How to avoid getting stung financially when you move in with your partner

Moving in with a partner is a significant milestone in a couple's relationship. This is almost as important to many people as getting married. It's an exciting time, but there are many things to consider that are sometimes overlooked, such as your financial situation.

When an unmarried couple moves in together and only one of them owns the house, there are numerous financial implications, especially if the relationship breaks down. In this blog, we’ll look into what you can do in the event of separation and give you a real-life example.

The case of Mr Horn and Miss Chipperfield

The reported case of Mr Horn and Miss Chipperfield is reminder of what can go wrong if you move in with a partner without considering who owns the property and in what shares. It’s so important to discuss and agree what you both intend to happen when you are planning the move, including if the worst should happen and you were to separate in due course, and to avoid any future dispute by recording your agreement clearly in writing.

Mr Horn and Miss Chipperfield bought a house in joint names for £740,000. Mr Horn paid the deposit and costs of purchase, contributing more than £285,000 in total. Miss Chipperfield paid him £39,000, which was her equity from her previous house. The balance of the purchase price was by way of a mortgage in joint names.

When they split, Mr Horn expected to receive the greater share of the equity because he had paid so much more than Miss Chipperfield, who instead sought 50% of the equity.

As they were not married, they could not claim a share of the other’s assets and the court had to determine who owned what.

What happened?

The starting point in any property dispute is always to look for the paperwork. This property was legally owned in joint names and Mr Horn and Miss Chipperfield were recorded as beneficial “joint tenants”, meaning they both had an equal entitlement to the property, regardless of who had paid what. The legal presumption was therefore a 50-50 split and the onus was very firmly on Mr Horn to try to prove otherwise.

Mr Horn argued that they only held the property as beneficial “joint tenants” because he had understood from the conveyancers that “joint tenancy” meant the property goes to the survivor on death. He would have been happy for Miss Chipperfield to inherit the property in the event of his death, but he didn’t agree to her having 50% of the equity in the event of separation.

The court went through the available evidence as to what they had both intended and concluded that the parties had intended an equal ownership of the property, not just on the first death and notwithstanding Mr Horn’s greater financial contribution. The judge took into account Miss Chipperfield’s career sacrifices for the sake of the family, her “significant financial contributions” i.e. giving Mr Horn her £39,000 and taking out a joint mortgage. Also, crucially, there had been a conversation between them in a pub when Mr Horn had said “Well that’s it Chip, we are now 50/50 owners, but that means you owe half the debt as well”.

In the absence of written proof that Mr Horn was to receive the greater share of the equity on a subsequent sale or in the event of the parties’ separation, the court’s conclusion was a 50-50 split.

The judgment does not state what the parties had paid in legal costs to get to that point. However, the costs would have been significant as this was the second round of litigation with Mr Horn applying for permission to appeal after losing before the first judge. He lost again and also had to pay some of Miss Chipperfield’s costs as a result.

Could this situation have been prevented?

Mr Horn could have had a greater share of the property on separation if they had had a cohabitation agreement.

We recommend that anyone moving in with a partner should agree ownership at the outset and record it any cohabitation agreement and/or a declaration of trust. This means that regardless of what type of ownership you decide upon, you have written proof of what each of you is entitled to in case of separation. The cost of doing this will always be far less than the emotional and financial costs of a dispute arising if the relationship were to break down at some point in the future.

If you’re looking to move in with a partner and getting a cohabitation agreement in place, our cohabitation lawyers can help. Speak to our team today.