Unmarried but share property together? Be careful what you say in emails if your relationship ends.
The importance for cohabiting couples of having clear agreements about what happens to property if you split up has been underlined once again by a recent legal judgement.
The Court of Appeal, looking at the case of Jayne Hathway and Lee Hudson for the third time, decided that an email signature was enough for Lee to transfer his beneficial ownership in their home, Picnic House, to his former partner, even though he later changed his mind.
It clearly shows the weight that seemingly casual email communications on important legal matters can carry, particularly those written at a highly emotional time.
It also illustrates how simply typing your name at the bottom of an email can have far reaching consequences.
That’s why, especially as cohabiting couples don’t have the same legal rights as married couples, it’s so important to take specialist legal advice to protect your interests in the event of a separation, even if you think it will never happen to you.
What is the background to this cohabiting couple break-up case?
Jayne Hathway and Lee Hudson separated in 2009 two years after purchasing a family home, Picnic House, in joint names. They did this without a declaration of trust which would have confirmed what share of the property they each owned.
They had two sons but never married and although they both contributed to the mortgage, from their joint account, Mr. Hudson’s contributions were far more than Ms. Hathway’s contributions. They subsequently separated.
In 2011, the house was affected by an oil spill which significantly reduced its value. Mr. Hudson then described it as a bad asset and the parties agreed some financial terms, via email, which included Ms. Hathway keeping the house.
However, in October 2019, Mr. Hudson issued a claim for the house to be sold and the proceeds divided equally.
Although Ms. Hathway agreed to sell the house, she did not agree to split the proceeds equally. She contended that she was entitled to the whole proceeds of sale as she had relied on their email agreement to her detriment, including paying the mortgage in full from 2015.
On first appeal, the judge awarded the entire beneficial ownership of the house to Ms. Hathway but Mr. Hudson appealed against this decision.
Is an email agreement binding for unmarried couples with property?
The Court of Appeal has ruled in the second appeal that the answer can most certainly be yes.
In the couple’s two-year email exchange about financial arrangements, Mr. Hudson agreed the home they’d shared would be transferred to his former partner.
Towards the end of this period he emailed Ms. Hathway: “The liquid cash, you can have. Savings in the bank, other plans, take it all. Physical property, the contents of the house … again I don’t want it; keep it. Which leaves the house, a bad asset which is preventing all of us [from] .. moving on with our lives…. You know what, I want none of the proceeds of that either. Take it. Buy yourself somewhere you can afford to live…. As for a Will, if I were to die before this financial mess is sorted, Heidi [his wife] will have no rights to Picnic House … What I want is an end to it. So have everything that’s available to have now and when the house is sold.”
This was followed up by another email which read: “Under this arrangement, I’ve no interest whatsoever in the house, so whilst I will continue to contribute, I won’t do so forever.”
Both emails were signed off by Mr. Hudson typing his name ‘Lee’.
As far as the judge was concerned, these emails effectively acted as an intention by Mr. Hudson to release his equitable interest in the house to Ms. Hathway. The legal requirement for this to be documented was satisfied by his emails and signing off with his name, ‘Lee’, at the end amounted to the necessary signature.
As a result, he ruled that Ms. Hathway was entitled to 100% of Picnic House.
How can I safely buy property with a cohabiting partner?
When it comes to buying a property together, cohabiting couples currently don’t have the same automatic legal rights as married couples.
In Ms. Hathway and Mr. Hudson’s case, a Declaration of Trust could have saved them a lot of time, stress and expense.
A Declaration of Trust is a legally binding written document which records things like what share of the property each cohabitee owns, how the proceeds of sale will be divided if the property is sold as well as things like who is going to pay the mortgage and in what proportions.
It can be drawn up at any time, and not just at the time of a property purchase. In Ms. Hathway and Mr. Hudson’s case, a subsequent separation agreement documenting the asset distribution at the time of the split could have negated the need for expensive litigation.
- Click here to read what we have written recently on why it’s so important for you to obtain early advice.
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.
As well as providing advice on 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.
We are also experts in the Trusts of Land and Appointment of Trustees Act (TOLATA) which gives courts certain powers to resolve property disputes between unmarried couples.
For more information, or to talk through your options, please contact one of our specialist property dispute lawyers: