04 April 2008
Your house or mine?
Did you know that just because you may own a property in joint names it does not mean that any equity arising from the property would be shared equally.
This point was well illustrated recently at the House of Lords when considering the case of Stack v. Dowden. The case concerned a couple who had lived together for 19 years, latterly in a house that they jointly owned. Most of the money for the purchase came from Miss Dowden.
In owning a property there is a difference between the legal ownership (i.e., who owns the property) and the beneficial ownership (i.e., how much of the equity each of them is entitled to). Unless the owners specifically declare their entitlements to the equity in the property then a dispute may arise, with one party seeking a greater share.
The issue in this landmark case was whether the equity should be shared equally to reflect legal ownership - or unequally to reflect Miss Dowden’s greater financial contribution. The lawlords decided in favour of Miss Dowden, awarding her 65% of the equity.
The important principle to come out of this case is that where a property is jointly owned there is a strong presumption, absent of any express intention to the contrary, that the equity will be shared equally. The onus is on the claimant to displace this presumption.
The Court will consider the parties’ intentions, whether actual, inferred or imputed, with respect to the property and look at the whole course of conduct in relation to it.
Relevant factors will include, amongst others; financial contributions to the property, the purpose for which the home was acquired, the nature of the parties’ relationship and how they paid the outgoings and other household expenses.
Rita Veitch of the Family Department at Hart Brown solicitors says, “The important facts in this case were Miss Dowden’s greater financial contribution to the purchase and the fact that they had kept their finances separate throughout their long relationship. The court specifically stated that the standard Land Registry wording, indicating whether the property should pass to the survivor on death of the co-owner, could not amount to an express declaration that the equity was to be shared equally.”
The case reinforces the importance of purchasers recording their shares at the outset, particularly where contributions are unequal, and seeking advice from a solicitor at an early stage as to the best way to do this.
This case adds further weight to the Law Commission’s recent recommendations that cohabitees’ rights need to be established in law - as too many assume they have automatic rights as a result of cohabitation, only to find that this is not the case and that they are in fact disadvantaged.
For further information contact Rita Veitch, Family Department, on 014893 887766