It may be assumed that when a couple purchase a property jointly in equal shares, that is how ownership remains, but it isn‟t necessarily so.
On November 9th 2011 the Supreme Court upheld an appeal by Patricia Jones and ruled that Leonard Kernott was entitled to just 10 per cent of the former couple‟s jointly owned property.
The couple had separated in 1993 after living together for eight years, leaving Ms Jones to pay the mortgage, maintain the house and bring up their two children. The property was acquired in 1985 for £30,000. By 2008, its value had risen to £245,000. The couple had cashed in a joint insurance policy to assist Mr Kernott to purchase a property of his own.
So what does the Supreme Court‟s decision mean for cohabiting couples who own property together?
Put simply, if they are not married and their relationship later breaks down, it means a loss of certainty about who gets what. In Kernott v Jones, the property was owned 50:50 on paper, but the Supreme Court altered that ratio because evidence indicated that it was no longer the couples‟ intention to hold the property in equal shares.
The court decided on the basis of what they deemed to be „fair‟.
One of the judges who sat on the case said: “Where the intention as to the division of the property cannot be inferred, each is entitled to that share which the court considers fair. In considering the question of what is fair the court should have regard to the whole course of dealing between the parties.”
How can cohabiting couples try to avoid the legal difficulties which Ms Jones and Mr Kernott encountered following their separation?
Firstly, if you buy a property jointly with your partner and you do not want the presumption of 50:50 to apply, you need to instruct your solicitor to draft a Declaration of Trust which sets out how the beneficial interests in the property are to be held. It is also advisable to enter into a Cohabitation Agreement also known as a Living Together Agreement.
If you have already purchased a property jointly with your partner without a Declaration of Trust, and you do not want the presumption of 50:50 to apply, the good news is, it may not be too late - you can still enter into a Declaration of Trust assuming both parties agree.
If you own a property jointly with your partner and then separate, it may be advisable for you to enter into a Separation Agreement, particularly if like Ms Jones and Mr Kernott, you do not intend to sell the property at the time of separation.
If you would like further advice on this matter, please contact Valerie Cooper or Samantha Mabey on 01932 858833.