Will the person whose name does not appear on the title to the property be entitled to a share of the property’s value? The answer is, yes – sometimes. The law recognises that in some circumstances, if the non-owning person has made a contribution, it would be unjust to ignore that.
A claim by the non-owning party might be made on the basis that a ‘constructive trust’ exists, or on the basis of ‘proprietary estoppel’. These terms are explained below.
A trust is an arrangement where the legal owner of property holds it for the benefit of one or more beneficiaries. In the case of cohabiting couples, one party may be registered as the sole legal owner but may hold the property ‘on trust’ for the benefit of themselves and the other party. This would mean that both were entitled to part of the value. This becomes particularly relevant when the couple separates.
For the non-owning person to be entitled to a share, there must be a common intention to share ownership of the property, and the non-owning person must have relied on that intention to their detriment.
Common intention to share ownership
A common intention to share ownership of the property may be either express or implied.
The simplest example of common intention is an express agreement between the parties, which might be verbal or in writing. As an example, consider the case of H v M (Property: Beneficial Interest), involving a couple who had cohabited for 11 years and had two children. During their time together, the man had said to the woman:
“Don’t worry about the future because when we are married it will be half yours anyway and I’ll always look after you and the boy”.
The man had also suggested that reason the property was in his name alone was for “tax reasons”. This is a clear example of an express common intention to share ownership. Once the express intention had been established, the woman only had to show that she had acted on the intention to her detriment. In this case, she had signed a mortgage deed as an ‘occupier’ which prioritised any right she had in relation to the property below that of the lender. In doing so, she prejudiced her security, and therefore acted to her detriment. The court awarded her an equal share of the house.
Often, the intention to share ownership can be found in discussions between the parties about why the legal ownership should not be shared. For example, in the case of Eves v Eves, the man had told the woman that the property was only in his name because she was under 21 years of age. In this case, the woman had worked on various structural alterations to the property. The court held that she was entitled to a 25% share. Note that in the more recent case of Curran v Collins, the court said that just because one party had given a ‘specious’ (i.e. misleading) excuse for the property being held in their sole name, did not automatically mean the other person could regard themselves as having an immediate entitlement to a share of the property.
If there was no express discussion between the parties, a common intention to share ownership of the property can be inferred from their conduct. Good examples include the payment of mortgage installments or payment towards improvements to the property. Contributions of labour may also be relevant – for example, in the case of Cooke v Head the woman (non owner) made small contributions towards the mortgage payments and in addition, helped to build a property on land owned by the man. The court awarded her a third share for their joint efforts. However, this may be contrasted with Lloyds Bank plc v Rosset in which the court noted that a mere common intention to renovate a house as a joint venture did not conclusively establish how they intended to own the property. In the Lloyds case, the wife supervised, helped with work and carried out some decorating: but this was not enough to justify inferring a common intention to share ownership.
In addition to a common intention that the ownership of the property should be shared, there must also be a ‘detrimental reliance’ on that common intention. So, for example, in H v M mentioned above, the woman signed a mortgage deed which put her rights in relation to the property below those of the bank. This potentially detrimental act was done on reliance of the fact that she would have a share in the property.
Size of share
Once it has been established that there was a common intention to share ownership, and a detriment on the part of the non-owning party, it is then necessary to determine the size of the non-owning party’s share. There is no presumption that the share will be equal. The Court will examine the parties’ conduct to determine what was intended as to the share. If this is not possible, the Court will determine the size of the share based on what it considers to be fair, based on the whole course of dealing between the parties in relation to the property.
An alternative way of claiming that the non-owning party should have an interest in a property is through the doctrine of ‘proprietary estoppel’.
The doctrine of proprietary estoppel is used by the Courts to achieve a fair outcome where:
- Person A promises Person B that they will have an interest in the property;
- Person B relies on that promise;
- To the detriment of Person B.
All three elements must exist for the claim to succeed, and the circumstances must be such that it would be unconscionable not to make an award. However, note that even if the Court agrees that relief is appropriate, Person B will not necessarily get everything that was promised by Person A. The Court will take into account the degree of detriment that Person B has suffered and their award will be proportionate to that. You can find out more about proprietary estoppel claims here.
An example of a proprietary estoppel claim:
Person A promises Person B, “If you quit your job and care for me until my death, this house will be yours”. Relying on that promise, Person B quits their job and cares for Person A until their death. It then transpires that Person A has left their house to someone else in their Will. Person B would have a claim on the basis of ‘proprietary estoppel’.
Note that the doctrine is much wider and more flexible than that of constructive trusts. To claim that a constructive trust exists, the non-owning party needs to show that there was a common intention to co-own the property. By contrast, to establish a proprietary estoppel claim, it is only necessary to show that there was an assurance made which was relied upon, to the non-owning party’s detriment. You can see in the above example that Person B would have no expectation of acquiring any share of the property until Person A’s death.
Cases referred to:
- H v M (Property: Beneficial Interest)  1 FLR 229
- Eves v Eves  1 WLR 1338
- Curran v Collins  EWCA Civ 404
- Cooke v Head  1 WLR 518
- Lloyds Bank plc v Rosset  2 WLR 867,  1 All ER 1111
Are you concerned about your rights in relation to a property that you don’t own? Have you recently split up with your partner and been left wondering what your legal rights are? Or are you cohabiting and wondering how you can protect your rights going forward? Get in touch with our team for advice – call us on 0800 788 0500 or email email@example.com.