Jones v Kernott [2011] UKSC 53

The Supreme Court has now reported its decision in the case of Jones v Kernott, a much anticipated decision relating to the division of the beneficial interest in a property owned by cohabitees (as opposed to married couples).

The decision is of importance to those un-married couples who have or are looking to purchase a home together, as it sets out the framework by which proportionate shares in equity in the property may be calculated in the event of a breakdown in the relationship.

The key aspects of the decision for prospective cohabitees are:

1. In the absence of  clear evidence as to the division of shares in the property the court has the power to decide how the beneficial interest in the property should be split between the parties based upon what the parties, as fair and reasonable people, would have intended
2. The intentions of the parties can, through their actions over time, be viewed as having altered their original "common intention"

The best way cohabitees can seek to formalise their intentions at the outset and avoid a costly dispute over contributions at a later date, is through the creation of a Declaration of Trust in which their proportionate interests in the equity value of the property would be clearly recorded. Such a deed would typically cost no more than £200. Whilst for those looking to purchase their first property this presents an additional up front cost,  the benefits of a clear record of the parties' intention in the event of a breakdown in the relationship would far outweigh that initial outlay.

However, what is apparent from the judgment in Jones v Kernott is that, whilst a Declaration of Trust is key to clarifying the initial intentions of the parties, and would therefore be taken as the starting point for deciding how much of the equity each party is entitled to, the actions of the parties subsequent to that may be deemed to have altered that initial intention.

Property owners should therefore undertake regular "health checks" of any declarations they have entered into to ensure that they continue to best reflect their intentions and to enter into new declarations where circumstances have changed. For example, where one party's contribution to the purchase cost of a property is greater than the other, but the other party then pays the entire cost of an extension that enhances the value of the property, the shares as initially agreed, may not then reflect the reality in terms of financial contributions to the property and would require adjustment.

Our conveyancing experts at Access Legal from Shoosmiths are able to react quickly and efficiently to the changes in our clients needs and provide advice on the best methods to protect proportionate interests in your property giving both of you certainty and peace of mind.

If you would like further advice, then please contact our dedicated Helpline on 03700 86 86 86.

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