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New rights for unmarried couples?

04 February 2011

Sir Nicholas Wall, the country’s most senior family law judge, has, this week, called for new rights for unmarried couples to share property and money when they split up.

Willans’ Family law team agree that reform is long overdue.

A Partner in the team has recently stated: “A sixth of couples in Britain now live together and do not marry. More than half wrongly believe that they have legal rights as ‘common law’ spouses. This is a myth with no legal foundation, since common law marriage was abolished in this country in 1753.

“At present, and in the absence of new legislation in this area, separating cohabitees must resort to a wide range of laws (some of which date back to 1882) to try to sort out their finances and assets when a relationship breaks down, which can be costly and work unfairly to one or both partners. For example, there are at least 6 separate pieces of legislation which can govern the ownership of the family home alone.

“Pressure has been mounting to overhaul the law since the introduction of the Civil Partnership Act, which provides legal rights to same-sex couples regarding inheritance, tax benefits, next-of-kin recognition, and financial remedies on separation, similar (if not identical) to those enjoyed by married couples. All too often, unmarried couples are denied such rights.”

A case in point

Take the example of Joe and Liz, who met in 2004. They decided to live together in Liz’s rented flat in November 2006.

Tired of renting and anxious to take the first steps towards becoming homeowners, they took the plunge and bought a house together in February 2007.

Joe had no savings but Liz had inherited £40,000 from a great aunt so they used the inheritance to put down the deposit on the house. The balance was raised by way of a mortgage held in their joint names. The property was also held in their joint names in equal shares.

Sadly, the relationship broke down and Liz has now left their home. She assumes she will, at the very least, get back her £40,000. Is she right?

We believe, in all probability, no!

In the absence of fraud or mistake, it is highly likely that the value of the property, after payment of the mortgage and costs of sale, will be divided between Liz and Joe equally. That means Liz will lose at least half of her inheritance (perhaps more, given early redemption penalties on many mortgages and falling house prices).

As Liz has discovered, the state of the law in this area is often highly unsatisfactory. She now wishes she had obtained legal advice at the outset. A ‘living together’ or ‘cohabitation’ agreement would have helped avoid the difficulties Liz is now experiencing.

Reform in this area is likely to be some way off, with any reforms unlikely to be retrospective.

If you need clear and pragmatic legal advice, we’re here to help so please get in touch.

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Sharon Giles LLB (Hons)
Partner
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