The number of high-net-worth couples that are choosing not to marry is becoming increasingly high. There is a widespread misconception that long-term cohabitation with your partner creates automatic legal rights. You might have heard of the phrase ‘common-law marriage.’ However, this title is simply a myth. As such, property disputes can become especially complex for wealthy unmarried couples and so it is important to be aware of the implications. This article will focus on the reasons why unmarried couples face these challenges, the types of property that can fall into dispute and ways these disputes can be resolved with a primary focus on TOLATA proceedings (Trusts of Land and Appointment of Trustees Act 1996).

Why do these disputes occur for unmarried couples

Unlike married couples, unmarried partners generally do not benefit from a legal framework that automatically governs how assets are divided when a relationship breaks down. You will have heard of the phrase ‘common-law marriage,’ which many people believe grants unmarried couples the same rights as spouses simply because they have lived together for many years. However, this is a complete misconception in England & Wales. People are often unaware that the separation of an unmarried couple is governed by different areas of law.

Instead, disputes between unmarried couples are determined under the ordinary principles of property and trust law and family lawyers often deal with cases under a piece of legislation called TOLATA. As such, legal ownership is crucial to these disputes. A partner who does not legally own the property may be able to establish a beneficial interest by demonstrating a common intention to share ownership and showing that they acted to their detriment in reliance on that intention. These are the type of proceedings that are bought under TOLATA.

For wealthy unmarried couples, these disputes can be complex. There can often be high value property portfolios, and other significant assets which have a complex ownership structure. Establishing who owns what and whether one partner has acquired an interest despite not being named on the title to that property, can often involve a lot of detailed evidence and analysis of the parties’ intentions and financial arrangements.

Types of assets often in dispute

The most common asset that unmarried couples argue over is the family home or other properties they have owned together or deem belong to both of them. When wealthy unmarried couples separate, disagreements can arise over a much wider range of assets. Residential property is often the most valuable asset and this can be the family home, a holiday home or an investment property portfolio. Questions could also arise over business interests, shares or luxury high-value items.

However, for the purposes of this article, I will be focusing on residential properties and TOLATA.

Properties – the family home or other residential properties

Real estate is often the most significant asset in disputes between unmarried couples, particularly where substantial wealth is involved. In England and Wales, the starting point is the title to the property which sets out the legal ownership and the presumption is that equity follows the law (i.e. the equitable ownership is the same as the legal ownership). Therefore, if the property is owned by only one partner, the other must establish a legal basis for claiming a beneficial interest. Some good examples of evidence which could be used to establish this are the financial contributions towards the purchase price, mortgage repayments or major renovations which have add capital value to the home.

Disputes often involve the family home, but also second homes and investment properties. These can often have complex ownership structures and can be of significant value which might require detailed analysis of financial records, or correspondence and the conduct between the parties throughout the entire relationship to demonstrate their intention as to the ownership of the property.

Steps to take before issuing TOLATA proceedings

Upon separation, the first step in these types of disputes is to try and agree with your partner the extent of your beneficial interest in the property and the subsequent financial provision you should receive from it.

TOLATA claims are heard in the civil courts rather than the family courts. As such, there is strict procedure to follow before issuing a court application. These can be found by reference to the Civil Procedure Rules and the accompanying Pre-Action Protocol. To give an overview, you should firstly write to your partner to see if matters can be agreed outside of court. If their response is not forthcoming, you need to serve them with what is called a ‘Letter before Action.’ This is a comprehensive document which must fully set out your position, containing the factual background of the matter, the basis of your claim, and the action required to resolve the matter.

As part of the Pre-Action Protocols, attempts at engaging with a form of non-court dispute resolution should be made. For example, you should invite your ex-partner to engage in mediation at the very least. If they do not engage, you can make this point in your Letter before Action.

In terms of setting out the action required to resolve the matter, you should clearly set out the steps you are asking your ex-partner to take. This is essentially the offer you are making in respect of the property and how you want the proceeds to be divided.

Issuing TOLATA proceedings

If an agreement cannot be reached in correspondence, then you may have to issue a court application under TOLATA.

The court’s role is not to redistribute property on the basis of fairness, as it might do in divorce proceedings. However, the intention of the court is to establish the parties’ existing legal and beneficial interests. In doing so, the court will consider the property’s legal title alongside the evidence of the parties’ intentions and conduct. As set out above, this can include evidence of mortgage repayments, renovation costs, discussions about ownership or any written agreements over the course of the relationship.

These types of disputes are heavily reliant on the facts of the case. The outcome will often depend on the quality of the documentary evidence and the credibility of the parties’ accounts, making early legal advice particularly important in high-value property disputes.

Once your TOLATA application is issued, the court will list the first hearing known as the costs and case management conference. This is primarily an administrative hearing, and the substantial outcome of the case will not be determined at this stage.

After the first hearing, there will likely be a further two hearings. The second is a pre-trial review which is a short hearing where a judge checks that all directions have been complied with to ensure the case is ready for a trial. The third is a Final Hearing where a Judge will decide the outcome of the case. Both parties will need to give evidence at this Final Hearing, and it might be listed across a couple of days to ensure there is sufficient time to hear all of the evidence before the court.

In terms of the costs consequences, each party will be responsible for their own legal fees in the first instance. Naturally, the further a court case progresses, the higher the costs will be. As these are civil proceedings, the general rule is that ‘the loser pays the winner’s costs.’ Therefore, this is something that you should bear in mind before issuing a court application. You should be content with the idea that you have a strong case before issuing proceedings as you could be liable to pay the costs of the other party if you are not successful. In some cases this could wipe out the benefit of the potential claim and there always needs to be a careful cost / benefit analysis – TOLATA claims should not be rushed.

Protective measures – Cohabitation Agreements and Declarations of Trust

For unmarried couples with significant wealth, taking proactive legal steps before a dispute arises can provide valuable certainty and reduce the risk of costly litigation.

A well-drafted cohabitation agreement allows partners to record how they intend to own property, manage financial responsibilities during the relationship and deal with assets if they separate. Although cohabitation agreements are not subject to the same statutory framework as prenuptial agreements, they can hold some weight in England and Wales provided they are properly drafted and both parties have the benefit of independent legal advice.

Couples purchasing property together should also consider entering into a declaration of trust. This document will record your respective beneficial interests and can help avoid later disputes over ownership. For example, if one partner has contributed more to the deposit of the property, this can be recorded in the declaration of trust. Thereafter, the declaration of trust can record your intention to own the property equally or in line with distinctive shares referable to the deposit contribution or mortgage payments.

Maintaining clear financial records, retaining evidence of significant contributions and seeking independent legal advice before acquiring high-value assets can all help minimise uncertainty and place both parties in a stronger position should the relationship come to an end.

High-value property disputed: Unique challenges

Property disputes involving high-net worth unmarried couples often present challenges that extend well beyond establishing who paid for a particular asset. Significant wealth is frequently held through complex structures, including family investment companies or trusts, making it more difficult to identify the true legal and beneficial ownership of the assets.

Given the substantial financial stakes involved, many high-net-worth individuals may prefer to resolve disputes confidentially and outside of court rather than pursuing in lengthy and costly litigation. Judgments in TOLATA proceedings can and will be reported without anonymity which is a big consideration for those with a public profile.

Other forms of Alternative Dispute Resolution

As set out above, as part of the Pre-Action Protocol, engagement in Alternative Dispute Resolution should be attempted. The court has the power to stay the proceedings to return the matter to mediation, or other forms of ADR, if they do not believe sufficient attempts have been made to engage in the same.

Early negotiation between the parties, often through solicitors, may enable an agreement to be reached without the time, expense and uncertainty of litigation. Mediation is another popular option, as discussed above, although the outcome of the same is not binding upon the parties. An alternative option to court is arbitration where a specialist is appointed to provide a binding determination. An arbitration can be conducted in private and outside of the court room.

Conclusion

If you are unmarried and have recently separated, family lawyers can help to ensure that you are protected and can help you to find a way to ensure you receive the appropriate provision from property that you previously owned with your ex-partner.

Frequently Asked Questions (FAQs)

My experience

My name is Alice Carter and I am a Trainee Solicitor at Edwards Family Law. I have worked at the firm for over 3 years, and I have assisted the team in various matters which involves these types of property disputes and TOLATA proceedings. Please do not hesitate to get in touch should you have any questions arising from this article.