A recent case in the Court of Appeal has reinforced the legal requirements for unmarried couples owning property together. Before looking at this case in greater detail, we will first take a view to the current legal processes in place for couples owning property before marriage.
What legal documentation is needed for premarital property ownership
When purchasing a property as an unmarried couple, it is important that the legal documentation drawn up accurately reflects the couple’s intentions, particularly with regard to their respective interests in it. In the absence of any documentation stating otherwise, the couple will own property registered in joint names in equal shares. Usually, the Transfer Deed (TR1) will state whether the couple own the property in equal shares or unequal shares (and the percentage shares) by checking the relevant box on the form. This is generally deemed a conclusive record of their respective interests in the property and there is no scope to argue otherwise in the absence of fraud or mistake. If one or both of the parties wish to argue that the TR1 is incorrect in this respect, there needs to be clear evidence of an intention to hold the property in unequal shares before the title can be rectified.
Importance of intention when co-owning a property before marriage
It is, however, possible to prove that the parties’ intentions as to how the property should be held have subsequently changed. It is necessary to show that one party has acted to their detriment to evidence a change in their intentions.
For a long time the law required a degree of formality in respect of how interests in land are recorded. S53 Law of Property Act 1925 requires that no interest in land can be created or disposed of except in writing and signed by the person creating or disposing of it, or his or her agent. Similarly, s2 Law Reform (Miscellaneous Provisions) Act 1989 requires contracts for the sale or disposition of an interest in land to be in writing. The only exception to this is where there is fraud.
The case of Hudson v Hathaway (2009)
In the recent case of Hudson v Hathaway, one of the joint owners sought to argue that the parties changed their original common intention as to how the family home should be held when purchased. Following their separation in 2009, one of them (the mother) remained in the property with the children. The father continued making mortgage payments. There were a series of emails between the parties in 2013 in which it was agreed that the mother would retain the entire equity in the property and the mother would make no claim against the father against his shares and pension. In 2015, the father stopped contributing to the mortgage. In 2019, the father applied to the court for an order for sale and for the sale proceeds to be divided equally. The mother argued that she was entitled to all of the proceeds as the original intention as to how the property should be held had changed in 2013 as evidenced by the emails. Further, she had acted to her detriment by making all the mortgage payments after 2015. She had also not claimed any financial support for the children and she had maintained and decorated the family home.
How did the case resolve?
The Court of Appeal held that the mother had acted to her detriment following the change of common intention as to how the property should be held. Further, the father had formally signed away his interest in the property, an email signature being sufficient to comply with the requirements as to formality in the legislation referred to above. The emails were sufficiently “signed” because they had the father’s name at their conclusion.
What this teaches us about property ownership before marriage
The main lesson to be learned is that parties changing the way they hold property need to ensure that their intentions are accurately recorded both when they purchase it and in any subsequent documentation (which can include electronic communications such as emails and WhatsApp messages) if they wish to change the ownership. We strongly recommend that full legal advice is sought both when the property is purchased and subsequently if the intention is to change ownership.
If you require legal advice regarding property ownership prior to marriage, please contact our expert family team.