What is beneficial ownership of a property?

The issue of beneficial ownership arises more in cases where a couple are not married. The phrase Beneficial Interest describes the situation where one cohabitee in a relationship has the right to occupy their home or a right to share in the equity in the property even where the other partner is the legal owner.

This usually becomes an issue when a relationship ends and the legal owner of the property asks the other person to leave, even if that person has contributed significantly to things such as purchase costs, mortgage costs and home improvement costs over a period of years.

Perhaps surprisingly, this situation can even arise when married couples separate or divorce, as well as when cohabiting couples split up but married people generally have protection under the law.

What is beneficial interest?

For a couple who are not married, there are three ways in which a beneficial interest can arise:

• Express declaration of interest: This is when the legal owner and their co-habitee have signed a trust deed declaring the share that each has in the property.

• Resulting or implied trust: This is when there is an implication that the couple agreed to share an interest in the property, perhaps because the non-owner has paid significant amounts towards home improvements

• Constructive trust: This is when a court concludes that there was a clear intention or agreement that the non-owning party would gain a beneficial in a property

The Express Declaration of Interest gives the greatest protection to a non-owner, whilst the other two options rely on having to prove intentions or agreements often in court if they cannot agree.

For this reason, our family lawyers will usually suggest that cohabiting couples have an Express Declaration of Trust with regard to property ownership, and that they also discuss and agree others matters, such as ownership of cars, as part of a Cohabitation Agreement.

How our family lawyers can help

You should also note that while judges will often be guided by them, cohabitation agreements aren't 100% binding in law. To protect you both as fully as possible, our family law experts are also able to prepare your cohabitation agreement as a formal legal deed to indicate to the court that you both want to be bound by it.

To learn more about cohabitation agreements and how they relate to beneficial ownership of a shared property, call 0330 041 5869 or contact us online today and we will call you.