The Supreme Court has finally given its long-awaited judgment in the case of Jones (Appellant) v Kernott (Respondent). Its conclusions should be given serious thought by unmarried couples who live and own a property together.

Under the current legal system, where a property is owned in joint names by an unmarried couple, the presumption is that the property is owned equally by both parties, regardless of the individual contributions either party may have made. This was a principle recognised by the House of Lords in the case of Stack v Dowden in 2007.

The difficulty with this presumption comes if the couple split up and one or the other claims that their individual contribution should entitle them to a larger slice of the equity in the former joint home. Unless the other party is willing to accept a smaller share, the parties face the prospect of a potentially lengthy and very expensive legal battle to determine who is entitled to what share of the value of the home.

Ms Jones and Mr Kernott met in 1981, had two children together and in 1985 purchased a house in joint names. They never married. They paid £30,000 of which the £6,000 deposit was funded solely from the proceeds of sale of Ms Jones former home. The mortgage and upkeep costs were shared, as was the cost of a loan for an extension.

In 1993, the couple separated and Ms Jones remained in the former family home and from that point paid the mortgage and upkeep herself. In 1996, Mr Kernott bought his own property using money cashed in from a joint insurance policy he had held with Ms Jones. Over the years, the former family home increased in value and in 2006 Mr Kernott announced that he wanted to claim his beneficial share in the property. Ms Jones defended the claim and the long legal battle commenced.

The initial decision of the County Court was to award Mr Kernott 10% of the value of the former family home, by then valued at around £245,000. Mr Kernott unsuccessfully appealed at the High Court but did succeed at the Court of Appeal. The appeal went all the way to the Supreme Court.

Within its judgment, the Supreme Court laid out five key points to try and assist how such cases should be determined: -

1. The starting point is that if a couple buy a family home in their joint names, without any express declaration of what their interests are in the property, they own the property equally.
2. The law does allow for that presumption to be argued against by demonstrating that there was a common intention not to share the equity of the property equally, either at the time the property was purchased or later on in the relationship.
3. When deciding if there is such a common intention, the court will take into account the conduct and dealings between the parties and see if a common intention can be inferred by looking objectively at what occurred between them.
4. Where it is clear that the parties did not intend for there to be an equal interest in the property at the outset or later changed their intention, but it is not possible to determine the actual shares each party would own, the court can impute what it considers a fair share having regard “to the whole course of dealing between them in relation to the property”.
5. Each case will depend on the individual facts of the case and while financial contributions are relevant, there are many other factors which may enable a court to decide what shares were either intended or fair.

 The Supreme Court found that the parties’ intentions had changed after the separation and certainly by 1995, when they made the decision to cash in their joint insurance policy allowing Mr Kernott to buy his own home.

In its unanimous decision, the Supreme Court restored the order of the County Court awarding Mr Kernott 10% of the value of the property. After four years and having taking the case to the highest court in the land, it is a pretty safe bet that the legal costs spent are likely to have exceeded the sums at stake between the parties.

Unmarried couples who live and own property together need to be aware that the Courts will, if necessary, impute the intentions of the couple: this could result in rulings being made by the Courts that do not meet the couples’ true intentions.

So in the continued absence of any clear lead from successive governments to legislate on the issue of co-habitees rights, what does this all mean for co-habitees that jointly own a home or are considering doing so?

The answer is that couples who do not make appropriate arrangements – either at the time of jointly purchasing a home to clarify or later on, could well find themselves facing the daunting prospect of a lengthy and costly legal battle should their relationship break down. To avoid such a depressing prospect, it is essential that unmarried couples who wish to buy a home together should seek specialist legal advice beforehand and consider getting a Declaration of Trust and a co-habitation agreement drawn up. These can be used to clearly set out the intentions of the couple regarding shared ownership. Such agreements should be reviewed as circumstances change.

While this may not appear a very romantic idea it provides some certainty and clarity at the outset about property rights which can help provide a strong foundation for the relationship, but if the relationship doesn’t work out the couple have more control over how the interest in the property should be divided up.  No-one would consider buying a home without a life insurance policy and equally, unmarried couples buying a home together need to recognise that co-habitation agreements can act as an insurance that can provide clarity and peace of mind.

If you are considering buying a home with your partner and you are not married, please contact our specialist family law team for advice.

By Andy McKay

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