Beware of Property-Related Pillow Talk
Juliana M. Snelling · May 1st, 2008
Are you an unmarried couple living together and have no idea who owns the house?
Maybe your parents put up the deposit that made it possible to buy the place so you feel that it’s really yours. But maybe your boyfriend, Mr. Fixit, added two rooms onto the place and he thinks that you own it equally. Perhaps, however, you are making most of the mortgage payments so you feel it’s not fair that he should own as much as you do. Equally, it may be that your boyfriend pays the utility bills and that allows you to pay the mortgage. Who owns the house then and in what proportions?
Unmarried couples living together is a fact of modern-day society and our courts are having to “get with it” and decide on property rights outside of Bermuda’s archaic matrimonial legislation.
The courts have to do this because during the good times, couples do not sit down and work out a formal agreement as to their property rights in the event of a break-up. As Lord Hodson said in the one of the leading English cases, the “concept of a normal couple spending the long winter evenings hammering out agreements about their possessions appears grotesque.”
If you do happen to be the responsible couple who has recorded your respective property rights in writing, good for you, because the law requires agreements about land to be in writing. Be forewarned, however, that whose name appears on the deeds is not conclusive of who owns the house. Having your name on the deeds makes you a “legal owner” but not necessarily the “equitable” or “beneficial” owner (the part that really counts).
The surest way of knowing what each of you owns is for the legal owner to enter into a written “declaration of trust” declaring how he or she holds the property—for whom and in what shares, for eg., “I declare that I own the house on trust for you and me in equal shares.” Certain formalities must be followed and, of course, a lawyer can help you with this.
If nothing is in writing, however, equity may come along, which is the law’s concept of fairness, and say that your girlfriend owns half the house even though her name is not on the deeds. She can do this by proving that a promise from you in relation to the property gave rise to a “constructive trust” or “proprietary estoppel” in her favour. These concepts are very similar and mean that if you make a promise to your girlfriend to give her an interest in your property and she relies on your promise to her detriment such that it would be unfair for you to go back on your word, she will own half the house.
Your promise could have been informal pillow talk (“Honey, you know this house is both of ours”) that was, however, taken seriously by your partner who relied on your promise by contributing labour or helping to pay for renovations. That is often enough for the courts to say that it’s only fair that he or she gets their half. This led an English judge to caution that “the tenderest exchanges of common law courtship may assume an unforeseen significance many years later when they are brought under equity’s microscope.”
Even if you made no promises to your partner, the law may infer shared ownership by looking at the conduct of the parties. Thus, if your boyfriend paid part of the deposit on the house or he is making mortgage payments or paying for renovations or spending his nights after work laying block for that new addition, the court may well declare him to be a joint owner.
Having a court decide the answer on ownership is not the way to go. It costs a fortune to both sides, even if you win, and the result could be something far worse than you ever contemplated. Save your money and a lot of grief by sitting down with your partner now to agree who will own what in case everything goes pear-shaped. Then see a lawyer to formalise what you’ve agreed. If you can’t be bothered, then my advice to you if you’re the legal owner is to keep the pillow talk focused on the weather. If you’re not the legal owner, start whispering sweet nothings and put up some shelves on the weekend!