Happily ever after………

As shown in the previous blog, many issues can arise when couples purchase a property together. With this in mind, the Supreme Court’s recent decision in Jones v Kernott provides some clarification to the law where an unmarried couple purchase a house together in both names but later separate and claim different shares.

The facts of this case were as follows. Ms Jones and Mr Kernott bought 39 Badger Hall Avenue in joint names in 1985 with the proceeds of Ms Jones’ sale of her mobile home and an endowment mortgage. The two parties contributed fairly equally to the household expenses and lived there with their two children together until October 1993 when Mr Kernott moved out of the property. From this point onwards he made no further contributions either to the mortgage or upkeep of the property, or as maintenance and support for the children.

In 1995 they put 39 Badger Hall Avenue on the market for £69,995 but did not find a purchaser. They then cashed in a joint life insurance policy and Mr Kermott used his share as deposit on a property which he purchased in May 1996.

In 2006, Mr Kernott contacted Ms Jones to claim a share of 39 Badger Hall Avenue and subsequently proceedings were brought to determine their respective shares. As they had made no agreement as to what shares each should have in the property the courts were left to look at the parties’ conduct to see what conclusions could be made. It was agreed that when they purchased the property they intended it to belong to each of them in equal shares. The deliberations hinged on the question of whether the parties’ intentions in respect of the property had changed when Mr Kernott moved out after eight years. The court found that their intentions had changed and based this on the fact that from the point that Mr Kermott moved out, Ms Jones covered all payments relating to 39 Badger Hall Avenue. They also noted that this had enabled Mr Kermott to purchase his own property which it was agreed Ms Jones had no interest in. The court found that Ms Jones was entitled to 90% of the beneficial interest and Mr Kermott to 10%, which was calculated on the basis of each being entitled to half until 1995 and Ms Jones being entitled to the full benefit from that point onwards.

Following this case, in the absence of any agreement by the parties, the court will begin on the presumption that if they are joint owners of the property then they would be entitled to equal shares of the property. The next step will be to see what their intention was when they purchased the property and then to see whether this intention changed at any point subsequently. This will be done by looking objectively at their conduct and if their intentions cannot be inferred from their conduct the court will look to what would be considered fair in relation to their dealings with the property.

While in this case this seems to have led to a fair outcome by far the best course of action for couples buying a property together is to have a declaration of trust setting out what share each of them should have and to change this if their circumstances change. Whilst it has to be said that this is not the most romantic option, it could save a lot of expensive litigation in the future if the couple separate.

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