16.11.11: Who owns what when an unmarried couple splits up?
In the recent case of Jones v. Kernott the Supreme Court decided on the correct approach to calculating beneficial interests in property where the legal title is held in joint names by an unmarried couple but there is no express statement of how it is to be shared.
The case concerned the ownership of a house bought by Ms Jones and Mr Kernott in joint names in 1985 for £30,000. There was no declaration as to how the beneficial interest in the property was to be held. They lived together with their children in the property and, while cohabiting, the joint mortgage and upkeep were shared between them, although Ms Jones made a substantially larger financial contribution than Mr Kernott.
When the relationship deteriorated in 1993, Mr Kernott moved out and made no further contribution. The couple cashed a jointly held endowment policy which helped Mr Kernott put down a deposit on another property which he bought in his sole name with the aid of his own mortgage.
Years later, after the value of the properties had increased enormously in value, the court had to decide what, if any, interest the parties had in the property.
The Supreme Court described the principles applicable in cases where a family home is bought by a cohabiting couple in these circumstances but where there is no express declaration as to their beneficial interests.
The starting point is that, if the property is jointly owned, it is presumed that they share the beneficial interest equally. That presumption can be displaced by showing either that they had a different common intention when they acquired the property or that they later formed the common intention to change their respective shares.
The court must look for evidence of the couple's common intention. In the absence of direct evidence, such an intention might be inferred from the couple's conduct. If no clear intention can be inferred, the court will impute an intention so that the parties shall be entitled to a share which the court considers fair having regard to the whole course of dealing between them in relation to the property.
No two cases are the same. On the particular facts of this case, the court decided that, while the couple owned the beneficial interest equally until Mr Kernott moved out, that event and the conduct of the parties thereafter meant that Ms Jones was entitled at trial to 90% of the property and Mr Kernott to the balance.
By clearly documenting the extent of each party's interest in property at the time of purchase or when there is a later change of circumstances, extensive arguments and unnecessary costs may be avoided in the future.
For more information and advice on your own particular case please contact our Residential Property, Litigation and Dispute Resolution, Private Client or Family departments.
This article should not be taken as a full statement of the law. It should be regarded purely as guidance and is no substitute for professional advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be accepted by Wiseman Lee LLP. © Wiseman Lee LLP 2011.