Declaration of Trust Agreements | Cohabitation Agreements

Cohabitation Agreements

In recent years more couples have chosen to simply live together rather than to marry i.e. to cohabit. Although there is no legal definition of cohabitation it generally equates to a couple living together without getting married or forming a civil partnership.

Choosing to cohabit rather than to marry requires couples to make tricky decisions about where they will live, what financial contributions they will make towards the purchase of property, or who is entitled to a share in the other's property. Income and past credit history can affect what couples are able to borrow via a mortgage and in many cases equal contributions towards the purchase price of property is not a realistic prospect.

As the value of property in the UK increases, so do the number of legal disputes between separating cohabitants. Generally the arguments that arise revolve around what each party is entitled to receive from property they shared.

Often agreements about who owns what, or what would happen to one person should a relationship end have been discussed but not written down. This invariably leads to misunderstandings and arguments. The value of contributions made by individuals towards the purchase of property and indeed renovations or mortgage repayments can amount to considerable sums. At the end of a relationship, when emotions run high, arguments over who said what, or what would happen after a separation can have significant financial ramifications. The same is true when one cohabitant dies without a Will.

How do I ensure my contributions are protected? Deeds of Trust/ Declarations of Trust

If one party is providing a larger contribution towards the purchase of a home or is buying into a partner's property, advice should be sought about the nature of how property is held. It is vital that any financial contribution to property is properly recorded to avoid confusion or future argument. This can be achieved via a document that expressly states what contributions have been made and by who, and what each party expects to receive should the property be sold. This is called a 'Declaration of Trust' or a 'Trust Deed'.

In the absence of a Declaration of Trust the position when one party alleges an interest in a property becomes more complicated. If individual interests are not recorded at the time of the purchase, it is extremely difficult to determine what each party is entitled to. The burden of proving that an interest is other than what is registered at HM Land Registry is also upon that party that wishes to establish that this is not the case.

Local Family Law Solicitors in Cardiff offering specialist advice surrounding Declaration of Trust Agreements

Constructive Resulting Trusts

The Court can imply a Constructive Trust if it finds on the evidence that there was a common intention between the parties before the property was bought that it should be owned in different proportions to what is registered at HM Land Registry. This means that the Court would imply that the parties had come to an agreement and will effectively there was a written trust. In these circumstances it is not necessary for the parties to have had an explicit conversation before the property was bought. It may be that the Court would only make such a finding by looking at the parties’ conduct during the purchase of the property and their respective finances generally. If the parties did not buy the property as a joint home the Court would have to pay careful consideration to the specific facts and the parties respective intentions and understanding at the time of the purchase.

The Court will also look at who contributed what to the property and may direct that the property should be owned in specific shares as a result of those contributions. This is called a 'Resulting Trust'. Contributions can be either direct contributions to the purchase price or simply that the individual is party to a mortgage. Direct contributions to the purchase price or deposit will nearly always result in a corresponding beneficial interest in the property. Similarly, if someone takes on the burden of a mortgage, alone or jointly, this should also result in a corresponding share in the equity.

This is an extremely complicated area of law and as such cases of this nature attract high legal costs. It is therefore vital that proper consideration is given to how property will be held after it is purchased. Recording the agreements reached in respect of property is never as costly as the cost of arguing about it after a separation.

Deeds of Trust | Declarations of Trust Agreements

The specialist family lawyers at Alun Jones Family Law can assist you in drafting a Declaration of Trust. For further details please contact the specialist team of Family Lawyers on 02920 023 222 or email Alun Jones at alun@ajonesfamilylaw.com.