Property disputes between cohabiting couples and the impact of children

Having recently returned from a period of maternity leave, children are at the forefront of Lucy’s mind. In this article, she considers how the presence of children might affect the issues in dispute when a cohabiting couple separate.

Please note: This article considers the legal provisions concerning unmarried couples. Any advice in respect of married couples should be sought from our Family team.

What is the law?

All jointly owned property is automatically impressed with a trust of land regulated by the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”). So, while we might not necessarily think of ourselves as ‘trustees’ and ‘beneficiaries’, this is nevertheless the position for many homeowners.

Where a co-owning couple separate and cannot agree on what should happen with their property or their respective shares in the property, either may make an application to court under section 14 TOLATA to ask the court to:

1. make an order relating to the exercise by the trustees of any of their functions; and/or
2. declare the nature or extent of a person’s interest in the property.

This may include asking the court to order a sale on the open market, for example.

When making any order under section 14 TOLATA, the court must have regard to specific factors contained within section 15 TOLATA. These are:

I. The intentions of those who created the trust.

II. The purpose for which the property is held.

III. The welfare of any minor who occupies or might reasonably be expected to occupy the property.

IV. The interests of any secured creditors.

It can therefore be seen from section 15 that, when making an order under TOLATA, the court must have regard to the interests of children.  

This was particularly relevant in the case of Edwards v Lloyds TSB 2004,where it was noted that, despite the relationship ending between the co-owners, the purpose of the trust still existed to some extent, as it continued to provide a home for the parties’ children. In addition, if a sale did take place, the court noted that the funds that Mrs Edwards would receive would likely be insufficient to allow her to find alternative accommodation for herself and the children. Accordingly, the sale was subsequently delayed by five years.

The same outcome may not have been achieved if the facts of the case were a little different.   These cases turn so heavily on their facts. If, for instance, both parents were to have care of the children (for example, by way of a shared parental agreement) but one parent could not afford an alternative property that would facilitate those visits unless the primary property was sold, this is a factor that the court would take into consideration as part of the overall wishes and circumstances of the beneficiaries. In such circumstances, an order for sale might be more likely.

While the interests of any children are plainly important, it should be noted that they do not carry more weight than any of the other factors listed under section 15. The welfare of any children concerned is not, therefore, conclusive, but must be considered alongside the other factors.

As such, even if children do occupy the property, if the court does not believe that their welfare will be adversely affected, a judge is likely to order a sale, as was demonstrated in the case of First National Bank PLC v Achampong 2003.

Equitable accounting

If a sale of the property takes place, principles of equitable accounting may come into play.  Equitable accounting is the ‘fine-tuning’ of the division of sale proceeds. It can be ordered at the court’s discretion under TOLATA.

Equitable accounting often arises in circumstances where one co-owner continues to occupy the property to the exclusion of their fellow co-owner. In such circumstances, the occupying co-owner might be ordered to pay an occupation rent to the non-occupying co-owner.

We can see from case law that the presence of children in the trust property can influence the court’s decision on whether to order an occupation rent. Stack v Dowden 2005 held that because the occupying party continued to provide a home for the four children (pursuant to a previous court order), this meant that there was no continuing obligation to pay occupation rent. Similarly, in Jones v Kernott 2011, it was suggested that the court would find no liability to pay an occupation rent while the home was needed for the couple’s children. While the existence of children will be relevant to a judge considering an order for an equitable account, each outcome depends on the specific facts of the case. As equitable accounting is based on equitable principles exercised at the discretion of the judge, outcomes can be difficult to predict.

Schedule 1 claims

Running alongside TOLATA and equitable accounting principles, is the court’s jurisdiction to consider financial claims in relation to children’s needs. An application for Schedule 1, where appropriate, must be brought before the child turns 18 (although provision can be made in limited cases beyond the child’s dependency e.g. if the child is disabled or particularly vulnerable into adulthood, see UD v DN (2021)). It is common for claims under Schedule 1 to be made alongside those under TOLATA.

The court will consider a variety of factors in Schedule 1 cases, such as the resources that each parent has or is likely to have in the foreseeable future (including mortgage capacities), the financial needs of each parent and the children, whether the child has any disabilities, and the manner in which the child was being or expected to be educated or trained.

Child maintenance

For the most part, financial claims in relation to children are assessed and enforced through the Child Maintenance Service (‘CMS’). Parents can use the online calculator to assess the level of maintenance they ought to be paying/receiving without need for a formal calculation but, if there is dispute or the resident parent does not know the non-resident parent’s income, they can apply to the CMS for a formal calculation.

However, the court can still assess maintenance claims in limited cases:

1. Educational expenses.
2. Costs attributable to a child’s disability.
3. ‘Top-up orders’ where the non-resident parent’s income exceeds £156,000 gross each year.

Capital orders

Additionally, the court has jurisdiction to make lump sum awards in favour of a child e.g. for expenses incurred with maintaining the child (like home furnishing, baby equipment, family car) or birth of the child (e.g. medical, nursing, hospital costs).

However, the court only makes provision for the children and will strictly ‘guard against unreasonable claims made on the child’s behalf but with the disguised element of providing for the [resident parent]’s behalf rather than for the child’ (J v C (Child: Financial Provision) 1999).

The court does not have jurisdiction to make a series of capital lump sum orders to cover rental expenditure where the CMS has exclusive jurisdiction and such awards, if made, are intended to be short term only (S v M (2022) and SP v QR (2024)).

Property orders

The court can award for a transfer of property for the benefit of a child, including transfer of a joint tenancy. Only one transfer of property order can be made.

However, it is very rare for the court to make orders for outright transfer of property i.e. without the property or the proportion of the equity contributed by the non-resident parent being transferred back when a certain event occurs (e.g. the child reaching 18 or finishing full time education).

Conclusion

Going through a separation can be an incredibly difficult time for both the parties and any children involved. Further adding to this difficulty could be unanswered questions about their rights in relation to their co-owned property and how their children may be affected. What is clear is that children are important to the courts when handling matters of this nature.

If you would like further assistance following a breakdown of an unmarried relationship or for advice on property disputes generally, please contact Laura Tanguay or Lucy Grunwell.

If you require any information on issues concerning children more generally, or claims under Schedule 1, please contact Francesca Skakel from our Family Team.