It is not uncommon for couples to live together in a property already owned by one of them, especially if they get married or start cohabiting later in life. In the event such a relationship breaks down, dividing the assets can be a point of contention.

In the first of a series of short articles, Divorce and Family partner Toby Atkinson and senior associate Sarah Havers explain what the law says about division of previously-owned property for both married, and cohabiting, couples upon both relationship breakdown, and how individuals can protect their assets.

In a new marriage, if one spouse moves in with the other (a property owner) but they divorce sooner after, does the spouse who moved in have a claim to the property?

The starting point for splitting up assets upon divorce, is that anything generated during the marriage is divided equally irrespective of whose name it is in. Likewise, assets owned by one spouse prior to the marriage and kept completely separate during the marriage (particularly a short, childless marriage) should be capable of being ringfenced.

The law in relation to the marital home, even if brought into the marriage by one spouse, is more of a grey area because it’s considered such a central asset of the marriage, regardless of its provenance.

Having said that, if they do not have any children and were only married for two years then the initial owner could argue that they should retain the vast majority if not the entire value of the marital home. The chances of this argument succeeding will depend on whether the other spouse has any assets or income of their own to meet her needs.

What could the property owner have done to protect their assets?

The couple could have entered into a pre-nup, which would have afforded the initial owner some extra protection for keeping their house separate. Although pre-nups are not automatically binding in this country, they can be highly persuasive, and the courts will give effect to any agreement that is freely entered into by each party, provided they fully appreciate its implications, unless it would be unfair to do so.

On the other hand, if the effect of the pre-nup was to leave the other party in a “predicament of real need” then the court would likely order some limited financial provision to be made for the financially-weaker party, reflecting the fact that it is a short, childless marriage with a pre-nup.

What should the non-property-owning person be aware of when living with someone for a substantial length of time? Could they be left ‘high and dry’ if the relationship breaks down?

Cohabiting couples do not enjoy the same legal rights as those who are married or in a civil partnership, even if they have lived together for a long period of time and have children. The current lacuna in the law means that the financially weaker party can, potentially, be left very vulnerable upon the breakdown of a relationship.

For example, consider a couple living together for thirty years and having three children together but never marrying. The woman gives up work when they have children and the man is the sole breadwinner throughout the relationship. The house is in the man’s name, as are all the assets save for a joint account the balance of which he keeps topped up only at the level necessary to cover the woman’s spending on herself and, previously, the children. The children have now grown up, finished university and left home.

The couple then break up. The woman has no property in her name and she has made no financial contribution to the home she has lived in for thirty years. She also has no savings, no pension, no income and very limited earning capacity as she is by this stage in her mid-50s and hasn’t worked for 30 years. The lacuna in the law for cohabiting couples means that she has no financial claims in her own right against her partner of 30 years and he has no legal obligation to provide her with any form of housing or income support. The only possible claim she could have had was on behalf of her children if they were still minors or still in full time education. But on these facts, they have finished university.

This is, of course, quite an extreme example but it demonstrates how the law currently leaves cohabitees (and women in particular) very financially vulnerable, especially if their partner is financially controlling and keeps all of the assets in their sole name.

In contrast, if this couple had not separated but the man had died whilst they were cohabiting, then the woman would have been able to bring a claim against his estate as a dependent.

How can a non-property owning partner in a relationship protect themselves in the event of a relationship breakdown? Or is marriage the only answer?

Marriage is in many ways the most straightforward solution as it ensures that both parties have a raft of financial claims upon divorce including transfer of property, lump sums, maintenance and pension sharing orders.

On the above facts, if the couple had been in a relationship for 29 years and then decided to marry but divorced after one year of marriage, the couple would most likely have been treated as being married for 30 years and the wife would have had available to her all the potential financial claims arising upon divorce. The starting point for splitting up the assets upon divorce is that anything generated during the marriage is divided equally irrespective of whose name it is in.

An alternative form of protection for cohabitees is to enter into a cohabitation agreement. Provided they are correctly drafted, cohabitation agreements are legally binding contracts which, if necessary, are enforceable by a court. They are very effective and highly recommended. Both parties would need to take legal advice but the issue is that the financially weaker party often has very little leverage when negotiating these agreements.

These responses were first provided for an article in Good Housekeeping.

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