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19 January 2016

Beneficial interest in property changed by common intention

Arguments over property ownership are very common, despite being easily avoidable provided the correct legal paperwork is put in place.

A recent case dealt with the ownership of a property after an unmarried couple broke up. At no point had they created a declaration of trust to delineate what their respective ownership rights should be.

The couple were together for many years and had two children. They bought a property together in 1996 for £135,000, financing the purchase with a £25,000 deposit that they had saved and a joint mortgage for the balance. They shared the bills and expenses and the property was in joint names.

Starting in 2005, they carried out a number of improvements to the property, to which they both contributed.

During their relationship, the male partner, a businessman, had purchased three flats, which he let out. These were purchased in his own name. He subsequently got into financial difficulties and the couple's home was remortgaged in 2005, releasing a total of £66,000 so that he could clear his debts.

Shortly thereafter, the couple's relationship broke down and the male partner moved into one of his flats. After eight months he stopped contributing towards the mortgage on their joint property and the female partner made all the repayments from then on. She also met the further costs of building work at the property.

The issue that arose was in what proportion the two owned what had been their family home.

The case went all the way to the Court of Appeal. In the Court's view, as the male partner had used the mortgage advance to clear his business debts, had failed to keep up his mortgage payments after the separation and owned three other properties, the intention must have been that the couple had decided to vary their respective proportions of ownership in the property, by 'common intention'.

The finding of the County Court that the shares of equitable ownership in the property had been varied from 50:50 to 85:15 in favour of the female partner was upheld.

For advice on formalising your agreements over the co-ownership of assets, contact Sarah McLoughlin by calling 01753 279035 or emailing sarah.mcloughlin@bpcollins.co.uk.

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Email: enquiries@bpcollins.co.uk

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