Many people would not realise that inviting your partner to live with you rent-free could have a major impact on your personal finances one day. One would be likely to assume that if your relationship comes to an end, you have protected yourself and your home by not receiving any financial contribution to the household costs or rent. Well, if you find yourself in this situation, read on and you might not rest on your laurels so easily.
Cohabitation is an area of law that is highly contentious. This is partly due to the emotional nature of the disputes in the first place and largely because the law on cohabitation is based upon a combination of ancient legal principles and previous case histories. In other words, unlike matrimonial disputes, there is no fixed legal framework set out in the statute books. It’s a changing landscape and one that can cause debate and uncertainty.
A recent case, Southwell v Blackburn  EWCA Civ 1347, was heard by the Court of Appeal. The court dismissed an appeal by a property owner who was horrified that his ex-partner was awarded £28,500, representing a slice of equity in his property. His appeal was dismissed.
In this case, the couple met in 2000. She was a 40 year old divorcee living with two daughters in a council property in Manchester. She worked as a teaching assistant. He was a claims manager living in Portsmouth. In 2002, they moved in together. The house was purchased for £240,000 in his sole name, financed entirely by him by way of a mortgage and capital release from his previous property sale. In 2009, the relationship broke down and she applied for a share of the equity. She claimed that she had been told by him that the house would ultimately be transferred into their joint names. He denied this but acknowledged that he had agreed to provide her with a home for the duration of the relationship.
The judge found that although it was unlikely that he made any clear promise to her that she would become an equal owner of the property, it was the case that he had made her promises and assurances to persuade her to give up her secure home and job in Manchester and move down to Portsmouth. On this basis, the judgment was made.
This case hinges on the historical concept of Proprietary Estoppel. Although no money had exchanged hands and no explicit agreement had ever been made about transferring the house into joint names, the key point was that he had made assurances to her that she would have secure accommodation. As a result of those promises, she gave up her own secure housing and income and moved down south. The Court at first instance ruled, and the Court of Appeal later agreed, that these assurances from him and her reliance upon those promises to her detriment amounts to Proprietary Estoppel. On that basis, the court awarded her £28,500 and this was upheld by the Court of Appeal.
If you do own a property and are considering cohabiting with your partner, don’t let this case stand in the way of true love! It is easy to avoid the pitfalls by instructing your solicitor to draw up a Cohabitation Agreement setting out the ground rules between you and your partner being clear and open about what will happen in the unfortunate event that the relationship breaks down.
If you would like advice on Cohabitation Agreements then please contact a member of our Family Law Team on 0161 969 3131.