Cohabitation disputes are resolved through the law of trusts. There is no such thing as a “common law” wife or husband. Many people living together mistakenly assume that they enjoy the same rights as an individual who is married or is in a civil partnership. We often receive calls from people who are disappointed to learn that financial settlements for cohabitants are largely based on what income and assets each respective party has put into the relationship.
Resulting Trusts and Constructive Trusts are the 2 main legal concepts applicable when one is assessing whether someone has a share in a property which might not be in their name, and if so, the extent of that share.
A resulting trust arises when somone has made a direct financial contribution to the purchase price of a property, and that contribution was not intended to be a loan or a gift. If a resulting trust is found to exist, then the precise share in the property is often assessed based on the amount of the contribution proportionate to the purchase price. It is likely to be necessary to look at the wider circumstances, and whether any constructive trust may also exist, in order to assess the correct share.
A constructive trust arises where there is an agreement between two or more parties. The agreement can be by way of an express agreement or a common intention.
The relevant legislation is the Trusts of Land and Appointment of Trustees Act 1996 (often abbrieviated to TOLATA). This statute provides the protection to the person with the trust, and provides the Courts with the powers to determine the size of the relevant shares and whether property should be sold. It is possible (and quite common) to bring a TOLATA claim even if one is not registered as a legal owner of a property.