Co-Owners - A Timely Reminder

Although it has been law for some years that in the absence of an express agreement between co-owners the parties are entitled to joint and equal shares in a property unless a clear contrary intention could be shown, the Court of Appeal has recently reinforced the importance for cohabitants to enter into an express agreement as to their beneficial shares in a property rather than leaving it for a Court to decide.

The Court has now determined that even if the result is patently unfair, they will not be prepared to substitute any other arrangement if there is no evidence of a common intention to do so and the overriding principle is that shares will be held equally.

When an unmarried couple purchased a property as joint tenants and the relationship ended the man moved out and purchased a property in his own name for which he was solely responsible.  After 12 years separation, but still as co-owner of the original property, the man severed the joint tenancy (that is, served notice on the co-owner that henceforth the beneficial interests in the property were to be held separately) and then claimed his share of the value of the property.

The woman claimed that since she had been solely responsible for the property for the previous 12 years and that the man had had no involvement with it it would be unfair for him to now claim an equal half share of its value.

Whilst the position found some favour with the lower Courts, the Court of Appeal was clear that the interpretation of the law did not require it to arrive at a fair decision but one based purely on the law as it applied to the parties.

The basic principle has been applied consistently by the Courts over a number of years and the onus on the party claiming that the general presumption should not apply will be extremely difficult if not impossible to disprove.

Consequently, all co-owners should consider how they should hold jointly owned property and in the even they hold separate shares or are likely to in the future they should clearly set out their intentions so that it is not left to the Court to decide.