The Penhale Practice

Joint Ownership

A recent Court of Appeal decision has highlighted the need for unmarried couples to carefully discuss and agree their intentions when buying a property in joint names.

In Kernott -v- Jones the Judge stated that the case should be viewed as "a cautionary tale" for all unmarried couples who are intending to buy a property in joint names.

In brief two parties met, had children, and bought a house in joint names. At the time that they purchased the property they did not obtain full and detailed legal advice as to how they should own a property despite the fact that Ms Kernott paid the whole deposit and Mr Jones only joined in with the mortgage.

Following the end of the relationship Mr Jones moved out and bought another property and Ms Kernott continued to live in the jointly owned property with her children. Mrs Kernott paid all bills, all mortgage payments and continued to repair and pay for the upkeep of the property.

Despite this, 12 years after the parties separated, Mr Jones decided that he wanted to claim his half share of the property.

Following earlier cases the Court decided that, although Miss Kernott had been solely responsible for all costs and expenses of the property including the mortgage and the repair and upkeep since the parties separated, and despite the fact that Mr Jones had purchased a separate property in his sole name, Mr Jones still owned 50% of the house and was therefore entitled to 50% of the equity.

At the time that the parties separated the property was valued in the region of £70,000 with a £30,000 mortgage. By the time Mr Jones wished to claim his 50% share of the property it was valued at £245,000 with a mortgage outstanding of just under £27,000.

The moral of this case is two-fold. Initially, when purchasing a property in joint names, you should also ensure that you take full and detailed advice as to how the property should be held, particularly if one party is putting in more money than the other. This can be easily recorded in a Declaration of Beneficial Interest which can be registered at HM Land Registry and will protect unequal shares in the future.

Secondly, if joint owners of a property do decide to separate and one party moves out, it is at that point when legal advice should be sought as to how the property should be divided. As in this case it is much easier to agree to pay a 50% share of the property when the property only has equity in the region of £40,000 as opposed to when equity has increased to around £218,000. Again at the point of separation there are various legal options available to deal with how the property should be owned, to take into account who will be responsible for the mortgage and the bills, which can avoid an estranged partner turning up 12 years later and taking the benefit of any increase in the property's value.

If you are thinking of buying a property, or you have recently bought or if you have recently separated from a partner and jointly own a property then taking legal advice can avoid situations such as that described in this case.

If you would like advice regarding this or any other matter relating to co-habitation, purchasing a property in joint names or a separation then please contact Nicola Codd, partner in this firm specialising in Family Law. Nicola will be happy to provide a free half hour advice and thereafter to discuss with you how best to protect your interests in the future.

Submitted by The Penhale Practice on Thursday 24th March 2011