A Supreme Court judgement passed in 2011 could affect thousands of couples who own property together. It’s a complicated area but it’s worth being aware of.
What the court ruling means
What the judges said in this case – called Kernott v Jones – overturned a previous Appeal Court ruling. The basic facts of the case brought by Patricia Jones and Leonard Kernott are:
1. Patricia Jones paid the deposit when she bought the house with her then boyfriend in 1985.
2. She also paid the mortgage while they lived together, although she received £100 a week from her partner towards household expenses. They also took out a small joint loan to pay for some improvements.
3. When the couple split up in 1993, she supported their children on her own, making no application to the CSA and receiving no offer of maintenance from her ex partner.
4. From 1993 Leonard Kernott made no contribution towards the mortgage.
5. In 2006 a county court said the property’s value should be divided unequally. It stated that Patricia Jones should be entitled to 90% of the proceeds of the sale and that Leonard Kernott should receive 10%. The Supreme Court decision upheld that division.
SAVVY TIP: Having read the judgement, what seems to be important is the fact that the couple cashed in a life insurance policy in 1995, which gave Mr Kernott the means to buy his own property. The judges said that this was evidence of Mr Kernott’s intention to ‘crystallise his interest’ in the property they’d lived in.
Why this judgement is important
The Supreme Court judgement is important because it went against the law that applies to couples who live together but who aren’t married. Alison Hawes, a partner and family law specialist at Irwin Mitchell, said: “The bottom line is that couples should not assume that the legal pieces of paper that show co-ownership of a property are the end of the story.” She said that if one partner moves out and stops paying the mortgage the court can adjust the share of the property each of them owns.
What this judgement doesn’t mean
The Supreme Court ruling doesn’t necessarily mean that couples who own property jointly but then split up will be able to divide the property differently to the way it’s legally owned just by going to court. In the case of Kernott v Jones, there was a lot of documentation that made it easier for the judges to find out what the couple’s intention had been, says Alison Hawes of Irwin Mitchell. “I’d advise couples to check their documentation relation to property to make sure that it says what you want it to say. It’s far better than relying on judges trying to reconstruct what’s happened after the event.”
1. Checking documentation. If you can’t remember how you own your property (whether it’s as joint tenants or tenants in common), check the Land Registry. If you own as tenants in common but don’t have a declaration of trust, it’s assumed that you own the property 50:50.
2. Having a declaration of trust drawn up. This spells out how you own your property between you. It can specify the percentage you each own and whether that percentage remains the same if, for example, one of you is made redundant.
Gillian Bishop of Family Law in Partnership recommends drawing up a cohabitation or ‘living together’ agreement. This can set out how you own others assets (not just your property) and is a useful record of intent if you were to split up.
What the law says
The starting point of the law in England, Wales and Northern Ireland is that it doesn’t give any rights to couples just because they live together (if you want more information about this, read my article called your rights if you live together elsewhere in this section).
When you split up: how the property is divided has traditionally depended entirely on what you did when you bought it. If you own a property between you as joint tenants (called ‘joint ownership without a survivorship clause’ in Scotland) it’s normally split 50:50. If you own your property as tenants in common, the presumption is that it’s owned 50:50 unless you have a document called a ‘deed of trust’ that states that you have unequal shares.
SAVVY TIP: This judgement says that the way a property should be divided when a cohabiting couple break up can be different to what’s on the legal document, if there’s evidence of the couple’s intention.
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