When labours of love just don’t pay off…

29 January, 2015
by: Cripps Pemberton Greenish

Unmarried couples who plan to or currently live together are not always aware of the legal pitfalls. Without an express declaration of trust and/or a cohabitation agreement setting out your future intentions/interest in a property that you co-own or invest money and time into, can often lead to a difficult break up. One of the parties may be at a significant financial disadvantage and the court may need to become involved.

A recent case highlighted this issue. Ms Gibson applied to court against her former boyfriend, Dr William Knottenbelt for a half share of his property in South Harrow worth £500,000 after he ended his relationship with her. Ms Gibson claimed that Dr Knottenbelt had persuaded her, her uncle and her father to renovate the dilapidated property. Ms Gibson and her family did so over the course of two years. Dr Knottenbelt then ended their relationship four months after he moved in to the property.

Ms Gibson and her family claimed it was understood that Dr Knottenbelt would buy the couple’s new home, but she would have a half-share in return for contributing to extensive renovations and their living expenses. She gave up her weekends to help her family work at the property. She demanded £67,500 to cover her family’s labour costs. In court, Dr Knottenbelt accepted the contribution of Ms Gibson’s father’s contribution and said he had offered him £5,000.

The judge rejected the suggestion that ‘the episode was a deceitful sham by William to get his house renovated by her family without payment’. He made a ruling in Dr Knottenbelt’s favour on the basis that no agreement was ever reached that Ms Gibson would receive a half share of the property. The judge estimated the value of the family’s work at £12,000. Dr Knottenbelt was awarded his legal costs for the five-day hearing.

Ms Gibson and Dr Knottenbelt never lived together. If they had they could have entered into a cohabitation agreement and, even if they didn’t live together they could have signed a declaration of trust. This records a couples rights and responsibilities in relation to the property where they live and the financial arrangements between them. If Ms Gibson had insisted that she and Dr Knottenbelt enter into a legally enforceable cohabitation agreement to protect her family’s significant contribution and a promise that she was to have an interest in the property, then the outcome of the hearing in my view is likely to have been very different.