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Supreme Court's Judgment Over Property Owned by Unmarried Couple

The difficulties faced by cohabiting couples when they buy a home together, and how they determine their respective shares in the property when the relationship breaks down, have been highlighted in a recent case.

The court held that where cohabitees purchased a property in joint names to provide a home for themselves and their family, but without any express declaration of their beneficial interests, the starting point is that the legal and beneficial interests are held jointly. This presumption can be rebutted by showing the parties had a different common intention at the outset or that they later formed the common intention that their shares in the property would be changed.

In Jones v Kernott the Supreme Court inferred a common intention from the parties conduct. Some eight years after buying the property together the relationship broke down and Mr Kernott moved out. He made no further contributions towards the mortgage or other outgoings, two years later the property was placed on the market for sale but a sale was not achieved. They decided to take the property off the market and cash in an endowment policy so that Mr Kernott could use his half share to buy somewhere else to live. The court determined that this sequence of events amounted to a “common intention” such that Mr Kernot’s interest in the property was to diminish from 50% to 10%. The court awarded Miss Jones a 90% interest in the property. The court inferred such common intention from the parties’ conduct, when there was no evidence that they had ever given this aspect of the matter any thought.

This case highlights the dangers and uncertainty of litigating over such matters. When unmarried couples acquire an interest in property they must be properly and carefully advised at the outset both in relation to the preparation of a deed of trust, to expressly determine the shares of each party and also a cohabitation agreement to determine and regularise their financial arrangements. This applies whenever a property is owned by more than one party, for example, when parents and adult children buy a property together.

Contact the Lanyon Bowdler Dispute Resolution or Family teams on 01743 280280.