Cohabitation among couples has significantly increased in popularity, more than doubling since 1996. I for one do not need to look far to find unmarried friends and colleagues in long term co-habiting relationships.
For couples who do marry, if they subsequently divorce the courts rely principally on The Matrimonial Causes Act 1973 (MCA) when dividing assets. We solicitors utilise the same legislation to argue our client’s best position, even where court proceedings are not necessary. Although the starting point for settlement on divorce is 50:50 the MCA, underpinned by a myriad of case-law, provides Judges and lawyers with very broad discretion as to how assets may be split. There can sometimes be an ironic comfort in knowing that regardless of the cold facts in a case a Judge can still exercise his or her discretion within sensible parameters to bring about what they perceive is the fairest outcome to both parties, although that can make for nervous proceedings at times.
Now, take the example of a man Jack who lives with his girlfriend Jill at Jill’s home which she bought a year earlier two months before they first met. The house and mortgage are in Jill’s sole name; Jill discharges the mortgage each month and pays the bills. Jack buys the shopping and pays for the lion’s share of holidays, household items and meals out. Jack knows that after Jill’s has paid the mortgage and bills she has little spare money. Jack also has credit capacity as he has no mortgage or property of his own so agrees to take out a loan to buy a new three-piece suite for the house. He also agrees that the lease agreement for the car Jill has set her heart on and intends to drive can go in his sole name. Jack drives a company car. Jill will try to keep up the car repayments “if she can”….and why not, Jack and Jill are a “proper couple” after all. Jack and Jill share household chores. Jill tends to cook and clean more whereas Jack does the gardening and decorates from time to time.
Fast forward three years. The housing market has risen 8% per annum while the once new three-piece suite is stained and tatty although a few months payments remain on the agreement. The car has lost its early appeal and is cleaned at the car wash every fortnight rather than weekly by hand as it was when new. Two years remain on the lease-purchase agreement, with a final payment at the end. Jack and Jill separate. Jack makes an early appointment to see his solicitor wondering how he might realise the monies “he has put into the relationship”. He wouldn’t mind buying his own house now things are over. Jill makes a few adjustments at home and bags up Jack’s clothes and possessions leaving them in the garage. Jill doesn’t feel the same pressing need to see her solicitor.
The advice for Jack is not good.
The law relating to co-habitees is complex not least as disputes fall within the jurisdiction of the civil court (as opposed to the family court), an arena where costs can be high and the penalties for losing parties can be even higher.
Contrary to popular belief cohabiting couples do not have the same rights as married couples, regardless of the length of the relationship. In some cases, couples may record their respective shares in a property by way of a Deed of Trust. Yet, even this can be a double-edged sword as while it may protect the share stated in the Deed it will not extend the share in the absence of further evidence.
Where there is no such deed or agreement case law requires firm evidence of financial contribution and woe-betide the party who cannot put his or her hand to a solid trail of receipts or bank statements. Even then convincing the court of the intention which lay behind payments or actions may be difficult given the passage of time. The risks are extremely high.
As social environments change the law in this area has not kept pace. That does not mean all co-habitees need to rush to get married to obtain the protection of the MCA. It does mean, however, that couples who do not think carefully about the basis of their co-habitation could find themselves severely disadvantaged on separation.
At Beswicks Legal, we always recommend couples enter into a co-habitation agreement recording the parties’ intentions from the outset. Jack is wishing he did!