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Unmarried couples property rights.

May 31, 2012

The Supreme Court has delivered its judgment in the unmarried couples property rights case of Jones v Kernott 2011 uksc 53 .The couple purchased the property in joint names back in 1985. They owned the house jointly and equally. Ms Jones (J) paid the deposit whilst they lived together Mr Kernott (K) paid her an allowance, paid her mortgage and household expenses.K had also undertook to do work on the property which included building an extension which is estimated to have added 50% to the value of the property.

The couple split in 1993. K moved out of the property, J remained so she carried on paying the mortgage. J sold a life policy that was given to K to enable him to have a deposit to enable him to purchase his own property. Thirteen years after the original purchase Mr. Kernott then claimed a half share of the property.

In the Supreme Court Lady Hale stated that the cause and intention after the couple had separated changed, K had the cash from the life insurance policy to enable him to buy the property and the inference to be drawn from that was his interest crystallised at that point, he would have the gain in the value of his own property Ms Jones, would have the benefit of the gain in the original property.

Prior to this case the Court had made their decisions in unmarried couples property rights disputes solely upon what they deemed the parties common intention was as to their shares of the property. The Supreme Court has changed the position where there is a jointly owned property in dispute and the non marital relationship breaks down.

The principle is that where people purchase a family home in their joint names the presumption is that they intend to own the property jointly in equity also.

The presumption arises because

  • purchasing property in joint names indicates an “emotional and economic commitment to a joint enterprise” and
  • the practical difficulty of analysing respective contributions to the property over long periods of cohabitation

This presumption can be rebutted that it was not or ceased to be the common intention. That may be shown where the parties didn’t share financial resources say had separate bank accounts or an imputation can be inferred from the dealings of the parties by the court.

If it can’t be inferred by way of a common intention then the the court will now impute an intention which they may never have had. The new Fairness principle

The following principles apply:

  • the starting point where a family home is bought in joint names they own the property as joint tenants in law and equity;
  • that presumption can be displaced by evidence that their common intention was, different, either when purchasing the home or later;
  • common intention is to be objectively deduced (inferred) from the conduct and dealings between the parties;
  • where it is clear they had a different intention at the outset or had changed their original intention, but it is not possible to infer an actual intention as to their respective shares, then the court is entitled to impute an intention that each is entitled to the share which the court considers fair having regard to the whole course of dealing between them in relation to the property; and
  • each case will turn on its own facts; financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended or fair .

The Supreme Court awarded Mr. Kernott only 10%. The decision overturned the Court of Appeal decision and substituted the County Court decision of 2008.

The Judges are intervening to provide fairness in such a situation because of Parliaments failure to reform the law. The Law Commission produced a report as to the reform of this area which the Government failed to implement.

The weaker party financially in a relationship which breaks down may now suffer because the courts will not make decisions as they would in matrimonial proceedings. To be on the safe side parties should make sure they have a simple Declaration of Trust which explains how they wish to own the property and a Living Together Agreement which shows what their intentions are. If there is a change in their circumstances such as when one party is made redundant and cannot pay the mortgage then a review of the arrangement at that point needs to take place.

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Updated May 2012