Who Gets The House When An Unmarried Couple Splits Up?

The first step in the process is to determine how the legal and beneficial interest in the property is held between the parties.

Whenever land is co-owned, a trust is created, known as a trust of land. This has the effect of separating the legal and equitable title to the land between the trustees (legal owners) and the beneficiaries (equitable owners).

There are different issues that can arise when co-owning a property:

1. Where a property is registered in the names of both parties, or
2. Where the legal title is registered in the name of one party only, and the other wants to establish that they have a beneficial interest in the property.

In this case, as the property is jointly owned as joint tenants, the presumption will be that each party will have a 50% interest in the property.

The transfer document itself includes a declaration of trust, despite the couple not entering into a separate declaration of trust. If there is a declaration of trust, then this is normally determinative of how the beneficial interest in the property is held.

If there is no declaration of trust, which is quite rare nowadays, then the assumption is that they hold the property in equal shares.

Once it has been decided how the legal and beneficial interest in the property is held, if the property is sold or one party decides to ‘buy out’ the other party’s interest in the property, it may be necessary for one party to pay to the other party an amount out of their share of the equity through “equitable accounting”.

Occupational rent is a notional rent charged against the occupier of a property in favour of the non-occupier.

The occupational rent is a compensatory payment to the non-occupying party and is usually calculated as 50% of the market rent for the property.

Occupational rent is confined to cases where one party was ‘excluded’ from the home. 

The Court will generally approach the issue on the basis that a relationship breakdown necessitates one party to leave the property.

In our example, Chris could argue that he was ‘excluded’ from the property due to the breakdown of the relationship and therefore Della should account to him for 50% of the rental value of the property.

However, in this case, as Chris stopped paying the mortgage when he vacated, the occupation rent may be counter-balanced, by Della’s claim against Chris.

The general approach is that expenditure on a property without the non-occupying party’s knowledge or consent will not be credited to the payer.

This will also relate to larger expenditure and not general repair and maintenance of a property.

Generally, the payer may seek an account to be credited with the lesser of (a) 50% of the increase in the value of the property resulting from the expenditure or (b) 50% of the actual expenditure.