It is a common occurrence to encounter a co-habiting couple who after purchasing a property jointly find themselves separating at a later stage. In the absence of a written agreement outlining each of the co-habitants respective beneficial interests, a claimant may apply for an order under the Land and Conveyancing Law Reform Act 2009 for an order for the sale of a property and the distribution of the sale proceeds.
A recent judgment of Judge John O’Connor in Dublin’s Circuit Court addressed the division of a property between a co-habiting couple following a breakdown in their relationship. The decision highlights the importance of drawing up a co-ownership agreement in circumstances where people wish to buy property jointly, whether the purchase is between people in an intimate relationship or otherwise. The purpose of a co-ownership agreement is to set out each co-owners respective beneficial interests in a property and can address both financial matters and also what occurs to the property in the event of death or on the breakdown of the relationship.
In the above cited case, the rights and remedies available to a co-habitant by virtue of the Civil Partnership and Certain Rights and Obligations of Co-Habitants Act 2010 were not considered, the reason for not pursuing the rights and remedies pursuant to this Act are not outlined in the judgment. However, it is of note that a co-habitant who wishes to pursue any of the orders under this Act must do so within 2 years “of the time that the relationship between the cohabitant ends, whether through death or otherwise”. Therefore in circumstances where the above cited Act is of no assistance a party may also rely upon the legal and equitable principles available to them.
Both parties were registered as owners of a property as joint owners. The property was originally purchased in 1996 and both parties had roughly contributed equally to the deposit. A mortgage was entered into by both parties to finance the balance of the purchase monies which has since been repaid in full.
During the course of living together, the parties held two joint bank accounts. The mortgage repayments were made from one of the bank accounts and the joint living expenses were paid from the second joint account. Both parties referred to their time living together as “a family unit” and that despite the fact that they were not married,they “lived as a normal married couple”.
The plaintiff calculated the total contributions made by her in relation to the “deposit, enhancement works, mortgage repayments, and household expenditures” and argued that she was entitled to 50% of the net proceeds of the sale of the property. The defendant disagreed with the plaintiff’s calculations and argued that her contributions amounted to no more that 26%. Neither party could agree and looked to the court to determine their respective beneficial interests in the property. Judge O’Connor stated “the issue of cohabiting couples owning a property jointly without a declaration in writing of the respective beneficial interests in a property is a common occurrence…….therefore the parties rely on the legal and equitable principles applicable”.
The court stated that it must firstly determine the intention of the parties when they originally purchased the property. The common intention of both parties was examined. Specifically, the fact that both parties purchased the property in joint names and were jointly liable for a mortgage led the court to believe that the parties intended that their beneficial interest was to be treated no differently than their legal interest. The court held that the parties were joint tenants in law and that there was no evidence to suggest that “the parties ever envisaged that it would be otherwise until the relationship ended……..the only matter that has changed, is that the court decrees that the property is now owned as tenants in common in equal shares and not as joint tenants”. The Court made an order under the Land and Conveyancing Law Reform Act 2009 ordering a sale of the property and a distribution of the sale proceeds in equal shares.
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