Is an oral agreement between cohabitees binding?

A recent Court of Appeal decision found that an oral agreement agreed by an unmarried couple was legally binding; reiterating the benefits of obtaining legal advice at the time when couples begin to live together.

The case involved Mr Ely, the Applicant, and Ms Robinson, the Respondent, who met in 1986. Mr Ely purchased a property in Dorset in his sole name. Subsequently Ms Robinson moved into the property with Mr Ely, making little contribution to the running of the household. The couple went on the have two children but the property remained in the sole name of Mr Ely. In 1989 Mr Robinson purchased a property in Bournemouth registered in her name, although Mr Ely argues that he contributed £16,000 to help with the purchase.

When the couple ended the relationship in 2005, Ms Robinson continued to live in Mr Ely’s property in Dorset with the children and at times members of her family also moved into the property. After their separation Mr Ely asked Ms Robinson to leave the property, when she refused to do so, he issued a claim for possession in 2007. Ms Robinson responded by issuing a separate claim for beneficial interest in the property, claiming that she should be entitled to an equal share of the property by virtue of a common intention.

Initially both applications were settled by agreement out of court. Mr Ely agreed to place the property in trust; upon his death 80% of the property would be gifted to his heirs and the remainder would go to Ms Robinson and in return he would not pursue any interest in her property in Bournemouth. It was also agreed that Ms Robinson could stay in the property in Dorset as long as her aunt and mother were alive, otherwise Mr Ely could sell the property.

Ms Robinson’s aunt and mother had both passed away by 2014 and Mr Ely therefore started the process of selling the property, believing that an agreement had been reached. Unfortunately, Ms Robinson disputed this and made a further application to the court claiming that she and Mr Ely had an annual conversation where he had told Ms Robinson ‘what’s mine is yours’, including the property in Dorset. Ms Robinson claimed that as a result of the conversation, she believed that she had an equal share in the property. Despite Mr Ely asserting that this was never agreed as neither party had signed any formal document, the court held that an oral agreement had been made and should be upheld.

Sam Miles, Family Partner at Warner Goodman says “This case demonstrates that an oral agreement between cohabitees could be upheld by the court, although it is likely to involve a potentially costly and emotional court case. It is always worth considering whether you should enter into a declaration of trust or a cohabitation agreement when you begin living together, meaning that you will both have a clear understanding of what the other is entitled to should the relationship breakdown.”

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.