Property Disputes for Co-habitants on Relationship Breakdown

by Paul Summerbell, 8th January 2015

There are a number of scenarios that apply in situations involving a relationship breakdown between co-habitants. This article will concentrate on one particular aspect, namely, if the family home was co-owned by the co-habitants but, upon relationship breakdown, no agreement can be reached about whether the property should be sold and how the proceeds of sale should be divided or whether one party should continue to live in the property.

If you are living with someone but are unmarried and therefore living as co-habitants, and the property in which you live is co-owned by you and your co-habitant, the Trust of Land and Appointment of Trustees Act 1996 applies to your situation. The key section of this particular statute is Section 14. Under Section 14 of the Trust of Land and Appointment of Trustees Act, any person who has a Trust of Land, or who has an interest in property which is subject to a Trust of Land, may apply to the Court for an Order to resolve the dispute concerning the occupation and sale of the property. The Court has the power to make an Order which relates to the exercise by the Trustee of any of their functions, or it will declare the nature or extent of a person’s interest in the property, subject to the Trust, and in either case, the Court may make such Order as it thinks fit.

In short, the Court can order a sale of the property. Alternatively, the sale can be postponed and allow one or other of the co-habitants to remain in occupation of the property. The Court may also order that the person in occupation pay compensation, often referred to as occupational rent, to the person excluded from the property. It is important to emphasise that this only applies to situations where unmarried co-habitants both have an interest in the property which they occupy and the property is in both their names.

The Court will consider the following factors when making any decision under the Trust of Land and Appointment of Trustees Act:

1. The intention of the person or persons who created the Trust (the co-habitants).
2. The purpose for which the property, subject to the Trust is held (for example, to be used as a family home).
3. The welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the Trust as his home (children).
4. The interests of any secured creditor or beneficiary (such as a mortgage company).

If the Court is going to decide to exclude one of the co-owners from the property, the Court will also have to have some consideration to the wishes of each of the co-habitants if both want to occupy the property or one wishes to sell and the other wishes to occupy. In other words, the Court will be involved in a balancing act between the interests of those co-habitants.

Sale of the Co-habitants “Family Home”

It is in this situation, where co-habitants wish to sell the former family home and disagree on how to divide the sale proceeds, that the Trust of Land and Appointment of Trustees Act is of any real assistance. If the Court is being asked to decide whether to order the sale of the property or to postpone the sale, the Court must first of all determine what the actual purpose of the Trust was when the co-habitants bought the property. If it was bought as a home for the co-habiting couple and their relationship subsequently breaks down, then the purpose of the Trust has come to an end and the Court is likely to order a sale of the property. However, where the property was purchased to provide a home for the family (including children) and the children still need the property as a home, then the sale may be postponed until the children are older.

Disagreements by Co-habitants over the Occupation of the Family Home

Whilst it is correct to say that the Trust of Land and Appointment of Trustees Act can assist where the co-habitants relationship has come to an end, and either one of the co-habitants wishes to continue to live at the property, it is, nevertheless, more appropriate in those circumstances to make an Application for an Occupation Order under the Family Law Act 1996. The reason for this is that the Court’s discretion under the Family Law Act 1996 is far wider than the Trust of Land and Appointment of Trustees Act Section 14. More importantly, the fact is that the criteria the Court must take into account when granting an Occupation Order is more family focused than it is under the Trust of Land and Appointment of Trustees Act. Under the Family Law Act 1996, the Court must consider the resources available to each co-habitant, the likely effect of any Order on the health, safety or wellbeing of either of the co-habitants and any relevant children and where significant harm is alleged, a balance of harm test. This criteria is welfare orientated and more suitable to resolving disputes between co-habitants on relationship breakdown.

Conclusion

In cases involving unmarried co-habitants who co-own the family home and in particular circumstances where the co-habitants do not have children, the Trust of Land and Appointment of Trustees Act 1996 is a useful piece of legislation to determine when the property is sold and how the proceeds of sale are to be divided where there is disagreement between the co-habitants. In cases where one of the co-habitants wishes to postpone a sale, there will be a greater chance of persuading the Court to make that decision where there are children of the co-habitants who need the property for their home. However, in situations where there are only the co-habitants, and one wishes to exclude the other from occupying the former home, the more appropriate legislation to use to achieve an occupation of the property to the exclusion of the other co-owner is the Family Law Act 1996 because the criteria the Court must take into account in reaching that decision, is more family orientated and includes the co-habitants’ resources, likely effect on health, safety or wellbeing of the co-habitants and of any relevant child and, if harm is alleged, the balance of harm test is applied.

There are an increasing number of adults who choose to co-habit rather than marry, and live together and start a family. It is important that those co-habitants who choose to purchase property are advised of the legal situation, should the relationship break down and, more importantly, that their interests and contributions to the purchase of the property used by the co-habitants as a family home, are clearly recorded from the beginning. In such cases, we advise co-habitants to enter into a Co-habitation/Living Together Agreement which specifies the terms on which property is held from the beginning. This is much like a Prenuptial Agreement for married couples.

Please see our associated article “Do I need a Co-habitation Agreement?” contained in the blog section of this website.

Contact our family team for expert advice and assistance on the “Contact Us” section of this website.

Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.