Cohabiting but with a business together? Make sure a legal agreement sets out who owns what
If you’re an unmarried couple and own a business together, setting out in a legal agreement who owns what could make life a whole lot simpler if you split up.
A couple with an £8million property portfolio who did not do this ended up having to slog it out in court recently with all the stress, emotion and expense this entails.
The case made legal history as it was the first time that what’s known as a common intention doctrine – basically, when it’s proven that a couple have, at least at one time, intended for property to be shared between them – has been extended from a family home scenario to a commercial context.
Had this couple been married, the court would have had the authority to divide their assets fairly between them when they divorced. As they were not, it could only establish their existing property interests.
What happened in this unmarried couple property dispute?
Ms Oberman and Mr Collins had accrued 41 properties bought jointly, solely and in their company name, by the time their relationship broke down after 20 years and two children together.
They agreed to share 28 properties in both their names but could not agree on 12 properties purchased in Mr Collins’ sole name.
Ms Oberman sought a 50% interest in all the properties, including the 12 purchased in Mr Collins’ sole name, on the basis that she had relied on letters and emails between them which set out their common intention to own all the properties equally.
One email which Mr Collins sent his former partner read: “..as far as I am concerned this has all been purchased for the benefit of both of us irrespective of whether they have been purchased in my name, your name, joint names or in (the company’s name).”
How was this commercial property dispute between a former unmarried couple decided?
The High Court agreed with Ms Oberman that there was a single property portfolio in common ownership and that she and Mr Collins had equal shares.
It didn’t matter that some properties were in Mr Collins name, or Ms Oberman’s name or in joint names or in the company name.
In this way, the court declared that there was a ‘common intention constructive trust’ and that this could be extended beyond purely domestic situations – normally the family home – to their property portfolio.
How could this unmarried couple property dispute have been avoided?
Lengthy litigation could almost certainly have been prevented if the couple had taken out an express declaration of trust, detailing who owned what and in what shares, at the time of buying the properties involved.
This could have been included alongside a Cohabitation Agreement.
When there’s a business involved, specialist legal advice to adequately protect the property business interests of everyone involved with a legally binding written agreement is important to avoid costly disputes later.
Get in touch
Wards Solicitors is recommended in the Independent Legal 500 guide for 2023 for its outstanding professional service standards and high levels of expertise amongst its lawyers.
We are experts in the Trusts of Land and Appointment of Trustees Act (TOLATA) which gives courts certain powers to resolve property disputes between unmarried couples.
Our Family Law team can help in setting up a Cohabitation Agreement or Declaration of Trust. Our specialist team of disputes lawyers can also help if things go wrong and these are not in place, always aiming to avoid going to court if possible.
For more information, or to talk through your options, please contact one of our specialist property dispute lawyers: