Unmarried couples do not acquire the same legal rights as married couples, regardless of the length of their relationship or whether they have children together. When cohabiting couples separate, disputes over the former family home are determined by applying principles of property law. This approach can produce harsh and unexpected outcomes for claimants.

So, what happens upon separation? 

The Starting Point:

Equity follows the law. Accordingly, where one party has sole legal ownership of a property, the starting point is that they are also the sole beneficial owner. Likewise, where property is held in joint legal ownership, joint beneficial ownership is presumed (Jones v Kernott [2011] UKSC 53, at [16]–[17]).

However, this starting point can lead to harsh outcomes. In such circumstances, equity may intervene to mitigate that harshness.

Where One Party Holds Sole Legal Title: 

1. Starting point: equity follows the law. 

• Consider whether this presumption can be displaced by establishing a common intention constructive trust, applying a two-stage analysis:

• Establishment of an interest: this may be express or inferred from conduct; and 
• Extent of the interest: there is no automatic presumption of a 50/50 split. The court will seek evidence of the parties’ actual intention or infer intention from their conduct.

If it can be shown that the parties had a common intention other than a 100/0 split, but their precise shares cannot be ascertained, the court may impute an intention. In doing so, the court will consider what is fair having regard to the whole course of dealing between the parties in relation to the property.

Where the Property is Held in Joint Legal Names but the Beneficial Interest is Not Expressly Declared:

1. Starting point: equity follows the law, giving rise to a presumption of equal beneficial ownership.

• Consider whether this presumption can be displaced by evidence demonstrating an intention other than a 50/50 split:
• The court adopts a holistic approach, examining evidence of the parties’ actual intentions or inferring intention from their conduct; and 
• Where a common intention different from equal shares can be identified, but precise shares cannot be inferred, the court may impute an intention based on what is fair in light of the whole course of dealing.

Common Intention Constructive Trusts:

In both scenarios, where a party seeks to depart from the legal position, the court will focus on the parties’ common intention as to how the property was to be owned.

The leading authority is Stack v Dowden [2007] UKHL 17. The House of Lords considered the effect of a conveyance into joint names without an express declaration of beneficial interests and inferred a common intention that the beneficial shares were unequal, awarding Ms Dowden 65% of the proceeds of sale. This conclusion was based on, among other factors, Miss Dowden’s substantially greater financial contributions and the unusually strict separation of the parties’ finances.

In her leading judgment, Baroness Hale set out key principles, including that:

• a conveyance into joint names indicates both legal and beneficial joint tenancy unless the contrary is proved;
• the court must ascertain the parties’ shared intentions—actual, inferred or imputed—in light of their whole course of conduct in relation to the property; and
• the burden lies on the party asserting that the beneficial interests differ from the legal title, and to what extent.

These principles were further developed in Jones v Kernott [2011] UKSC 53. In that case, the Supreme Court ruled that one party was entitled to only 10% of the beneficial interest following separation, reflecting the fact that the property was no longer intended to serve as the family home. 

The Court confirmed, inter alia, that:

• the starting point for a family home purchased in joint names is joint legal and beneficial ownership;
• this presumption may be displaced by evidence of a different common intention, either at acquisition or subsequently;
• common intention is to be objectively deduced from the parties’ conduct and dealings;
• where a change in intention is clear but precise shares cannot be inferred, the court may impute an intention when one cannot be inferred that reflects what is fair, having regard to the whole course of dealing;
• each case turns on its own facts; and
• while financial contributions are relevant, they are only one of several factors the court may consider.

Proprietary Estoppel: 

An alternative route to acquiring an interest in property is through proprietary estoppel. This typically requires proof of:

• a representation or assurance;
• reasonable reliance on that assurance; and
• detriment suffered as a consequence of that reliance.

Avoiding the Problem: 

As ever, prevention is better than cure. Ideally, parties should receive clear advice at the point of conveyance as to how they intend the beneficial interest to be held, and that intention should be expressly recorded. This may be achieved by way of:

• an express declaration of trust;
• a contract; or
• a cohabitation (or “living together”) agreement.

Dunya Amini is currently undertaking her second six, if you would like to instruct Ms Amini, please contact her clerk on 0115 941 8851