First published in NewsBrief Summer 2007
There are over two million cohabiting couples in the United Kingdom. By 2031, it is estimated that this figure will have almost doubled.
Nonetheless, the law relating to unmarried cohabitees remains arcane and uncertain. Whilst the legal landscape may be changing with the possibility of a new statutory framework on the horizon, what should cohabiting couples be doing in the interim to protect themselves in the event of relationship breakdown? The recent House of Lords decision in Stack v Dowden has sought to provide some clarity to cases involving unmarried couples.
The facts of the case are simple. Mr Stack and Miss Dowden had been in a relationship since 1975. They had lived together since 1983 and had four children during this time. They had purchased a property in their joint names by way of a mortgage and Miss Stack had contributed her savings and the sale proceeds from a previous property that she had owned in her sole name. When their relationship broke down, Mr Stack applied to the Court to have his entitlement in the property declared as the couple hadn’t reached an express agreement as to their respective shares at the time of purchase.
At first instance, the Judge ordered that the Parties had an equal share in the property. This was also the starting point for the House of Lords, who stated that there should be a presumption that where there is joint legal ownership by an unmarried couple, each party is entitled to 50% of the proceeds of sale. The rationale behind this approach was that couples should know where they stand with regard to ownership of a property when they enter into their relationship.
However, the decision also made it clear that if one party wished to show that the beneficial interests were to be divided other than equally, then the onus fell on that party to establish it. It further provided that there could only be a departure from the presumption of equality in ‘unusual’ circumstances. Nonetheless, it found that Mr Stack fell within this so-called ‘unusual’ category because of a number of features of the case, including a considerable disparity in contributions to the purchase costs of the property. A 65% share was awarded to Miss Dowden from the proceeds of sale with the remainder to Mr Stack.
It remains to be seen whether the landmark ruling in Stack v Dowden has introduced a degree of certainty into this nebulous area of law or whether the case will herald the sea change that was suggested by the popular press at the time of the ruling. Nonetheless, it serves as a useful reminder that if unmarried couples are to avoid lengthy and costly disputes, they should seek to regulate their relationship clearly. When purchasing property together, they should always try to ensure that their interests are formally recorded, preferably in a Declaration of Trust. A Cohabitation Agreement may also help ensure certainty for both parties and avoid any future disputes.
For more information or advice on cohabitation agreements, please contact Peter Lowe.
