As a family solicitor with over 20 years’ experience, it is a worrying fact that there continues to be a widespread acceptance of the myth that cohabiting couples are protected under the existence of a “common law marriage” which simply does not exist, says Emma van Bunnens of Mayo Wynne Baxter
Shakespeare Martineau, which is also part of the Ampa Group, shared the results of its findings having commissioned Censuswide to survey 504 people who were looking to buy their first or second home in the 12-month period January 2022 to January 2023. A huge 47% of those surveyed believed there to be such a thing as a Common Law spouse.
The choice of couples to live together prior to becoming married or entering into a civil partnership is increasingly popular. Unmarried couples do not share the same legal rights as those who are married or have entered into a civil partnership. Different legislation applies to cohabiting couples. Unfortunately, this frequently leaves separating cohabiting couples and families both legally and financially vulnerable. Cohabitees are treated in law very differently to couples seeking to divorce.
The issues of cohabitation come into effect when cohabiting couples decide to purchase a property together or, indeed, when one partner moves into a property owned by the other. It is important that when parties decide to purchase a property together, they have a frank discussion as to how the property is to be owned and how any financial contributions to the property are to be protected. In circumstances where one party may have made a capital contribution, for example, to the purchase price, they need to discuss how the couple are to make financial contributions to the property going forward.
Of those surveyed, 41% believed that if one of them is paying the utility bills relating to the property, that they automatically obtain a share (an interest) in the property.
This is not the case. If the property is owned in the sole name of one party, the other will only obtain an interest in the property if they contribute to the mortgage payments or pay for work undertaken to the property which increases its value. However, the legislation that deals with such matters is based on land law and how a potential beneficial interest is acquired on the basis of a trust. This is difficult to prove and can lead to lengthy, stressful, and potentially costly court proceedings. This can be avoided. There is no automatic entitlement to a share in property where parties cohabit, no matter how long they may cohabit for.
Joint ownership – two options
When purchasing a property, your conveyancing solicitors will request confirmation from you as to how you wish to own the property. There are two ways of owning a property jointly.
The first option is to own the property as joint tenants. This means you own the property equally. As joint tenants, you will automatically inherit your cohabitee’s share of the property if they were to die, regardless of what their Will might say.
Alternatively, you can own a property as ‘tenants in common’. The property will still be jointly owned but can be owned either in equal or unequal shares. Your Wills would then state who you wish to inherit your share of the property. It is crucial, therefore, that you make Wills should you choose to purchase a property in this way.
When purchasing a property, it is important to fully understand how you wish to own the property. If, for example, one cohabitee is contributing to the deposit – e.g. from an inheritance; a gift from parents or maybe finances from a previous divorce settlement, it may well be that they wish to protect that money.
If the property was to be sold in the future or if the relationship were ever to break down and the property be either transferred to one or other of the owners or if it were to be sold, then by owning the property as ‘tenants in common’, the cohabitees could enter into a Declaration of Trust which would set out the parties’ respective shares. Therefore any financial contribution to the purchase of the property could be protected.
Living together in a partner’s property
If a couple have decided to move in together and it has been agreed that one will move into a property solely owned by another, again it is vital that an agreement is reached as to ‘who pays what’.
It is important for the owner of the property to understand that if their partner contributes to the mortgage or house improvements, they could argue later that they have acquired what is known as a beneficial interest and therefore a share in the property.
To avoid any litigation or confusion later, the parties should consider entering into a legally binding Cohabitation Agreement setting out their financial arrangements. Whilst this may be an awkward conversation to have at the start, it can prevent many potential difficulties in years to come if the relationship breaks down.
What do you need to do?
Whether you intend to purchase a property jointly with your partner or plan to move into your partner’s property, it is crucial that you consider the financial arrangements of doing so to protect both parties. If purchasing a property, consider how the property is going to be owned and think about entering into a Declaration of Trust and a Cohabitation Agreement. If you are going to be moving into a partner’s property, you must consider entering into a Cohabitation Agreement.
At Mayo Wynne Baxter, we can advise you in relation to the above and help you decide the best way to protect your money and property.
Emma van Bunnens - email@example.com