A Cautionary Tale for Cohabitees
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The case concerned Leonard Kernott and Patricia Jones, who jointly purchased a family home for £30,000 in 1985. Ms Jones paid the deposit of £6,000 and the couple shared the outgoings on the property.
In 1993 when the couple separated, it was agreed that Ms Jones would remain in the property, with their two children, and pay all of the outgoings, including the mortgage. It was also agreed, at the time of separation, that the parties had an equal interest in the property. Accordingly, Ms Jones made Mr Kernott an offer of £20,000, which represented 50 percent of the net equity in the property, which he refused. |
In 2008, after their son turned 18, Mr Kernott then decided to issue a County Court claim to realise his 50 percent in the property. When the case eventually came to trial the judge found in favour of Ms Jones and said that her contributions towards the purchase of the property and since separation, entitled her to more than 50 percent of the value of the property. Furthermore, the judge considered that Mr Kernott had only made a minimal financial contribution in support of their two children after the separation. Accordingly, the judge ordered Ms Jones’ interest in the property to be 90 percent and Mr Kernott’s to be 10 percent.
Mr Kernott appealed and lost before taking his case to the Court of Appeal, where the decision was overturned by a 2-1 majority. For Lord Justice Wall, the critical question was how much the parties had contributed over the years, “it is simply impossible for a court to analyse personal transactions between cohabitants, and the costs of doing so are likely to be disproportionate.”
Lord Justice Wall continued to say in his judgment, that 17 years had not altered the fact that when the parties separated, they had equal shares. Mr Kernott was therefore entitled to 50 percent of the available equity in the property and not just 10 percent, as had previously been ordered.
Lord Justice Jacob went further to say, “unmarried couples seldom enter into express agreements into what should happen to property should the relationship fail and often do not settle matters clearly when they do”.
If you purchase a property jointly, it is good practice to have an express agreement setting out how the equity in the property is divided. The law will presume that you have equal shares and this case demonstrates how difficult it is to rebut that presumption.
Many couples find it difficult to broach the subject of what will happen to their property in the event that their relationship ends. As Ms Jones commented, “You don’t go into buying a house thinking things aren’t going to work”.
However, couples wishing to avoid an acrimonious split would be wise to follow the advice of Lord Justice Wall and “address the unthinkable, namely that their relationship will break down and that they will fall out over what they do and do not own”.
For prospective homeowners, the rule is not just, “Buyer beware!” but “Cohabitee? Beware!”
For more information and advice on the status of cohabiting couples and the issues that can arise on the breakdown of a relationship, please contact the Family Department (Maeve O’Higgins, Michael Gregory and Vanessa Lyus) on +44 (0)20 7749 2700. |
