreement between an unmarried couple at the date of their separation.

The case involved a property dispute between a couple who bought a house in joint names in 1985 but separated in 1993. Miss Jones argued that she had a greater interest than her original 50% share, based on the fact that she had assumed sole responsibility for payment of the property’s outgoings and maintenance for many years since separation. Mr. Kernott argued that the parties’ original intentions were correct and each had a 50% interest to mirror the nature in which the property was held as joint tenants.

Following a careful analysis of the parties’ relationship and their dealings with the property following separation, the Supreme Court reinstated an earlier decision of the County Court and held that the intention of the parties as to their beneficial interest in the property should be taken at the time of their separation as circumstances had changed dramatically from their original agreement. Accordingly, the Court awarded Miss. Jones 90% and Mr. Kernott 10%.

The key principals to come from the Supreme Court judgment are as follows:

– There is a presumption that a property purchased by an unmarried couple in joint names is owned by the parties 50/50 as joint tenants in law and equity.

– This presumption can be rebutted if there is evidence to show a common intention between the parties that their respective shares should change. This common intention can be displayed either a) at the time of purchase or b) at a later date i.e. separation.

– The parties’ common intention is inferred from the parties conduct and dealings throughout the relationship and what the Court believe, based on an objective test, were the parties’ common intentions.

– If the Court cannot infer a common intention as to the actual shares each party should hold, an imputed intention can be determined based upon what is fair within the whole course of the parties’ dealings with the property.

– The Court needs to look at many factors to determine what is intended between the parties or ultimately look at what is fair, therefore allowing each case to be decided based upon its own individual facts.

Fundamentally, in the absence of any agreement or common intention between the parties, the Court can substitute a “fairer” division of the property if the parties conduct and dealings so permit.

The decision is set to have major influence upon the way in which unmarried cohabitants hold property and conduct their relationships, and creates a warning to those in this situation to ensure that their intentions are properly recorded both at the onset of their relationship and as matters change and develop throughout time.

In order to properly record their intentions, unmarried cohabitants should strongly consider entering into the following:

Declaration of Trust – this document records how a property is to be held by parties i.e. joint tenants or tenants in common and what beneficial shares each party holds.

Cohabitation Agreement – this document records the parties’ intentions in relation to their respective shares in the property as well as numerous additional factors such as liability for mortgage repayments and household utility bills, child care arrangements, provisions for relationship breakdown. Such a document can be tailored made to each individual couple’s relationship.

These documents will provide certainty for unmarried cohabitants and if properly executed and reviewed, will clearly show a common intention that can be relied upon should the relationship ultimately breakdown and thus prevent protracted and expensive Court litigation as experienced in Jones v. Kernott.

Blaser Mills operates a family law department in High Wycombe, Harrow, Rickmansworth and Staines. For further advice regarding cohabitation law or any other family law matters please email us at lcb@blasermills.co.uk or call us on 0845 604 2847.