Recent Case highlights need for Cohabitation Agreements

This is a brief summary of an interesting court case decided recently concerning a claim by a former partner in relation to a dispute over a property following the breakdown of a relationship.

What was the case about?

The case hinged upon the extent to which the judge could infer the existence of an agreement or understanding from the way in which the partner who owned the property had conducted himself.

The couple (Ms Liden and Mr Burton) had lived for twelve years in the property.

Initially the property was in the names of Mr Burton and his then wife.

Following their divorce it was transferred into his sole name, and, as part of the settlement, a mortgage was secured on the property (and there was later borrowing). At the time of the transfer Ms Liden and Mr Burton were already living there.

The facts were disputed but the judge accepted that they were as follows:-

  • Mr Burton was worried that he might not be able to afford to keep the property after his divorce and Ms Liden agreed to help out.
  • Mr Burton told Ms Liden that the property was expensive to run and that they could only afford to live there if she made some payments.
  • On this basis she began the payments of £500 per month, which was half approximately of  her pension income.
  • Ms Liden was initially unaware of the mortgage and Mr Burton was rather vague in ghis explanation of how her money was being used.

Mr Burton assured Ms Liden that they would be together for the future, that this would be their home, and that he would look after her forever.  This induced her to make the payments. However, he had her sign a document that described her payments as “rent”. He argued that describing the payments that way prevented Ms Liden claiming an interest.

The Judge’s decision

The judge concluded that Mr Burton had induced, encouraged or allowed Ms Liden to believe she was obtaining an interest in the property, and that she had made the monthly payments relying on this, and that it would be unfair for Mr Burton to deny that interest.

Mr Burton’s appeal

The Court of Appeal accepted that Ms Liden reasonably understood that her payments were in return for an interest in the property.  The combination of reliance and the payments that she made  led to, and justified, the conclusion that the court reached. The fact that she signed a document that described her payments as “rent” did not prtevent this so they confirmed the original decision and dismissed the appeal..

What can we learn from this case?

Payment of rent will not in itself give the payer an interest in a property. However, those who lead their partner to believe that they are gaining an interest in a property, but seek to protect themselves by getting their partner to sign a document describing their contributions as merely being ‘rent’ cannot be so confident.

If you are worried what should you do?

For most people there is no need to panic.

If you are about to start a cohabiting relationship then, as in many other situations, the answer is to contact a solicitor to prepare a cohabitation agreement before you start to live with your partner. If the agreement is clear and both parties have had independent legal advice it will be very difficult indeed for an aggrieved partner to make a successful claim after the relationship has broken down.

If you are already in a cohabiting relationship and the property is in your name with your partner making payments then things may be more tricky if the relationship breaks down. You should seek legal advice about your postion and discuss what you may be able to do to avoid future difficulties.You have a much better chance of sorting out a potential problem during the relatioonship that later on when it has broken down.

If you are a non owning partner then you should seek advice as to your position.

If you would like advice on this kind of situation please contact any of our offices and one of our Solicitors will be pleased to help you or complete the enquiry form on the website.

The information and comment in this newsletter are not intended to constitute legal  advice relevant to particular circumstances.

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