Navigating property rights: challenges and solutions for cohabiting couples

Cohabitation has become increasingly prevalent in recent decades, with the number of unmarried cohabiting couples has more than doubled since the 1990s. This shift reflects changing social norms, economic factors and evolving attitudes towards relationships, marriage and civil partnership.

Many couples choose to live together before, or instead of, getting married or entering into a civil partnership. While this arrangement offers numerous benefits, it also presents unique challenges, particularly in the realm of property rights.

In this article, we delve into some of the complexities of property ownership for cohabiting couples and explore how the Trusts of Land and Appointment of Trustees Act 1996 or as often referred to, TOLATA, serves as a crucial tool for resolving arising disputes.

Cohabiting couples can hold property ownership in several ways:

• Sole ownership: one partner holds sole title to the property. This arrangement can leave the other partner very vulnerable, as the law presumes that the sole owner owns all the equity. It can be difficult to overcome this presumption.
• Joint tenancy: both partners share equal ownership of the property. In the event of one partner’s death, their share automatically passes to the surviving partner. However, joint tenancy may not accurately reflect each partner’s contributions or intentions.
• Tenancy in common: each partner holds a distinct share of the property, which may or may not be equal. This arrangement allows for greater flexibility in specifying ownership percentages and protecting individual investments. For example, they could agree to hold the property in 50:50 shares, or 70:30 or 90:10.

Each of these options come with their own advantages and disadvantages. For example, disputes often arise when a couple ticks the “joint tenants” box at panel 10 of the Transfer Form upon purchase of a property. Typically, after the relationship has broken down, one of the parties considers that they should get more than 50% of the equity (for example, because they paid most/ all the purchase price). However, as the “joint tenants” box was ticked on the Transfer Form, it is difficult to argue a different outcome than 50:50 shares in the equity. This is of course not the sole possible outcome – a declaration of joint tenancy can be set aside on the grounds of fraud, mistake, undue influence, or duress, for example. Each case should be treated uniquely, which is why TOLATA plays a crucial role in resolving property disputes between cohabiting couples.

For more information about circumstances in which the court may set aside a declaration of joint tenancy, see our previous article here.  

TOLATA gives the court certain powers to resolve disputes about the ownership of property/ land where there is more than one interested party.

A few key provisions of TOLATA include:

• Section 14: allows the court to declare the nature and extent of beneficial interests in property (i.e. how the equity should be split between the parties). It also allows the court to order the sale of a property, so that the sale proceeds can be split between the parties.
• Section 15: sets out factors that the court must consider when deciding whether to order a sale of the property, for example the welfare of any children who occupy the property.  

By bringing a claim under TOLATA, cohabiting couples can seek legal redress and clarity on property ownership disputes. However, TOLATA does not necessarily produce outcomes that are “fair”. As indicated above, if a couple have ticked the “joint tenants” box on the Transfer Form, then on the face of it they own the equity 50:50, even if one of them paid all the mortgage payments and purchase price. 

The majority of TOLATA claims settle before trial, for instance via mediation.

Conclusion

While married couples benefit from a comprehensive legal framework that protects them in the event of divorce, cohabiting couples must navigate a more complex and uncertain landscape.

If a dispute has already arisen regarding a co-owned property, TOLATA provides a mechanism for resolving the dispute. However, the outcome of TOLATA proceedings will not necessarily be “fair”. Birketts has called for urgent reform to cohabitation laws in England and Wales but it is unlikely that significant reform will take place in the near future.

By seeking legal advice at an early stage, unmarried couples can minimise the risk of future disputes and build a solid foundation for their shared future. It is often appropriate for a declaration of trust and/or a cohabitation agreement to be drawn up before a couple purchases a property in their joint names.  

Birketts’ TOLATA Team is well-placed to assist you with any queries concerning jointly owned property and related issues/ disputes.

For more information about the topics covered in this article, please contact Stephanie Butler or Gabriella Banham.