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My relationship has ended: what happens to the house?

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According to the Office for National Statistics, there are over 6m people cohabiting without being married or in civil partnerships, However, unlike spouses and civil partners, cohabitees have no automatic right to make a financial claim against their former partner upon separation. This means that a claim to the home will be decided by application of the law of property, and not matrimonial law.

What does this mean for me?

Step One – Establishing the Legal and Beneficial Owners

In simple terms, the Legal Owner is the person/people named as the ‘registered proprietor’ on the Title Register, the record of property ownership maintained by the Land Registry. The Beneficial Owner is the person/people entitled to the value of the property.

The starting point is that the Legal Owners are one and the same as the Beneficial Owners. This is all well and good if a property is registered in the joint names of both cohabitees, but can be problematic if there is only one Legal Owner, ie a Sole Proprietor.

In this situation, the first thing the other person has to do is establish that they have a beneficial interest in the property, even though they are not a registered proprietor. This will come down to what evidence they can present of an agreement, or common intention, that despite not being ‘on the deeds’, they are entitled to a share of the property. The evidence may be that they contributed towards the purchase price, or that they paid for improvements, but other circumstances can be taken into account.

Step Two – Establishing the Extent of Beneficial Ownership (or Who is Entitled to What Share?)

Once the Beneficial Owners have been determined, the next step is to establish the extent of their interest, ie what share they are entitled to.

If a property is in joint names, they will hold the property as either Joint Tenants or Tenants in Common. If they are Joint Tenants, the presumption is that they are equally entitled to the value of the property.

If they are Tenants in Common, there will often be an accompanying ‘declaration of trust’. In its simplest and clearest form, this is a statement of what share each person is entitled to. Sometimes the statement will be that those shares are equal, but in other cases it will be that Party A is entitled to more than Party B. In the absence of an express declaration of trust to the contrary, the presumption is that the value is to be split equally.

In either case, the presumption is ‘rebuttable’, and a party can put forward evidence of an agreement or common intention that the shares would be unequal.

If the property is only registered in one person’s name, the other person will have to produce evidence not only of an agreement or common intention that they were to have an interest, but of the extent of that interest. Again, evidence of contribution to the purchase or improvement of the property may be relevant.

What Happens Next?

Ideally, beneficial owners will be able to agree between them who is entitled to what share, and how the shares are to be realised. It is worth bearing in mind that neither party has the right to buy the other person’s share, or to be bought out.

If the parties cannot agree who is entitled to what, or how they realise their share, an application can be made to the court under the Trusts of Land and Appointment of Trustees Act 1996, for a declaration of the existence and extent of a person’s interest and/or for an order that property should be sold. In the event of a sale, the proceeds will be split in accordance with the beneficial interests determined by the court.

How Johnson Astills Can Help

Here at Johnson Astills, our Dispute Resolution experts can advise on your rights and your options and help to try and reach an agreement with a former partner that meets your objectives and avoids the need to involve the court.

If an amicable outcome is not possible, our experts can prepare and submit an application to the court and help you with it all the way through to the final hearing, and any further action that may be necessary.

Even if a claim needs to be issued, our team of experienced lawyers will always consider whether the dispute is suitable for Alternative Dispute Resolution, including mediation, so that the expense and stress of a final hearing can be avoided.

We offer Fixed Fee Initial Appointments, at which we will preliminary advice on your particular circumstances. So if you are wondering what your rights to a property may be following the breakdown of a relationship, give our friendly team a call today.