How Do I Make A Financial Claim As A Cohabitant?

In this blog, ahead of the Family Justice Council Debate tonight (7 December 2023), FLiP Director James Pirrie and Associate Rory Collett discuss what a cohabitant needs to show to be able to make a financial claim on separation. 

It is all too easy to slip into sharing our lives together, without really knowing what we are stepping into. Often we won’t think about the long term situation if, for example, something goes wrong and we need to go our separate ways again. We will just assume that the law of the land “has our backs” and will speak with moral justice to resolve our situation, however that eventually turns out.

The law on divorce seems to make that sort of sense: most times the financial solutions it generates are appropriate to people’s circumstances at separation.

But strip away the marriage and things can become very different. The court has a structured 3 fold test to apply in deciding whether there is any claim to be made at all:

1. Is there an agreement between you? and generally
2. Did the person making a claim rely upon that agreement? and
3. Did they then act to their detriment?

At stage 1, the judge will usually be saying “show me the agreement”.

• This is fine if the property you are talking about is registered in both of your names (the TR1 contains the agreement) or you are engaged (an agreement is assumed).

• It is also fine if you have actually thought about things and agreed who has what entitlement, even if those were simply conversations between you and nothing is written down.
• But if you can’t show these things, the situation can become very much more difficult. You can’t get home on: “obviously I should have a claim – it is only fair – I wouldn’t have contributed the way that I did if I wasn’t going to share in the upside of everything.”

The law as it now stands is very specific.  Merely having a relationship doesn’t create claims – but beyond this, if there isn’t an agreement between you, the judge in effect will be saying:

• “Show me that you contributed to the purchase price of this property”
• “Otherwise I will need to see contributions to paying down the mortgage [and interest only mortgage payments probably don’t count]”
• “And beyond this I will need to see a devastating contribution – the sort of thing that so clearly could only be explained by the fact you would have a share that I must infer an agreement.”

And this is a high bar: working without pay in your partner’s business won’t do it; nor will any of:

• Manual work, driving a tipper, digging trenches, picking up materials, laying concrete etc
• Operating a joint account
• Giving your partner £5000 to enable them to pay their debts
• Doing work on the property in exchange for extending the boundaries and acquiring next door land
• Making planning permission applications
• Renovations

In fact doing all of these won’t get you over the threshold to pursue a claim, because that is exactly what one person had done before pursuing the case that they lost: none of them PROVED that there must have been an agreement to share property in existence – all of them were also consistent with just sharing your life with someone.

It can be difficult to know what does work: spending £20,000 on installing a new kitchen and upgrading the bathroom probably won’t do it (because the court would say “well you may have done this as part of your partnership – you may have been wanting to upgrade the amenities in where you spent your life together; it doesn’t scream out “there must have been an agreement”).  On the other hand, spending £15,000 to reduce the mortgage probably would suffice.  Which side of the line you fall may well feel random – but what is crucial is that you have in mind how many seemingly meritorious claims die on the doorstep, because the judge who will deal with your case has to apply the law and that requires them to see you get over stage one: that there is an agreement in the first place.

This evening (7 December 2023) the Family Justice Council debates whether the law needs to move on to provide more financial protection to cohabiting couples: “should cohabiting couples have the same financial rights as those who are married or in a civil partnership?”

The Government has been saying for some time that they should not. There is little doubt that whilst we are stuck with the current system, those without property registered in their name are often exposed and for all of us, the cost and time involved in resolving disputes will often be disproportionate.

We cannot say too loudly “write up an agreement between you right at the start, whilst times are good so you both know where you stand.”