Cohabitation


Couples who live together in committed relationships (cohabitants) often believe they have some form of legal status or protection. That belief is wholly wrong.

Despite what the general public still believe, there is no legal relationship in England and Wales of “common law” husband or wife. The same is true where same-sex couples are concerned.

The stark reality is that cohabitants who have not entered into a legally-recognised relationship – either marriage or Civil Partnerships – may have very few rights. It makes no difference that they may have lived together for many years. They still will not be entitled to the same protections that spouses or Civil Partners enjoy.

Terminology

Joint tenancy is a mechanism for two (or more) people to share an interest in the same property. The owners are called joint tenants. Each joint tenant shares equal ownership of the property – one joint tenant cannot have a larger ownership than another. A key concept in joint tenancies is the right of survivorship. This means that if any one of the joint tenants dies, the remainder of the property transfers automatically to the survivor/s. The transfer happens because of how the property is owned. It happens even if the joint tenant provides for something different to happen with his or her property in a Will.

Tenancy in common is a mechanism for two (or more) people to share an interest in the same property. The owners are called tenants in common. Tenancies in common differ from joint tenancies in two key ways:

  • tenants in common do not have to have equal ownership of the property. For example, one tenant in common can own 75% of the property, and the other the remaining 25%, and
  • no right of survivorship applies to tenancies in common. So, if a tenant in common dies, his or her share of the property passes under the terms of any Will, or on the intestacy rules.

Legal ownership refers to how the legal title to property is held. It may refer to land or other property for which an ownership document is generated (for example, a car, shares, a bank account). The person (or people) named on the ownership document are the legal owners.

Beneficial ownership refers to who is entitled to the ultimate use and benefit of property. Often, the legal and beneficial owners of property will be the same people. However, our legal system recognises that they need not always be. Property might be owned by one person but somebody else altogether may be entitled to use it, enjoy it and benefit from it. A good example of beneficial ownership is a trust arrangement: the trustee is the legal owner of the trust property, but it for the benefit of a beneficiary. The trustee (the legal owner) has a duty to use the property in a way that furthers the beneficiary’s (the beneficial owner) interests.

A declaration of trust is the name given to a document that sets out who is the beneficial owner of a property. If there is more than one beneficial owner, the declaration of trust will say whether the co-owners are tenants in common or joint tenants. If tenants in common, it will say what shares they each own. A declaration of trust should be in writing. There may be other formalities that must be observed, depending on the type of property owned.

Resulting and constructive trusts are legal concepts for deciding the beneficial owners of property where there is no declaration of trust. The rules on how and when a resulting or constructive trust arises are quite outdated and frequently poorly understood.

Intestacy occurs where a person dies without leaving a valid Will describing what should happen to their property. The person is said to have died intestate. There are rules that say how property should be divided when a person dies intestate.

Ownership of land

As can be seen from the terminology above, the concepts that apply to co-ownership of property may become complicated. This is not a problem for those who are married or in Civil Partnerships: courts dealing with the financial fallout from the breakdown of a marriage or Civil Partnership are not limited to simply ascertaining the legal and beneficial ownership of property. A court in those situations can actively adjust ownership to ensure a fair outcome.

This power of adjustment is not available in disputes between cohabitants. Cohabitants must instead look to the concepts identified to see whether they have a claim in relation to property.

Often, cohabitants’ most valuable asset will be the family home and other land they have bought together.

Where the land is in England and Wales, the first enquiry should be legal ownership. Is the property owned in joint names? If yes, is it owned as tenants in common or as joint tenants?

Beyond legal ownership, is there any declaration of trust? For properties bought after 1 April 1998, the transfer document (Form TR1) requires co-owners to describe the arrangement for beneficial ownership. This is a type of declaration of trust. If ownership is not dealt with on the Form TR1, there may be a separate document dealing with beneficial ownership. This may have been completed at the time the land was bought, or at some later date.

If there is a declaration of trust, then beneficial ownership is easy to establish. Unless there is something that might invalidate the declaration (such as fraud, duress or mistake), that is the start and end of the enquiry. The cohabitants will own the property in accordance with the declaration. A court will not allow cohabitants to go behind the beneficial ownership described in the declaration of trust.

If there is no declaration of trust, a dispute about land ownership between cohabitants will be resolved as follows:

  • the starting point is that beneficial ownership follows legal ownership. So, cohabitants who are tenants in common will be presumed to beneficially own the property in the same proportions as the legal ownership. Cohabitants who are joint tenants will be presumed to beneficially own the property in equal shares.
  • that starting point can be displaced by showing that the cohabitants had a different intention, either when they bought the land or which they arrived at later, about beneficial ownership;
  • the cohabitants’ common intention is to be deduced objectively from how they behaved: it was important to look to how each party interpreted and understood the intentions of the other because of their words and conduct;
  • in relationships where the common intention was clear, the court could impose either a resulting or constructive trust to give effect to that intention. This was the case even if it meant the beneficial ownership was different to the legal ownership;
  • in situations where either:
    • the cohabitants did not intend joint beneficial ownership of the land at the outset, or
    • had changed their original intention

but it was not possible to ascertain precisely enough their common intention about beneficial ownership, the court could decide what share was fair. The court would impose a resulting or constructive trust accordingly. In deciding, the court would have regard to the whole course of dealing between them in relation to the property.

Where land is owned outside of England and Wales, the situation becomes more complicated. The general rule is that, where there is a dispute about land, it should be settled in the country where the land is owned. But this in itself gives rise to problems. For example, many Continental legal systems do not recognise the concept of beneficial ownership. For them, there is only legal ownership. Some countries do not permit two people jointly to own property, and so it might be legally owned by one cohabitant only for this reason. Declarations of trust, if they exist at all, may be far less common in relation to land owned overseas.

Whether a cohabitant has any claim in relation to land bought abroad will depend on the legal system in the country where the land is owned. If a court in that country decided a cohabitant had no claim in relation to the land, an English court would not be entitled to review that decision, no matter how unfair it seemed. Nor could an English Judge give a cohabitant a greater share of property in this country by way of compensation.

The English court’s role in these cases is to establish beneficial ownership. Once established, the Judge is not entitled to alter the ownership. This remains the case even if fairness requires an adjustment. For example, if one cohabitant had assets that significantly exceeded their needs, whilst the other had only limited assets, a court here still could not tinker with how the land was owned to achieve a fairer outcome.

If one cohabitant owns land absolutely – both legally and beneficially – then the other cohabitant has no claim to it at all.

Ownership of other property

Common examples are bank and building society accounts, shares, vehicles, and endowment policies. Principles of joint tenancy and tenancy-in-common also apply to property other than land.

Declarations of trust are possible in relation to property other than land, but are uncommon.

The principles that apply to establish who beneficially owns land also apply to help resolve who beneficially owns other property. So:

  • a declaration of trust will almost always be conclusive;
  • where there is no declaration of trust, beneficial ownership is presumed to follow the legal title;
  • this presumption can be avoided if it is shown the cohabitants intended something different, either when the property was acquired, or subsequently. In such cases, beneficial ownership will follow the parties’ intentions, under a resulting or constructive trust. If those intentions were unclear, then the court could decide what share was fair, taking into account the whole course of dealing between the couple about the asset.

It will rarely be cost-effective to bring court proceedings to resolve questions of ownership to property other than land. In most cases, the expense of the proceedings will quickly outstrip the value of the property.

Where the property is outside of England and Wales, the issues described above in relation to disputes about land apply. The rules might be slightly more relaxed, depending on the type of property, so as to enable a court in this country to resolve a dispute about ownership.

As above, if one party owns property absolutely – both legally and beneficially – then the other has no claim to it at all.

Where cohabitants have joint debts, they are jointly and severally liable for them. This means that the person or organisation owed the money – the creditor – is entitled to go after either or both of them for repayment. The creditor can choose who it thinks it will be easier to get the money back from. It is then a question for the cohabitants to resolve between themselves whether one owes the other money for a joint debt repaid to a creditor.

Debts in the name of one cohabitant only will remain their responsibility after the end of the relationship.

Maintenance

Cohabitants have no right to be maintained by each other. It makes no difference that they might have lived together for many years. So, a cohabitant who separates will have no claim against his or her former partner to help meet living costs. There is no power to order maintenance to ensure a fair outcome, or to ensure a cohabitant is not left in dire need.

This compares starkly to the claims for maintenance that couples who have married or entered into a Civil Partnerships have, if their relationship ends.

What is said above about maintenance applies only to claims between cohabitants. Where there are children, maintenance claims for the children’s benefit will usually be possible. A cohabitant might benefit indirectly from such financial support. For example, there are some situations where the court will order one parent to provide a home for a child until the child is independent. This could provide the parent with whom the child lives – a former cohabitant – a place to live until the child is an adult. However, the former cohabitant will not own the property and would be required to leave it when the child no longer needs it as a home.

Claims in the event of death

One area where cohabitants enjoy some limited protection is in the event of the death of a partner. The rules about intestacy do not allow for a cohabitant to receive his or her partner’s property. However, they can make a claim for financial provision against the estate of a cohabitant who has died without making appropriate provision for his or her family and dependents.

Likewise in relation to fatal accidents: the Fatal Accidents Act 1976 entitles a cohabitant who has lived in the same household as the deceased for at least two years before the date of death to bring a claim.

In both cases, the cohabitation must be ongoing at the date of death. A former cohabitant would not be entitled to make a claim (unless he or she could show there was ongoing financial support being provided by the deceased).

As described above, special rules apply where cohabitants are joint tenants of land or property. On the death of one joint tenant, the survivor will automatically receive their share of the property. This happens even if the deceased is intestate or leaves a Will that claims to leave the jointly-owned asset to somebody else. This is because of the right of survivorship applies to take property owned as joint tenants out of the deceased’s estate.

How can we help?

  • Help you decide whether any property you own with your cohabitant should be held as joint tenants or as tenants-in-common;
  • Advise generally about the position on legal and beneficial ownership of any property you own with your cohabitant;
  • Identify any claims there might be between you and your cohabitant for maintenance and other financial provision for your children’s benefit;
  • Identify professionals abroad who can advise about how claims between cohabitants about property owned there would be resolved;
  • Advise about claims between you and your cohabitant in the event of the death of one of you;
  • Identify and direct you and your cohabitant to suitable dispute resolution resources to help resolve any issues;
  • Represent you in court proceedings about the legal and beneficial ownership of property you own with your cohabitant.

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