Cohabitees, Separation and the Family Home – Understanding TOLATA
There is a myth surrounding family law in England and Wales that will not disappear; the existence of ‘common law marriage’.
Cohabitees are the fastest growing family type in the UK[1]. Despite this, they do not enjoy the same legal rights as a married couple or those who have entered into a civil partnership. For example, if a cohabitee dies without making a Will, their partner has no legal right to inherit under the Rules of Intestacy. In addition, a cohabitating partner who is not registered as a joint owner on the family home may not be legally entitled to a share of the property upon separation.
Disputes often arise when a cohabitating couple separate but only one party has their name on the title of the property. Imagine if you had been living with your partner for a decade. You moved into their home and contributed to the mortgage payments, improving of the property, and doing all the things normal couple do when creating a life together within four walls. Most reasonable people would judge it inequitable that a someone who has contributed so much is left with no rights to the property if the relationship breaks down.
Fortunately, the law recognises this is an inequitable situation too, and provides a remedy under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
What is TOLATA?
Claims by cohabitees seeking to establish (or quantify) an interest in the family home are brought under TOLATA. Under s.14 of the Act, the court may declare the nature or extent of a person’s interest in the property or order the land to be sold. In determining such an application for an order for sale, the court must have regard to the matters set out in s.15..
What factors does the court have to consider under section 15 of TOLATA?
Under section 15, the court must have regard to the following factors when determining an order for sale under TOLATA:
- the intentions of the person who created the trust
- the purpose for which the property subject to the trust is held
- the welfare of any children who call the property home
- the interests of secured creditors
How is a beneficial interest in a property established?
If your name does not appear on the title of the property, you do not enjoy legal ownership. It is for you (with the help of your solicitor) to show that you have a beneficial interest in the property by showing:
- a) the existence of a trust, either express or implied, under which the beneficial interest in the property is held by you, or
- b) a proprietary estoppel.
This is the method by which a non-owner may establish a beneficial interest in a property legally owned by the other party.
Express trust
An express trust is one that is deliberately created by the owner of the property (known as the settlor). The trust gives a beneficial interest in the property to another party (the beneficiary) unless the trust is set aside or corrected for reasons of fraud, mistake, or undue influence, varied by subsequent agreement, or affected by proprietary estoppel.
For an express trust to be valid, it must be in writing and signed by the settlor. The document must clearly constitute an intention to create a beneficial interest in the property for the beneficiary.
Implied trust
Where there is no express trust, the court will look to see if one was implied by the act or omissions of the legal owner of the property. An implied trust can result from the following:
- a) Resulting trust – this occurs when one partner has made a direct financial contribution to the property. It is best practice to make a note of the payment, making it clear it was not a gift or a loan. If a resulting trust is deemed to exist, it means the owning partner holds part of the property in trust for the other.
- b) Constructive trust – this occurs when there is deemed to be a common intention between the cohabiting parties that the claimant has an interest in the property and the claimant acts in reliance on that intention and thereby suffers a detriment. For example, if you and your partner constantly referred to the property as both of yours, and you invested your money into the home instead of purchasing a property for yourself, and your partner never once stated the property was his/hers alone, the court may find a constructive trust exists.
Proprietary estoppel
Proprietary estoppel is similar to constructive trusts. It arises when the legal owner of a property causes another to act to his/her detriment in the belief that he/she will obtain an interest in the property.
Three factors must be present for proprietary estoppel to arise:
- There must have been an assurance, representation, or expectation that the claimant will have a right to the legal owner’s property,
- the claimant must suffer a detriment, and
- the detriment must be because the claimant relied on the assurance, representation, or expectation.
Intertwining these factors is that of unconscionability – the doctrine that the legal owner cannot take advantage of the claimant and deny him/her the right they believed they had.
In summary
TOLATA and the doctrine of proprietary of estoppel are complex but they provide a route for a party in a cohabitating relationship to receive an equitable portion of the family home should the relationship break down.
Hart Reade Solicitors are a full-service law firm with offices in Eastbourne, Hailsham, Polegate and Meads. We hold a Lexcel Accreditation from the Law Society of England and Wales and are members of Resolution. To make an appointment with one of our dispute resolution solicitors, please phone our office on 01323 727 321.
Please note, this article does not constitute legal advice.
[1] http://www.familylawweek.co.uk/site.aspx?i=ed182776