Unmarried Couples and Property

It is extremely common for an unmarried couple to buy a home together, securing a mortgage to do so. They may or may not contribute equally to the purchase price. But either way, any solicitor acting should ask them to agree now their respective interest in the property i.e. who gets what if they should split up or if someone should die. Ignoring these issues can create future problems.

Assuming that neither the Transfer nor any other written document contains an express declaration of trust, consider whether there is a provable express verbal agreement. This might, in certain circumstances, give rise to a 'constructive trust'.

If there is nothing written or verbal, consider the whole course of dealing between the parties in order to decide what shares were intended as at the date of purchase. Conduct subsequent to purchase may throw light on this.

For example, two people buy a property subject to mortgage and contribute equally to the purchase and repayment of the mortgage while they are together. Assume no express written or provable verbal agreement, conduct suggest that they are each entitled to half the equity now. This is the case even if one of them left the home many years ago and since then, has failed to contribute towards the mortgage, which is paid in full by the resident partner.

Equitable accounting

Having decided the division of equity consider equitable accounting. If one party pays the whole of the mortgage repayments due from both of them, the paying party will be able to claim from the non-paying partner his or her share of the mortgage i.e. one half of the mortgage repayments.

The courts used to treat only the repayment of capital as being the subject of equitable accounting. In such cases, payments of interest are set off against any claim for an occupational rent (see below). However, it now appears to be accepted that where an account is taken (so that the issue of occupational rent will be considered separately) the whole of the mortgage instalments can be brought into the account if both parties are liable to repay the mortgage.

Occupation rent

Traditionally each co-owner has a right to possession of the entire property and cannot be liable to pay for their occupation, merely because one of them occupies the whole. These days, however, where one co-owner is occupying the property to the exclusion of the other, for whatever purpose or by whatever means, then if it is necessary to do 'equity' between the parties an occupational rent should be paid.

 

Where the absent party is able to enjoy his or rights to occupy the property, but chooses not to do so voluntarily and is not excluded by any relevant factor, then no occupational rent will be payable.

The key question therefore will often be whether there has been an 'exclusion'. If one party has forcefully excluded the other, then this will point to an occupational rent being payable.

If one co-owner has left voluntarily, and would be welcome back, then normally an occupational rent will not be payable.

These are only guidelines. Each case must turn on its circumstances. An occupational rent is likely to be the relevant proportion of the market rent for the property, but the court may well be willing to treat the occupational rent as being offset by repayments of interest under the mortgage as above, especially where the amounts are likely to be similar.

If you require further advice, please do not hesitate to get in touch with the Kaslers Team by calling 0845 270 2511.

Related topics you may find useful:

Making a will
Unmarried couples - rights in English law
Deed of co-ownership
Buying property together
Equality

Call Michael Breeze on 07900 195 195 or call 0845 270 2511 to set up an appointment