Unmarried cohabiting couples – watch out for verbal agreements

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Couples who are unmarried but live together, should be careful about what they say with regards to how they own their property.

The recent case of Ely v Robson (2016) found that a verbal agreement the couple had made was binding. They had lived together with their children, in a property owned solely by Mr Ely. Their relationship broke down in 2005, but they continued to live together at the property, together with Ms Robson's aunt and occasionally her mother.

Mr Ely issued Court proceedings. Before the trial, which was listed for September 2007, they met in August 2007 to try to settle matters. Ms Robson later asserted that no settlement had been reached. Mr Ely, by contrast, claimed that when they met they had made an agreement as follows:

  1. Mr Ely would hold the property on trust for himself for life, and upon his death 80% would go to his heirs and 20% to Ms Robson;
  2. Ms Robson could live at the property while either her aunt or mother were alive;
  3. Mr Ely would be able to sell the property once Ms Robson's right to live there ended; and
  4. Mr Ely would relinquish any claims he had against Ms Robson's properties.

Because of this agreement, they both asked the Court to postpone the trial to allow them to finalise their deal, but it was never formalised and no further trial date was set.

Following the subsequent deaths of Ms Robson's aunt and mother, Mr Ely applied to the Court again. He asked the Court to declare their respective shares in the property, and for an order for sale.

The Judge held that after the former couple had met in August 2007 there was a common understanding, which Mr Ely had relied on to his detriment.  They had both made a verbal agreement and the Judge said it would be unconscionable for Ms Robson to try to argue otherwise. It was therefore found to have given rise to a constructive trust which the Judge upheld.

This recent case highlights again the need for unmarried couples to be clear about their intentions about property ownership. To avoid a dispute when the relationship ends, they can put in place a Living Together Agreement, sometimes also called a Cohabitation Contract. This sets out what will happen if they separate and should avoid the stress and expense of litigation. 

For advice on arranging such an agreement or contract, please contact the Blake Morgan family team.