How to try and avoid lengthy cohabitation disputes following relationship breakdown
The Central London County Court handed down its judgement in the case of Thomas and Powell, a case which concerned a dispute between cohabitants about ownership of the former family home following their separation.
Up until their separation in 2014, Miss Thomas and Mr Powell lived together at a property in Wandsworth Common. Due to their differing financial positions, the property purchase was funded by Miss Thomas but Mr Powell undertook extensive renovation work at the property in order to make the property liveable.
When their relationship ended, Miss Thomas refused to acknowledge Mr Powell’s interest in the property and claimed that he should not be reimbursed for the work he had done at the property. Mr Powell challenged this and said that he and Miss Thomas had agreed that he would receive one third of the profit if they ever split up.
During negotiations, Mr Powell stated that he would accept £35,000.00 for his interest in the property but this was rejected by Miss Thomas and the case proceeded to Court. At Court, the Judge ordered that not only was Miss Thomas to pay Mr Powell £50,000.00 for his interest in the property, as she has rejected a reasonable offer for settlement, she would also have to foot the legal costs in full. It is estimated that the total amount she is going to have to pay is around £200,000.00.
The use of a Cohabitation Agreement
In order to have avoided this protracted and expensive Court litigation, Miss Thomas and Mr Powell should have considered entering into a Cohabitation Agreement, prior to, or at the time of moving into the property. This would have enabled them to record their intentions in writing and to clearly set out each persons interest in the property, and what would happen in the case of their separation. Then, upon separation, they could have looked at the terms of their agreement and implemented them accordingly.
Whilst a Cohabitation Agreement would not have barred either of them from making a claim to Court if they so desired, it would have acted as persuasive evidence of their intentions and both would have needed to show a good reason why the agreement should not be upheld. In the majority of cases, parties are keen to avoid the expense of contested litigation and often choose to abide by their agreements.
When should the use of a Cohabitation Agreement be considered?
Below are a few scenarios where parties should strongly consider entering into a Cohabitation Agreement:
- Parties who are purchasing a property together as a family home;
- Parties who are purchasing a property together as a family home and one person’s parents or relatives have given them money to fund or assist with the purchase;
- Parties who are purchasing a property together as a family home but the property is being registered in the sole name of just one of the parties;
- Parties who are purchasing a property together as a family home but one party is contributing all, or a greater percentage of the purchase price;
- Parties who are purchasing a property together as a family home but one person is going to pay the mortgage but the other person is going to fund any renovation and maintenance work to try and increase the value.
Do Cohabitation Agreements just cover financial issues?
Cohabitation Agreements are flexible and wide ranging and can cover a number of issues such as a) each parties child care and child maintenance obligations, b) each parties responsibility towards paying the mortgage and household bills, c) what would happen in the case of one cohabitants death or long term illness? This is because each agreement is tailor made to the individual couple in question and can cover any aspect of their relationship.
If you require any advice in relation to any issues pertaining to this topic or seek assistance in respect of any family law matters, please contact Lorna Barry on 01442 872311 or via email at [email protected].