Many problems that arise when cohabitees own property together tend to recur very frequently. For example, assume that two people own a property together – whether as joint tenants or as tenants in common – and there is no evidence of any agreement of the proportion in which each each joint owner owns the property. In the absence of evidence to the contrary the law will assume that it is held equally.
Now this can lead to obvious injustice. Say , for instance, one of the joint owners pays the deposit on the property and pays all the the mortgage. If this couple were to split up then the person who had contributed nothing would almost certainly say that he/she was a joint owner and therefore entitled to half the net proceeds of sale. Indeed, the situation can be worse than this in that the joint owner who has not contributed to the deposit or the mortgage might leave and go and set up home elsewhere. This situation might continue for many years until the joint owner who has remained and who has continued to pay the mortgage wants to sell. At this point the absent co-owner who has contributed nothing will almost certainly appear and want to claim half. The fact of the matter is that the signature of both joint owners is required to effect a sale and so the joint owner who has remained will not be able to sell the property without the signature of the other joint owner. It is this power which gives the absent joint owner a great deal of leverage in such a situation.
Now, the fact of the matter is that in general a property belongs to the person (or persons) who have paid for it and so unless there is an agreement to the contrary it would be possible for the person who has paid the deposit and the mortgage payments to claim that the property was his/hers alone despite the fact that it was in joint names. However, there are several difficulties with this approach.
First, there is the fact that in order to effect a sale the signature of both joint owners is needed. This means that it might be easier to buy off the interest of the person who has not contributed in order to get the signature. This fact alone gives a lot of leverage. Second, a joint owner in this position is in the difficult situation of having to say, “Yes, it is true that the property is in joint names but in reality it is entirely mine because I paid for it.” The difficulty about this is that it has to be proved and it can be quite difficult to prove these things when perhaps many years have gone by. The person who has not contributed might even say, “Yes, it is true that I did not contribute anything but I was made a joint owner in return for doing the housework.” In short, if a joint owner gets into this situation it can very likely only be resolved by litigation. Rather than enter into the uncertainty and cost of that (which is usually considerable) such a joint owner may simply prefer to agree a figure to buy off the claim. This frequently happens.
Of course, many people can reach agreement about these things amicably but very many more do not. In general it is better when cohabiting either to buy the property in the name of one person alone and make quite sure the other does not contribute to the purchase or improvement of the property or else to have a definite agreement (often called a “trust deed”) setting out precisely what share each person is to have if the relationship breaks down.
And there is another point. When a property is jointly owned if there is a dispute and there is no written agreement to the contrary the court makes certain presumptions as to whether or not a property should be sold or retained as a home. The presumptions a court might make in the absence of any written agreement to the contrary might be highly inconvenient. So, if one joint owner wants to remain in the property after the other has left and perhaps buy out that other joint owner’s share it is absolutely vital that there be a proper written agreement to that effect. If there is not then either joint owner might be able insist on sale and there would be nothing the other could do about it.
If you have read this to the end you probably now have a good idea that this is a complex part of the law.