On the 9th November 2011, the Supreme Court laid down long awaited guidance on how to determine the respective beneficial interests of a couple in a property purchased in joint names, where there is no express declaration of trust.
Mr. Kernott and Ms. Jones owned a property as joint tenants but disputed what share each had in the property. At trial Ms. Jones was awarded a 90% share, but this was reverted to 50% on appeal by Mr. Kernott. Ms. Jones appealed to the Supreme Court, which re-instated the original 90/10 split.
The Courts’ Approach to jointly owned property following Kernott and Jones:
- Where property is owned in joint names, the starting point is that equity follows the law. Therefore the presumption is that the parties are both legal and beneficial joint tenants.
- That presumption can be overturned by establishing that the parties (a) had an alternative common intention when the property was purchased, or (b) later formed a common intention that their shares should alter.
- The common intention of the parties is to be worked out objectively from the parties’ words and conduct.
- Where the presumption is overturned, but the Court cannot establish what shares the parties intended each should hold, the Court must grant each party a share that the Court considers fair having regard to the whole course of dealing between them in relation to the property. This means the Court can impute an intention to the parties.
- Each case will turn on its facts, and there are many that a court will consider when determining each parties’ interest in a property.
What does the Supreme Court’s decision mean for cohabiting couples?
If an unmarried couple own property together as joint owners, and there is no express declaration of trust, the presumption is that the property is owned 50/50. This ratio can be changed if evidence shows that it was the couple’s common intention to change the presumption of equal ownership. This is a substantial obstacle to surmount and parties must have direct or inferred evidence to establish a common intention to hold in unequal shares.
Janet Raeburn | Solicitor
Matrimonial Department, Kerseys