Thinking about buying a house with your partner? Or perhaps you’re considering purchasing property with a friend or family member? Alternatively, you might be planning to move in with someone who already owns a property.
Cohabitation is a popular choice for many. But, before you leap, it’s crucial to understand the legal implications of property ownership, and what can happen if things go wrong.
Contrary to widespread belief, cohabitants do not have the same legal rights as their married counterparts (for further information please see our insight, What Are Your Rights if You Cohabit With Your Partner?. Similarly, those who purchase property with friends and family are not protected to the same degree as if there was a marriage or civil partnership.
Joint Tenants vs Tenants in Common
When considering cohabitation and property ownership, it is fundamental that you understand the difference between holding property as Joint Tenants and as Tenants in Common. This is because they impact your ownership position if the relationship breaks down:
- Joint Tenancy implies equal ownership: where both partners have an undivided share in the property, and if one partner dies their share automatically transfers to the other.
- Tenancy in Common allows for distinct ownership shares which can be inherited according to the owners’ wills.
If you are moving in with someone who already owns a property then, in law, the legal owner of the property will be able to sell it without your agreement until such time as you both agree that you should be registered as a legal owner at the Land Registry. This is a particularly important point if you have invested money into the property or have been led to believe you will have some financial interest in it.
Relationship Breakdown
In the unfortunate event of a relationship breakdown, cohabitants do not have the same legal framework for property division as married couples.
Instead, the Court has the jurisdiction to resolve disputes about property ownership under the Trusts of Land and Appointment of Trustees Act 1996 (‘TLATA’). TLATA can also be used in respect of other relationships where parties have an interest in the property, such as friends and relatives, or where you have put money into the property with an expectation that you will get it back, or acquire a share of it.
Put simply, the Court can consider factors such as your financial contributions, intentions, the welfare of any dependents, and the parties' conduct, before making orders related to property interest and potential sales.
Most property disputes arise where a property is solely owned by one cohabitant (or a former cohabitant), or the division of the equity between two joint tenants is disputed because one party has put more in than the other and the official documents do not adequately record this.
In these circumstances, two main types of applications can be made under TOLATA to resolve these disputes:
- Determination of Ownership: This involves seeking a court order to determine the extent and nature of a party’s ownership interest in a property. This clarifies shares and rights each party holds in the property where this may be contested by either party.
- Sale of Property: A party can apply for an order to sell the property and distribute the proceeds among the co-owners. This can be a solution where parties cannot agree on the management or use of the property but where they have determined each party’s interest in the property.
Where there are children in the relationship, additional protections may be afforded to the parties by making an application under the Children’s Act (“known as Schedule 1” applications). Schedule 1 provides the Court with additional powers as regards the property, usually until the children reach 18. However, Schedule 1 applications do not resolve the fundamental issue about ownership and so in some cases, a TLATA claim and a Schedule 1 application, should be made together.
How we can help
If you require any advice regarding Cohabitation and Property Ownership, then please do not hesitate to get in touch with our experienced team on 01392 207020.
- Co-author of this insight, Jack Matthews
