A RECENT ruling of the Supreme Court makes it clear that unmarried couples who buy a house together should have a written agreement setting out exactly who owns what.
In the case of Kernott v Jones, the couple bought a house in joint names in 1985. They separated in 1993 and Mr Kernott moved out, making no more contributions to the household.
He used the proceeds of an endowment policy in his name to buy a house in his own name. Ms Jones carried on living in the jointly owned house, paying all the mortgage payments and the costs of bringing up the couple’s children.
The general rule is that when a couple buy a property as joint owners, they will own a property in equal shares, unless they make a declaration to say otherwise.
Initially, in the County Court, the judge ruled Ms Jones had displaced the general rule and was entitled to a 90% share in the property.
However, this was overturned by the Court of Appeal, where the judges said that only a clear declaration could displace the general rule. They said that the lack of contribution by Mr Kernott was not enough to conclude that there was an agreement to change the ownership of shares in the property, and ruled each was still entitled to a 50% share.
Ms Jones appealed to the Supreme Court, which restored the original decision that she was entitled to a 90% share of the property.
The court said the general rule can be displaced by evidence that they both intended for one person to have a greater share of the property, at the time of purchase, or at a later date.
The strongest evidence is if the intention is recorded in writing, but the court said that it could also be inferred from the couple's conduct. Therefore the individuals will be entitled to whatever share the court considers fair, having regard to all of their dealings in relation to the property. The outcome of each case will depend upon its unique facts.
In many cases the court will have to reach a decision on sparse and conflicting evidence, and although the judges will strive to find fairness, if the picture is not clear the outcome will be uncertain.
The only safe option for an unmarried couple buying a property is to make things absolutely clear in a formal declaration of trust.
If the situation changes and one of them leaves the property, they should agree and record in writing any change in the shares.
For further information contact Nicola Matthews, partner at Hay & Kilner, on 0191 232 8345 or email nicola.matthews@hay-kilner.co.uk .
Nicola is a Law Society Family Law Panel Member, qualified Collaborative Lawyer and local chair of Resolution, an association of specialist family lawyers who adopt a firm yet conciliatory approach to family cases.