Info & Advice

My former partner and I bought a house together – what happens now we are splitting up?

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As with a lot of legal questions, there are only a few definite answers and many ‘it depends’ responses to issues within the scope of your general query.

It is a tall order to comprehensively advise and doing so is beyond the preliminary advice and information that lawyers can give without a formal retainer or in a broad article like this.   Despite that we can give some pointers that would help in negotiation and help you be realistic in your approach.

If you agreed what should happen in advance, by having a formal Living Together Agreement then that is the starting point.

We didn’t have any specific written agreement about what should happen if we split up – what is the starting point?

The first thing to check is whether you have agreed anything when you bought your home as a matter of property law and the buying process.

The registered title and any trust deeds are the starting point in a situation like yours.

If there is a trust deed, the minimum it will say is in what shares you own the property – which is important if you are not contributing equally.  If somebody pays all the deposit, they might have that amount repaid to them before the remaining net proceeds of sale (’equity’) is shared.   That could be calculated as a % of the value at the time of purchase, it could be a fixed amount or even indexed, but it is something that should have been agreed at the outset.

The deed may also say how you have agreed to share the expenses.

Unlike a ‘Living Together Agreement’, which is usually rather more complicated and wide-ranging, the Deed only provides a statement of ownership rights and some financial obligations.

Is a trust deed the end of the matter?

In unmarried family situations, the law is somewhat fragmented and is an interaction of property law, trust law, contract law and child law.  As yet, there is no over-arching ‘fairness’ requirement in law.

Under property law, your ownership is determined by the Deed and you are in the situation as any other co-owners of property, despite being a couple or a family.

Trust and contract law can modify that ownership, but if there is a Deed then that is the starting point for ownership issues and it requires strong and convincing evidence to say that ownership is other than what the deed says.

What about us having a child or children: does that alter things?

The law of equity, a sub-genre of trust and property law, can sometimes be invoked, including to say that a property bought for housing a child creates a trust (in some circumstances) which is only ended when the purpose of the trust has been fulfilled.   However, the courts are reluctant to hold that sale should not take place just because the property was intended as a home for a child.  A ‘child’ in law can be over 18 and so an open-ended obligation to house a child could be a very long time indeed which can cause considerable hardship for some co-owners.  If the courts stopped owners from getting their share of co-owned property for many years, then the judges would be creating new laws which Parliament had not devised.   Although the law about unmarried families has needed reform for a long time, imposing a long-term obligation to delay selling family homes represents a radical interference with property ownership rights, which needs Parliament to consider.

The law has some mechanisms to decide on when a sale should take place.

Under the Children Act, where there is a child, the courts have the power to impose conditions upon the owner-parents which go beyond what was agreed.   Mostly, the court uses that power when people have wealth beyond their needs and the co-owner has options for housing  other than to sell.   A Schedule 1 application is often more of a negotiating ploy than in the expectation that a court will use its powers to delay a sale or make provision.  Negotiation is crucial as court proceedings do not have a certain outcome and a deal agreed between the owners/parents is better than a decision being imposed on them.

My partner has moved out and says I should pay ‘occupation rent’ – what is that?

Occupation rent is compensation for being kept out of money tied up in a property and can be justified as you have exclusive use of the property, despite not owning it all.  It is not an automatic right and whether that would be fair depends on the circumstances.  If you had a Living Together Agreement, that would usually set out the arrangements on separation representing an express agreement and occupation rent would not need to be claimed.

In a general accounting, occupation rent can be ordered as something to be credited to the account of the owner not in occupation, but it is discretionary and not a foregone conclusion.   It is often established by establishing what the person not in occupation reasonably requires to rent as the property is in the sole use of the remaining co-owner.   When there is a child, the reasonableness of compensating the non-occupier is less clear-cut.  That discretion is less likely to be used unless the remaining party has behaved unreasonably and has taken an obstructive stance.  It cannot be said that it is ‘owed’ until a judge exercises their judgment on the issue, which is not guaranteed and depends on all the relevant circumstances.

How can that all those different considerations be summarised?

As a general approach:

  • If there is an express Agreement, that ought to be followed
  • If there was a Deed, you own the property in the shares stated in that deed
  • Unless there is evidence of agreement otherwise, that agreed sharing is the likely outcome
  • There is no agreement about sale arrangements, so general law applies which the Deed says means a sale should take place under property law
  • Occupation rent can be sought, but it is not ‘as of right’ and should form part of negotiations
  • Schedule 1 of the Children Act 1989 and trust law may be invoked to delay a sale
  • It is difficult to oblige a person to accept a buy-out, but people will often agree to that (complicated interaction between property/trust/family laws)

Could we have avoided these problems?

The preventative measure to reduce uncertainty if you split up co-owing property is having a Living Together Agreement (LTA) which used to be called a ‘Cohabitation Agreement’.   You can agree what should happen in advance and that provides certainty and less assumption in your dealings with each other.   Although it is best to have an LTA before living together or buying a property, it is not too late to reach agreement any time before the relationship breaks down.

Shouldn’t the property lawyer have told us about Living Together Agreements and recommended one?

From the viewpoint of family law where solicitors see a lot of conflict and uncertainty that could have been avoided, the answer would usually be ‘yes’.

Had you entered into a Living Together Agreement, there would have been a great deal more certainty, but property lawyers are quite narrow in their approach and rarely appear to advise unmarried couples to do that with any enthusiasm or detail.   They want clients who are happily moving into their new home together, not having to contemplate the relationship failing.

When co-owning with unequal contributions, if that subject is addressed by the property lawyers, then a Deed is the least that can be done to achieve that unequal ownership, but it is unlikely to go further than stating the shares of ownership and the calculation to be used when the property is eventually sold.

In an ideal world, property solicitors would recommend a Living Together Agreement to reduce the uncertainty, but because their specialist area is property law, they may not ever see the consequences of people not doing so and are unlikely to want to put a damper on their clients’ enthusiasm for a great life in a dream home.   They are not there when some turn to nightmares!

For that reason, whilst from a family-law perspective it seems an omission, if solicitors did not recommend an LTA making a claim would be difficult as the expectations of conveyancers’ responsibility is remarkably low.   If they overlooked instructions to prepare a Deed, that would be less excusable.

How much might sorting out a problem like co-owners splitting up cost?

It always depends on complexity and attitude as to what work is needed by the lawyers.   Going to mediation or agreeing to arbitrate are usually cheaper than making an application to the court, but can easily cost a few thousand pounds even without having court papers to prepare or hearings to attend.   It is worth speaking to an experienced family law solicitor who can give an estimate based on similar cases that have been settled which have factors in common with your situation.   They can only give estimates based on experience, but they can identify what could be ‘live’ issues that need resolving which will help.   As with all negotiations, the attitudes of the people involved make more of a difference to the expense than the legal issues themselves.

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