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What happens when cohabiting couples separate?

Helen Lafferty explains what happens when a cohabiting relationship breaks down and parties find themselves in an unprotected ‘grey area’

The Common Law Marriage Myth

Many cohabitating couples are surprised to discover that there is no such thing as a ‘common law marriage’ in this country. The myth that cohabiting couples share the same legal protections as married spouses, can have potentially devastating effects for parties who separate after a long period of time living together, particularly when their finances are so entwined. There have been calls for reform by family practitioners for years, arguing that protections afforded to married couples should be mirrored for their cohabiting counterparts, or at least some of them.

When a married couple divorce, if parties cannot agree the finances between themselves, the process is that the family courts can step in and apply principles of ‘equality’ and ‘fairness’ and ‘sharing’, and more often than not, prioritise meeting the parties’ ‘needs’ as well as those of their children. Family judges in England and Wales have wide discretion when it comes to deciding how assets can be divided upon divorce. The same cannot be said for cohabiting couples. The laws guiding judges in an unmarried relationship fall under ‘civil law’ rather than family legislation. The roots and principles applied in cohabitation cases are immersed within old land law, such as the Trusts of Land and Appointment of Trustees Act 1996 and the Law of Property Act 1925, or where there are children involved; legislation aimed at protecting the welfare of the child, such as the Children Act 1989.

How Assets Are Divided

The main asset for a cohabiting couple is usually the home a cohabiting couple share. Where there is a dispute as to the ownership of the property, and therefore the division of the net proceeds of sale on separation, parties will look to the trusts of land and appointment of Trustee’s act 1996. In a ‘TLATA’ case, in the absence of a cohabitation agreement or declaration of trust, the presumption is that the property is held in the way it is recorded (). A party would need to provide evidence that this is not how they intended to hold the property if they wished to contest it. There are a few ways a party could do this.

Firstly, if there was some forward-planning by the parties, a cohabitation agreement or a declaration of trust can be extremely helpful in demonstrating the parties’ intention to hold the property in differing shares. Unfortunately, not many couples moving in together consider this a necessity what with all of the other expenses involved. However, where there is a cohabitation agreement, parties are likely to save themselves a significant amount of money in legal fees in the event of a dispute later down the line.

Proving Equitable Interest In Property

Secondly, and particularly when the parties have been living in a property held in one party’s sole name, the party who is not on the property title could demonstrate that they hold what is known as an “equitable interest” in the property. This is difficult to prove and a party would usually need to show that they have contributed financially to the mortgage, or have spent money improving the property (eg. they have built an extension on the property with their own money, increasing its value). They could alternatively show that they have moved into the property to their own detriment and have also contributed financially.

Contrast this to the starting position in divorce cases where there is a presumption that during a long marriage parties have contributed equally (i.e. a stay-at-home parent is presumed to have equally contributed to the home as a working parent even if the property is in one parties sole name). Unmarried couples’ contributions are not afforded the same consideration.

One of the things that parties often do not consider is the position when one party moves out of the home that is jointly owned, and the time in between them vacating and the property being sold. Whether or not one of the parties is paying ‘occupational rent’ (rent to the other person who is excluded from the home), or paying towards the mortgage, could end up creating what is known as an “equitable account” and this could result in the balance of the proceeds of sale being distributed unevenly.

One of the ways cohabiting couples can resolve the issue on separation is by coming to an agreement between themselves. Provided the parties can speak to one another and come to a fair arrangement, this is by far the most cost effective way of dealing with the issues. Parties should always seek independent legal advice on the agreement and should seek a solicitor‘s help drafting a separation agreement to ensure that nothing is missed and one party does not renege on the agreement.

Alternative Methods of Dispute Resolution

Alternatively, parties can look at methods of dispute resolution, such as mediation or arbitration to help them reach an agreement. These are more cost effective ways of resolving matters than issuing court applications.

As a final resort, parties can seek remedy from the court. This is often the only effective method available if one party refuses to negotiate. It is, however, by far the most expensive option, and it carries with it a number of risks. For cohabiting couples, the application would be made to the civil rather than the family courts. The civil courts can, and will, make awards for costs against losing parties. It also can be very difficult to prove something is held in any way other than what is recorded. If you are unsure of your position, either when considering moving into a property with your partner, or on the breakdown of your relationship, we strongly recommend seeking legal advice as soon as possible.

It is imperative that unmarried separating couples understand that there is very little protection available to them, especially the financially weaker party.  It is important that parties in these circumstances also realise that their claims are only limited to properties, and not to individually held bank accounts or other assets held by their separating partner.

There are many campaigners amongst family lawyers for a change in the law to provide greater protection, in particular as the percentages of unmarried couples ever increases.  The law has a long way to go to give these families and sector of the community the protection they deserve.

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