Where land is transferred into joint names, the legal and beneficial interests are held separately. The legal estate vests in the co-owners as joint tenants, but they may have different beneficial interests in the land.
The co-owners may hold the property on trust for themselves as joint tenants – that is, the property will automatically vest in the survivor. Alternatively, they may hold the land on trust for themselves as tenants in common. In such cases, the parties will each own distinct shares in the property, which may or may not be equal, which will pass in accordance with the parties’ wills or under the rules that apply on intestacy.
However, property and trust rules lack the flexibility required to deal with problems that arise where co-owners split up. Consequently, Parliament has given the courts jurisdiction to vary proprietary rights on the dissolution of a marriage or civil partnership – but not in the case of co-habitants who separate.
The absence of such powers on the breakdown of a non-marital relationship has led to the application of equitable principles to imply a constructive trust in respect of the family home, to reflect the shared intentions of the parties. However, the law can be difficult to apply. Each case will turn on its own particular facts and members of the judiciary take different views on where to draw the line when trying to establish the parties’ intentions.
Jones v Kernott [2011] UKSC 53; [2011] PLSCS 264 concerned a couple who bought a house and lived together for eight years. Following their separation in 1993, they tried unsuccessfully to sell the property, and then split the proceeds of an insurance policy so that Mr Kernott could buy his own home. Ms Jones remained in the property with their children and paid the mortgage and household expenses herself. Mr Kernott claimed a half share in the property in 2006 on the ground that the parties still shared the beneficial interest in the property equally between them.
The Supreme Court awarded Mr Kernott 10% of the value of the house. It ruled that the court must always start from the position that the parties have made a conscious decision to put the property into joint names and must therefore have intended to have equal shares in their home. However, it may be possible to disprove this by showing that the parties shared a different intention when they bought their home, or that their intention changed.
The Lords agreed that the court should give effect to the parties’ intentions where these can be inferred, and the majority decided that it was possible to infer from the parties’ behaviour that their intention changed when they sold an insurance policy so that Mr Kernott could buy his own home – or would have imputed this. The minority were prepared to impute such an intention to the parties in the search for what was fair.
The government has decided not to implement the Law Commission’s Report on Cohabitation during the life of the current Parliament. Therefore, best practice for co-habitants must be to enter into cohabitation agreements – and review them regularly.
Allyson Colby is a property law consultant
