Rights of a Cohabitant on Relationship Breakdown
When a relationship breaks down, what rights do either party have to the bricks and mortar that have been purchased during the relationship?
This is not as easy a question as you may think to answer because the law in the area is archaic and draconian, and indeed it can be particularly unfair depending upon your particular circumstances. To dispel a myth, there is no such thing as ‘Common-law husband and wife’ and, unfortunately as nearly all practitioners in this area will say unanimously, the breakdown of a co-habiting relationship is not dealt with or regulated in the same way as a formal marriage or civil partnership.
To explain, here is a brief example where a same-sex couple have finished a relationship:-
David and Nick decide to mutually end their relationship. During their 15 years together, they lived in a house which David had purchased as he finished University. David bought the property with a small deposit and a mortgage. The legal title of the property was also registered in David’s sole name. Nick moved in after David had been living in the property for 2 years. Nick and David set up a joint account into which they paid their respective salaries and which serviced the mortgage and the utility bills. The property increased in value as the property market soared. Equity built up as a result. To all intents and purposes they were living as they would had they formalised their relationship.
They adopted a child and David took a career break to look after the child. Nick meanwhile upped his payment into the joint account to cover the shortfall. The property was re-mortgaged to build an extension. Nick carried out most of the work himself but the mortgage remained in David’s name as Nick had mortgage problems when he was younger. The status quo with payments into the joint account continued even after the child went to school and David returned to work. Nick would also carry out DIY enhancements and was happy to do so as he believed that as he was in a long-term and solid relationship with David they would ultimately share in their joint endeavours.
When the relationship ended Nick wanted the property sold and for David to give him half of the equity in the property. David refused – he was the sole legal owner and the mortgage was in his name, furthermore he had the child and he wanted to stay living in ‘his’ house. He made an offer to Nick of a small capital sum which was all he could afford. Nick refused to leave the property.
What is Nick entitled to?
You may think that the circumstances above justifies Nick’s entitlement to half of the equity that he is looking for and if David cannot raise that, then the property should be sold to make that money available for Nick.
That unfortunately is not the case. Nick must seek to successfully argue that he has a beneficial interest in the property, as he has no legal interest upon which he can rely.
This however, is far from straight forward.
Nick has a substantial evidential burden to produce if he is successfully to argue he has a beneficial interest giving rise to a financial claim. The onus is on Nick to establish that the beneficial interest he seeks i.e. a 50% interest in the property, differs significantly from the legal position.
A further complicating factor for Nick is William. A child will always be a factor for consideration.
Therefore, Nick has an extremely difficult task ahead of him.
It is clear from this scenario that the law in this area needs considerable overhaul in order to bring it into line with the social change. Whilst less people are marrying, they are living together and the law presently, as can be seen, is inadequate.
Where cohabitation breaks down, there is no specific statutory regime for sharing the assets. This area of the law is extremely subjective with many judges interpreting the previous case law differently.
However, the landscape appears to be shifting, albeit extremely slowly.
In the case of Kernott & Jones in 2011, helpful judicial guidance was provided and now in a Scottish case of Gow v Grant, the UK Supreme Court allowed Mrs. Gow’s appeal affirming the Sheriff’s decision that Mrs. Gow had suffered an economic disadvantage as a result of the relationship breakdown. Essentially the Court agreed that the underlying principle of the Scottish Family Law Act was one of fairness.
There is still a very long way to go however, and anyone who is unsure of their ‘rights’ when a relationship breaks down must obtain legal advice so that they know where they stand.