At rhw we deal with people at the start of their relationship, as well as at the end. We prepare Pre-Nuptial Agreements for those about to start their married life, and have to manage the divorce process for those at the end.
One thing that we have noticed increase over recent years, is that people are cohabiting rather than getting married. Many do not worry about what could happen if they break up, which is understandable, and there is a misguided belief amongst others that when two people live together for long enough, a “Common Marriage” is created which is untrue. There have been calls for more rights for cohabitees, which to date have not progressed too much.
Until that happens you should know what legal implications arise when two people do not marry.
If a couple decide to buy a property together and they are not married, we would advise that they prepare a document which sets out whether the couple owns the property equally, or if one person owns more than the other. This is called a Declaration of Trust. If you do not explain how much each person owns, there could be an assumption that you each own 50% of the property automatically, or that one person owns nothing at all despite having put money into improving the property or paying off the mortgage.
Sometimes there can be a risk that the couple won’t agree what to do with the property if they split up. To combat that, we would suggest that they also prepare a Cohabitation Agreement. This document can explain how the property is to be dealt with if the couple breaks up; whether it is to be sold, or if one person gets first refusal to stay in the property. Although it is strictly not legally binding, it is recognised by the Court if a dispute arises.
If neither of the above documents are prepared, and the couple argues about who owns what, then a claim can still be made under the Trusts of Land and Appointment of Trustees Act (TOLATA) to ask the Court to decide but it can be very expensive.
If a couple create a joint bank account, there is an automatic assumption that each party owns half of whatever is in the account. At the start of your relationship, this might be fine as you will both agree what the account is meant to be used for.
However, if you break up, this understanding might change. If you had a Cohabitation Agreement this would set out how much interest each person has, and what the bank accounts are meant to be used for. It can also stop one person withdrawing a large sum from the joint account unexpectedly, by placing an agreed restriction on how much one person can take out.
When a couple gets married, the Matrimonial Causes Act creates an assumption that everything accumulated during the marriage becomes part of one pot, even if the items are in one person’s sole name. This does not apply when two people live together. If an asset is in one person’s name, even if both people paid for it, then it will be treated as belonging to that person, unless there is an agreement which says otherwise. A Cohabitation Agreement would be used to explain who owns what, so things can be divided fairly if you move out.
To summarise, if you are living with someone and wish to avoid that messy break up, you should complete a legal document together showing what you each own before it’s too late.
If you have any further queries about “common law marriage” then please contact our friendly and experienced family law team on 01483 302000 or email firstname.lastname@example.org for help with any divorce or even high net worth divorce matters.