Who-owns-what agree­ment vi­tal for those who split up

Yorkshire Post - Property - - NEWS -

UN­MAR­RIED cou­ples who buy a house to­gether must make sure they have a writ­ten agree­ment set­ting out ex­actly who owns what.

That is the ad­vice fol­low­ing a Court of Ap­peal rul­ing where a woman was forced to hand over half of a house to a for­mer part­ner, even though he had stopped con­tribut­ing when he moved out.

And fol­low­ing the out­come of le­gal ac­tion by the cou­ple, which reached the Court of Ap­peal (in the case of Ker­nott v Jones), a lead­ing judge is call­ing for a change in the law.

The cou­ple bought a house in joint names in 1985 and when they sep­a­rated in 1993, Mr Ker­nott moved out, cashed in the en­dow­ment pol­icy in his name which was in­tended to pay off his part of the mort­gage, and did not make any more con­tri­bu­tions to the house­hold. Ms Jones car­ried on liv­ing in the 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. But when the cou­ple ended up in court, at both County Court and High Court hear­ings, the judges ruled that Ms Jones had earned her­self a 90 per cent share in the prop­erty, ar­gu­ing that this dis­placed the gen­eral rule.

The case fi­nally ar­rived in the Court of Ap­peal, where the judges dis­agreed say­ing that only a clear dec­la­ra­tion could dis­place the gen­eral rule. The court said that the lack of con­tri­bu­tion by Mr Ker­nott was not enough to con­clude an agree­ment to change the own­er­ship shares in the prop­erty, rul­ing that the prop­erty still be­longs to the cou­ple equally, al­though one of the judges, Lord Jus­tice Ja­cob, dis­sented and called for the law to be clar­i­fied.

Vicky Hey­wood, prop­erty law spe­cial­ist with Hud­der­s­field­based Ea­ton Smith so­lic­i­tors says: “It may seem that the court went for cer­tainty over fair­ness, but in both this case and in the lead­ing case of Stack v Dowden, there were dis­sent­ing judg­ments. It shows that the courts are un­com­fort­able with this po­si­tion, but for the time be­ing the only safe op­tion for an un­mar­ried cou­ple buy­ing a prop­erty is to make things ab­so­lutely clear in a for­mal dec­la­ra­tion of trust.

“And if the sit­u­a­tion changes and one of them leaves the prop­erty, they need to agree and record any change in the shares.

“It is dif­fer­ent for mar­ried cou­ples be­cause the courts have wide pow­ers to re­dis­tribute prop­erty be­tween par­ties when they divorce; in con­trast, when an un­mar­ried cou­ple splits up, the job of the courts is to de­cide what each party owns, not how their prop­erty should be di­vided be­tween them.”

MINE­FIELD: Agree­ment about prop­erty are vi­tal for cou­ples.

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