Is it a gift or not?
A widely reported case involves the breakdown in a relationship between an unmarried couple. The case hit the headlines because the parties involved are a successful business man and his ex-girlfriend. When the parties met the girlfriend was working at the National Gallery as a cleaner and this fact led to some fairly lurid headlines including 'Plumber loses £650,000 house to cleaner' and 'Millionaire Plumber is ordered to pay his Lithuanian former cleaner girlfriend huge slice of his fortune – even though they were NEVER married'.
Headlines aside, the case is an important reminder of the views a Court will take when considering how the assets of a parting couple will be split.
A commonly held misconception is that unmarried couples have an automatic right to assets from their partner in the event that they spilt up. A phrase often used is 'common law' wife or husband. The law recognises no such status.
When a couple who have gone through a marriage or civil partnership ceremony split up there are a range of remedies available to the couple. However an unmarried couple have surprisingly few rights and in the unfortunate event that a matter comes to Court, often the Court will only be able to rely on Contract law and Trust law to decide how assets should be split based on the evidence put before the Court.
In the case in question the couple were together for nine years and the judge acknowledged the business man involved 'was extremely generous in these years and that considerable sums of money passed through his hands'. The business man paid himself £150,000 from his plumbing business and gave his girlfriend an annual salary of up to £93,000.
The man bought a £650,000 second home in 2009. He paid the £100,000 deposit when the property was purchased and subsequently all costs and mortgage payments. Interestingly the couple never moved into the disputed property; the man claimed that his girlfriend refused to move in because there was insufficient wardrobe space.
However one of the key facts in the case is that the second home was purchased in the girlfriend's sole name. The man claimed that this was only done to get a mortgage more easily because he already had some debt. The girlfriend claimed that the property was intended to be a gift to her and on the facts the judge agreed with this view. Accordingly the £650,000 house was passed to the ex-girlfriend.
The moral of this story is that you should take comprehensive and detailed legal advice when purchasing a property. It is possible for someone to hold the legal estate in a property but on behalf of someone else. Accordingly in this case the property could have been put in the girlfriends name but a behind the scenes declaration of trust could have been signed acknowledging the man's contribution. It would appear that for whatever reason this course of action was not taken. If you contribute towards a property and do not want your actions to be misconstrued at a future date it is important to take proper legal advice at the time of purchase.
To discuss this or any other property related issues contact us.