The last census in England and Wales identified a slump in the number of couples deciding to get married. When compared to 1996, 1.5 million more of us now opt for informal partnerships over traditional vows and in 2021, 22% of couples who lived together were cohabiting rather than married or in a civil partnership. It is a common misapprehension that living with your partner forms a “common law marriage”, a concept that has not existed since 1753.
So if two people have lived together but have not “tied the knot”,
- what right does one party have over the property of the other?
- what if one party or their relative pays the full purchase deposit, but the other contributes to the mortgage and maintenance?
- what if one party owned the property before the relationship started or their company owns it?
The default position
Property law has been slow to react to the cultural shift with the default position being that none of the property rights available to married couples are available to cohabitees, regardless of the length of the relationship and any periods of cohabitation. This means that legal ownership is not affected if the relationship fails.
Can TOLATA step in?
The Trusts of Land and Appointment of Trustees Act 1996 (commonly referred to as TOLATA) gives the Court power to resolve disputes about the ownership of property where there is more than one interested party. If someone believes that they have an interest in a property or have contributed towards the upkeep of the property and they are being treated unfairly, they may be able to commence a claim under section 14 of TOLATA even if their name is not on the legal title of the property or even their partner’s name in the event that the property is owned by a company or one partner’s parent(s).
If the application is successful the Court can use TOLATA to impose a “trust” over the property and find that the person whose name is on the legal title is in fact holding the property or a share in it on behalf of another person. This can arise when both individuals have made a financial contribution to the purchase price or upkeep of a property or if there is an agreement or understanding between the parties that they share the property. The Court can resolve the dispute by determining the extent of each party’s ownership, granting one party the right to occupy the property or issuing an order for sale declaring the beneficial entitlement (interest in the property) of each co-habitee.
What if we were engaged?
This could potentially make a real difference. When a husband and wife separate either party can apply to the High Court or the Family Court to settle disputes arising. When a couple terminate their agreement to marry, property in which either or both have had a beneficial interest during the engagement may be subject to the same rules as determine the rights of husbands and wives in equivalent circumstances. We are well experienced in advising on the parties’ respective rights and remedies arising in such circumstances.
How to defend a TOLATA Claim?
The most effective defence for a TOLATA claim is to prevent one from arising by taking pre-emptive steps. Property owners should ensure that they fully document their intentions with regard to the property and keep a record of any finances that the other party has contributed to the property with details of whether these sums were given as a gift or on a conditional basis or in reality as rent.
As mortgage rates rise and the cost-of-living crisis continues to squeeze couples, even more may opt to live together without paying for a wedding and without the arrangement being formalised. This is a complex area of law where early professional advice is a good investment in protecting assets or ensuring that financial contributions are properly recognised.
If you believe that you have a claim to a property in which you previously cohabited with your partner or are facing a claim to defeat your legal interest please do not hesitate to contact partner Shams Rahman or any member of the Property and Trusts Litigation team.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.