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Establishing joint legal owner interest for cohabiting couples

This content applies to England

Rights that cohabitant joint owners have to occupy the home.

How each joint owner's interest can be established.

Where a cohabiting couple are joint owners, both partners have legal rights to occupy their home. Their right of occupation arises from property law.

Each joint owner's interest can be identified through the existence of:

  • an express declaration of interests
  • a resulting or implied trust, or
  • a constructive trust

If there is no express declaration of interests, or if it is not possible for the couple to come to an agreement about each party's interest at the time of the relationship breakdown, then either party can apply to the court for a declaration of the nature of the trust between them and the amount of each party's share in the property.

Express declaration of interests

The joint owners may have expressly agreed about how they intended to share the property when they purchased it. A statement to that effect is usually contained in the transfer document (ie form TR1). For example, if one of the joint owners has paid the deposit, both joint owners share the mortgage payments and they stated in the signed TR1 form when they bought the property that their intention was to 'hold the property jointly on trust for themselves as beneficial joint tenants', then the courts will assume that they hold the property in equally and will each be entitled to equal shares of the proceeds of sale.

An express declaration of interests cannot be displaced and the courts will always enforce it, as long as there is no evidence of mistake, fraud or undue influence.[1]

Resulting or implied trust

In the absence of a valid express declaration of interests, the courts will presume the creation of a resulting or implied trust from the actions and dealings of the parties. For example, in non domestic cases, if one of the joint owners pays the deposit to buy the property, both joint owners share the mortgage payments, and they have made no further agreement about their rights to the property, the court would be likely to conclude that there is a resulting or implied trust between them as tenants in common, holding the property in distinct shares because of their unequal contributions to the property. In the event of a dispute, it would be necessary to show a common intention that the joint owner who had paid the deposit was to hold a greater beneficial interest than the other partner.

Constructive trust

A constructive trust occurs where the court holds that the behaviour of the parties is such that the court will regard one party as a trustee for another. The most important form of constructive trust for cohabitants is the so-called 'common intention trust' which arises by operation of law where the parties agree that beneficial ownership should be held in a particular way but do not follow the formalities (eg they do not execute a written declaration of trust) and one of the parties suffers detriment in reliance on the agreement.

Three things will normally be necessary to establish such a constructive trust:[2]

  • there must have been a common intention that each joint owner would have a particular interest in the property
  • there must be evidence of express discussions giving rise to the common intention, and
  • the joint owner claiming the particular share must have acted to her/his detriment by relying on the intention that they would both have a beneficial interest.

The principles applicable to a constructive trust are the same whether the parties are in a relationship such as husband and wife, business associates or friends.[3]

For example, if one of the joint owners pays the deposit to buy the property, both joint owners share the mortgage payments, and the one who paid the deposit said that s/he wanted the other joint owner to consider that money hers/his just as much as it was the owner's who paid the deposit, the court might be likely to conclude that there was a constructive trust under which both joint owners would have an equal beneficial interest, despite their unequal contributions.

Presumption of ownership in equal shares

The House of Lords held that when resolving disputes in domestic cases (ie where the cohabitants jointly bought a property as their family home) about the beneficial interest of each joint owner, the starting point is a presumption that a property, jointly owned in law by the cohabitants, is beneficially owned in equal shares.[4] In such cases, the presumption arises because purchasing property in joint names indicates an emotional and economic commitment to a joint enterprise, and because of the practical difficulty of analysing respective contributions to the property over long periods of cohabitation.

This presumption can only be rebutted (displaced) if it can be shown that the joint tenants' common intention was in fact different, either when they purchased the property or at a later stage.[5] In such cases, the common intention of the joint tenants will be objectively deduced (inferred) from the conduct and dealings between them. Courts will take a range of matters into account and may consider matters such as the couple's financial arrangements generally and the division of their other assets. Financial contributions are relevant but other factors are also important. There is no exhaustive list of matters that the courts will consider as each case will turn on its own facts.

Where it is clear that the beneficial joint tenants had a different intention at the outset of their joint purchase, or changed their original intention over time, so no common intention as to their respective beneficial shares can be deduced by the court, then the court can impute to the joint tenants an intention that each of them is entitled to a fair and reasonable share as it thinks fit, again having regard to all circumstances of the case.[6] For more on this see What is joint ownership?

How the value of the home is split between joint legal owners

Once the nature of the trust between the joint owners and the share each holds in the property has been established, the value of the shares can be quantified related to the value of the property. The value of the respective shares should be decided when the property is sold or when one party buys out the other, not when the couple cease to live together.[7] If one party has stayed in the property and has spent money that has improved its value, then this may be taken into account.

What happens if one of the cohabiting joint owners dies

The effect of one joint owner dying depends on whether the owners are beneficial joint tenants or tenants in common. If they are beneficial joint tenants, then the surviving joint owner will automatically become the sole owner of the entire property. If they are tenants in common, then the share of the joint owner who has died passes to her/his estate. The beneficiary of the will or intestacy (if it is someone other than the surviving joint owner) would then be able to apply to the court for an order for sale under the Trusts of Land and Appointment of Trustees Act 1996.

See the page Long term occupation options for details of applying to court for an order for sale.

[1] Goodman v Gallant [1985] EWCA Civ 15.

[2] Lloyds Bank plc v Rosset [1990] UKHL 14; Crossley v Crossley [2005] EWCA Civ 1581; Insol Funding Ltd v (1) Cowlam (2) Cowey (3) Insol Funding Ltd [2017] EWHC 1822 (Ch).

[3] Gallarotti v Sebastianelli [2012] EWCA Civ 865.

[4] Stack v Dowden [2007] UKHL 17.

[5] Jones v Kernott [2011] UKSC 53.

[6] Jones v Kernott [2011] UKSC 53; Barnes v Phillips [2015] EWCA Civ 1056; Insol Funding Ltd v (1) Cowlam (2) Cowey (3) Insol Funding Ltd [2017] EWHC 1822 (Ch).

[7] Walker v Hall [1984] FLR 126; Turton v Turton (1987) 3 WLR 622.

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