News and Insights
28 September 2016
Protect your interests
Cohabitation is on the rise. The Office of National Statistics estimates that opposite sex cohabiting couples now account for 20% of all families and household types in the UK in 2015. Judging by the number of properties being purchased by unmarried couples in the Royal Court each Friday, this is also the trend in Jersey.
Cohabiting couples are often referred to as “common-law marriages”. But unlike married couples, cohabiting couples in Jersey have very little protection unless they have a legal ownership of property (i.e. named on the title deeds).
Scenario 1: Sole ownership; Adam and Beth
Adam and Beth moved into Adam’s house together 15 years ago, although they have never married. The house is in Adam’s sole name, but Beth has contributed to 50% of the mortgage repayments since she moved in. Adam and Beth have a falling out and split up, then Beth tries to claim back the money that she invested in the property.
Under Jersey Law, Adam is likely to be entitled to all of the equity in the house and Beth will have great difficulty in recovering any of the money that she put in.
Scenario 2: Joint owners; Chris and Daphne
Engaged couple Chris and Daphne purchased a property together as joint owners. Chris paid the initial deposit of £50,000 and they are jointly liable for the mortgage. Chris also makes all the mortgage repayments because Daphne has a low income. Chris and Daphne break up before they get married and the house has to be sold. Chris and Daphne did not enter into an equity agreement or cohabitation agreement so when the house is sold, the proceeds will be shared equally. This despite Chris having financially contributed so much more to the property during their relationship.
Scenario 3: Owners in common; Edward and Francoise
Edward and Francoise purchased a property as owners in common, with Edward owning a 40% share in the property and Francoise owning a 60% share. Tragically, Francoise dies whilst the couple are still together. Francoise did not make a will before she died, so her 60% share of the property will pass by way of intestacy to her estranged uncle who then insists on selling the property. Francoise’s uncle will receive 60% of the equity in the property.
The surest way to deal with these situations is to have, at least, a comprehensive equity agreement in place. This should detail who has contributed what to the purchase of the property and set out how the property should be dealt with in the event of a separation or death. It is also imperative to make a new will whenever you purchase a property. In addition, all cohabitees should consider entering into a cohabitation agreement to address matters of property and money.