Legal battle proves the importance of written agreements when discussing property

A midwife has succeeded in claiming she is entitled to 50% of the £1 million home she had shared with her CEO ex-partner after a High Court Judge agreed that he had promised her half of the property during a conversation in a pub 13 years ago.  Sam Miles, Family Law Partner, reviews the case here and advises how you can possibly avoid the same situation through a Declaration of Trust or Cohabitation Agreement.

Ms Chipperfield and Mr Horn lived together for over 15 years.  They had two children together but never married.  In 2006, the couple moved to a new property in Lymington worth £740,000, paying a deposit of £280,000.  Only £39,000 of that was contributed by Ms Chipperfield.

After they split in 2016, Mr Horn sued Ms Chipperfield claiming most of their house belonged to him, despite it being in joint names.  Ms Chipperfield explained to the Court that it was always their intention that the house was owned jointly.

Ms Chipperfield referred to a conversation 13 years before, when Mr Horn said “well, that’s it Chip, we are now 50/50 owners – but that means you owe half the debt as well”.  Whilst Mr Horn agreed that this conversation had taken place he insisted that it did not mean the house should be shared equally; that “the words were not to be treated as meaning what they said literally”.

The Judge disagreed, finding that the words were to be given their literal meaning.  He said “the reference to 50/50 meant both literally and in context that the ownership would be shared in those proportions”.

The Judge went on to say that Mr Horn failed to acknowledge the sacrifices which Ms Chipperfield made to the family in terms of her career and the significant contributions which she made to the family finances.  Neither at the time of the purchase, nor thereafter was there any discussion to the effect that the shares should be other than 50/50. The Judge ruled that there had to be a presumption that the house would be split equally.

Joint ownership of a property

“Unmarried couples often have conversations like Ms Chipperfield and Mr Horn did when the relationship is going well,” explains Sam.  “However, once the relationship has broken down there can be a tendency to re-interpret or deny the significance of such conversations.”

The High Court decision in this case raises queries over the importance of verbal promises and what should happen to shared assets on the breakdown of a cohabiting relationship.  An unmarried couple buying together should ensure that they understand what joint ownerships means. If a couple contribute unequal shares to a deposit and want that to be reflected when the equity is split on separation, then the parties should take advice on a Declaration of Trust.  Alternatively, couples could look at entering into a Cohabitation Agreement.

What is a Declaration of Trust?

A Declaration of Trust is a legally binding agreement setting out your intentions for the property if you are an unmarried couple cohabiting.  It will detail not only your intentions but also your share in the property and the entitlement of each party should the property be sold. 

What is a Cohabitation Agreement?

A Cohabitation Agreement is a document which explains how not only the property should be divided upon your separation but your other assets as well.  This agreement is particularly pertinent if you have moved into your partner’s property and your name is not on the deeds, or if you have not contributed towards the mortgage payments. 

“We appreciate that having a conversation about making plans should your relationship fail will never be an easy one, but it is an important one to have to avoid situations like Ms Chipperfield and Mr Horn in the future,” concludes Sam.  “Attempting to come to an agreement like this following a separation will be more time consuming, costly and emotionally harmful without a legally binding document of this nature.”

If you are an unmarried couple living together and you are interesting in finding out more about a Declaration of Trust or Cohabitation Agreement, contact Sam today on 023 8071 7431 or email samanthamiles@warnergoodman.co.uk for practical and compassionate advice.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.