If you are married and split up, the family court has wide powers (if you divorce) to make decisions about your finances and to achieve “fairness”.
If you’re not married, there are no similar laws. This is increasingly important, as less people are getting married. So what happens?
We are mainly dealing with strict property law. There is no element of “fairness”. The court does not have the power to make financial orders just because it wants to. This can lead to harsh outcomes – people may have lived together for years only to find that when they split up, they are not entitled to anything.
Before I go any further, I must stress this is a complex area of law with a variety of different approaches, so rather than relying on anything in this brief article, please always take early legal advice about your financial circumstances.
If a couple buy a house together, and the paperwork specifies their shares (be it 50/50 or 60/40 or anything else) then that is usually binding. This means if you buy a house together and tick the box 50/50 then this is what you are each entitled to when the house is sold, even if one person paid all of the deposit, or paid all (or none) of the mortgage.
If the house is in the name of just one person, on the face of it, the other person may not be entitled to anything. This is one of those “harsh outcomes” I mentioned earlier. There’s no such thing as common law husband and wife, and the court can’t simply give a share to one person just because they want to.
Instead, we usually look for trust type claims. The rules derive from years and years of caselaw, and are frankly difficult to understand and not always consistent. The approach differs for family homes and other properties (such as investment properties or business properties). For family homes the approach is not based on whether you made a financial contribution (which is known as a resulting trust) but instead, is based on the court creating a trust based on what the two of you agreed, and this is known as a common intention constructive trust.
In one of the leading cases, Stack v Dowden, the court confirmed they aren’t looking to achieve fairness; but instead they are looking for a common intention you would both own a share of the property. They court can’t simply make it up. They apply a two step test:
- Was there an agreement (which could be express or inferred i.e. the court can decide there was an agreement based on how you managed your finances – but they can’t simply create one if there is no suggestion of an agreement).
- If so, the court can impute and assess the fair share.
The key issues is intention, rather than (say) financial contribution.
This is a complex area of law and there are other factors. Couples with children may have claims on their behalf (such as under schedule 1 of the Children Act). Engaged couples may have others claims, and the court can create other property interests known as estoppel.
The best advice is to sort things out early on, before there are problems, to make sure there are no claims later on.
Peter, June 2019