Interest in Cohabitation?

Recently, a client of mine said that he “knew that after 6 months of living with his new partner, she would gain an interest in his property”.

I asked my client where he had heard this information and he told me that he had been speaking to a friend who had told him as much.

This is not the first time that I have had to put clients straight about their position on cohabitation and it is a mystery to me where these snippets of “advice” stem from but in short I informed my client that a cohabitee does not gain any automatic right or interest in property after a set period of time.

The key to a non-owning cohabitee seeking to claim any interest in a property lies in a 2 stage approach;

1)     The non-owning cohabitee proving a common intention of the parties to share the interest in the property

2)     Quantify their interest either by inference from their conduct or by imputing what the Court considers fair

This can be particularly complicated but the area of trusts is used to deal with hurdle 1 and in their boiled down states these are:

1.      Express Trusts – i.e. some evidence in writing of the parties’ intentions as regards interest in the property – quite unlikely in a situation where one party alone owns the property

2.      Constructive Trusts – i.e. where the non-owning cohabitee shows that there was a common intention that they have an interest in the property (either through their conduct or that there was some agreement between the parties) and that they had relied on that intention to their detriment

3.      Resulting Trusts – i.e. the non-owning cohabitee made some contribution to the purchase price of the property that they intended would gain them some interest in the property

Trust arguments are complicated and disputes between cohabitees can be costly. The best piece of advice to any client of mine with such issues would be to carefully consider with your new partner any financial contributions that they make towards the purchase or any property, mortgage payments or any outgoings/renovations/extensions on the property and make a clear record of what payments are for and whether it is intended at all that these payments will mean that the new partner has any interest in the property and, if so, how much.

Review any financial arrangements relatively frequently and certainly if they are to change at all to make sure that your agreement is up to date and good evidence.

Thinking about these issues at the outset makes it much easier to resolve matters if the relationship fails.