Today, 9th November 2011 the Supreme Court has issued its long-awaited decision on property rights of unmarried partners. The case provides clarity on issues affecting jointly-owned property following its previous decision in Stack-v-Dowden.
The court considered what should happen when a joint owner of a property abandons it. The case is most relevant to unmarried partners who own a home together with both names on the deeds.
Often, unmarried partners will not go into print on any agreement they reach as to who should own what proportion of the property. The normal default position is that they are joint owners – the property passes to one of them when the other dies. They might say that they are tenants in common in equal shares – each owning half the property.
Problems arise when the relationship breaks down. The court has to consider what should happen to the house and who should get what from it. The court then has to look at the whole course of dealings of the owners – including who has contributed what. The court will seek to infer or impute an intention on the owners from examining their conduct.
The court has been slow in the past to look into what has taken place during the relationship and cohabitation, in any great detail. Certainly, any difference in contributions to the purchase price is still likely to be disregarded if there is joint ownership.
But, after separation, a failure to keep up involvement in ownership of the property can have a marked impact on their legal interests.
In Kernott –v- Jones, Mr Kernott left the jointly-owned property in 1993 and bought another house for himself in 1996. He made no contributions towards the joint property after 1993 and the court decided that he should not profit from the increase in value since that date. His buying another property was taken as a demonstration that he had no interest in “availing himself of the beneficial ownership” of the property, having ignored it completely whilst he had his own property upon which he concentrated. He could not have afforded to pay for the two properties.
If Mr Kernott had taken action to realise his interest in the property before buying his new home, or had contributed to the mortgage after leaving, the outcome might well have been different. As it stands, his 50% share was reduced to 10%.
Separating unmarried couples should seek early advice about their property. Losing interest in maintaining and paying for a property may very well result in losing a legal interest in it. Departing partners need to take early action and not let sleeping dogs lie.