Legal advice: settling finances when an unmarried couple splits
PUBLISHED: 16:28 30 May 2018 | UPDATED: 16:49 30 May 2018
“If we aren’t married, how will our property be divided when we split?” HRJ Foreman Laws Solicitors answer common questions
According to Resolution, the Family Lawyers Association, the number of people choosing to live together instead of getting married has more than doubled from 1.5m in 1996 to 3.3m in 2017.
The arrangement is often referred to as common law husband and wife however, this concept is still not formally recognised in law. If you aren’t married, or in a civil partnership, or if you don’t have a co-habitation agreement, and there is a break down in your relationship, the law takes a very different approach to resolving the financial disputes.
Neil Johnson, Solicitor at HRJ Foreman Laws Solicitors answers some commonly asked questions.
If we aren’t married, how will our property be divided if we split?
If a settlement cannot be reached, through party to party negotiation, mediation, solicitor to solicitor negotiation, arbitration or round table meetings, you will almost certainly have to take your case to the courts in proceedings under the Trusts of Land and Appointment of Trustees Act 1996 (often referred to by lawyers as a ‘TOLATA claim’).
What is TOLATA?
A TOLATA is a different form of litigation to that experienced by a divorcing couple. The court’s task is to determine the parties’ intentions about their financial arrangements, including their respective shares in any property they own. These shares may have been documented or simply discussed when they lived together. In the absence of formal legal documents, the courts may consider emails, text messages or even evidence of conversations which may have seemed trivial at the time.
Under TOLATA, the Court will make a decision on the division of the property. It may request the couple sell the property and it will state what each party’s share in the net proceeds of sale should be. It will also decide whether to make an award on account of a party’s expenses.
What do I need to make a TOLATA claim?
The first and very often decisive piece of evidence is any Declaration of Trust involving the parties. For conveyances after 1998, this will be included in the TR1 form submitted to the Land Registry. In the absence of any separate or later Declaration of Trust, or fraud or mistake in the conveyance, the parties’ interests will be established by the TR1 entry. It is therefore essential that cohabitees take legal advice before submitting this document so that their intentions are clearly recorded from the outset. Should those intentions change, it is again important that they revisit their Trust documents so as to reflect those changes.
Things have changed since we purchased the property. But it’s not documented. What should I do?
It may be that as cohabitants you are legal co-owners but there is no effective declaration of trust. Instead one party conducts itself in reliance of what has been agreed or promised, often by increased contributions to mortgage payments and maintenance of the property.
Alternatively, you may have something in writing but then later down the line, your joint intentions change, such as where the parties agree to a larger share in the property being held by one of the co-habitees, for example in return for their increased contributions to the repayment of the mortgage.
In these cases it is open to the court to look at the conduct of both parties to find evidence and determine what their true intentions were before they split. It will then determine if this evidence is compelling and strong enough to discount any documentary evidence.
Evidence of the parties’ intentions could include conversations, including well-intentioned comments like ‘everything I have is yours’ and ‘this is our house’ (which tend to suggest an equal share, regardless of financial contributions). The court may also consider the actual expenditure (who paid for what) and the overall nature of the relationship in reaching its conclusions.
As you might expect, parties often dispute what has been agreed (the courts want to know exactly what was said, where it was said, on what date, and in what circumstances) leading to acrimonious and expensive proceedings. This point is particularly important as the unsuccessful party in a TOLATA claim will very likely be ordered to pay the successful party’s costs.
Is there a way out?
Whilst no couple plans to separate, significant heartache and legal fees can be avoided by taking advice on the Declaration of Trust and TR1 documents, both at the time of the purchase of the property and, if circumstances change, during the relationship. HRJ Foreman Laws’ family lawyers will be very happy to assist with this.
If your relationship does come to an end, seek early legal advice with a view to resolving matters through negotiation. This can be conducted at a formal mediation, by negotiation between lawyers or, if you and your partner are still on talking terms, by direct discussion guided by your lawyer.
If matters cannot be resolved amicably, even through gritted teeth, then take early legal advice – their lawyers will be there to support you.
For advice email us at firstname.lastname@example.org or call us on Hitchin 01462 458711, Welwyn Garden City 01707 887701.
About the authors
HRJ Foreman Laws Solicitors delivers legal services for businesses, families and individuals. It has offices in Hitchin and Welwyn Garden City, Hertfordshire. It is recognised by Lexcel - the Law Society’s quality mark for excellence in legal practice management and excellence in client care. It is also regulated by, and compliant with, the Solicitors Regulation Authority.
Its areas of expertise include Company and Commercial, Commercial Property, Conveyancing, Family Law, Wills, Trusts, Probate, Inheritance Tax, civil litigation, commercial litigation.