Written agreements keep money matters clear in relationships

We look at whether a partner or ex-partner can have a claim on the property of the deceased as the result of financial contributions that were made during the course of the relationship, but where nothing has been set out in writing.

Following Valentine’s Day this weekend, you may be floating along in a haze of romance, about to embark on a new property project with your partner. While we don’t want to dampen your enthusiasm, if this involves contributing money to a joint endeavour, it makes sense to document everything – including what is to happen should things go wrong, or should one partner die – in writing.

Promises, promises…

This has been highlighted in the recent case of Rawlings v Chapman & others. Margaret Rawlings had given substantial amounts of money to a man she was in a relationship with, John Hopkins, based on the promise he made her that he would leave his property to her. The became engaged in 1985 although they maintained separate houses, and in 1990, began building a house that they would live in together, although it was owned in his name. Ms Rawlings eventually sold her property to complete the build but again, nothing was put in writing as to her contribution, or what would happen to the property. The relationship came to an end although they remained friends. When Mr Hopkins died, his will left nothing to Ms Rawlings, the majority of his estate going to horse charities.

Ms Rawlings argued that the promises Mr Hopkins had made that he would leave his property to her amounted to what is called, in legal terms, a ‘proprietary estoppel’. This is where someone (such as Ms Rawlings) has acted to their detriment – in this case, handing over money to Mr Hopkins – based on the promises that the action would give that person a right in property – Mr Hopkins’ promises that she would inherit. If this can be proved, then the person making the promises (Mr Hopkins – in this case through his will) cannot deny what was promised.

No evidence meant no rights

Unfortunately for Ms Rawlings, there was no evidence as to the promises that Mr Hopkins had made other than what she herself could tell the court. The promises had been made a long time before Mr Hopkins died and had not been set out anywhere in writing. In court, the charities who were to benefit under the will also argued that Mr Hopkins was a womaniser who had several relationships and would have been unlikely to give away his property. In the end, the court did not allow the claim.

This may seem harsh and unfair – it’s also a very common situation, and highlights the need to set out agreements between couples who have no other legal entitlement over each other’s property (through marriage or civil partnership) if monies are changing hands to finance property.

Investing in property with a partner – here are our top tips

  • If you’re asking someone you are in a relationship with to contribute money to a property purchase: be clear about what they will get out of it and set the agreement out in writing so everything is clear. Will the property be put into joint names? Are you going to enter into a Declaration of Trust document? Will you leave the property to them in your will? Getting this documented will put your relationship on a much firmer footing, and avoid heartache at a later date.
  • If you’re being asked by someone you are in a relationship with to contribute money to a property purchase on a promise that you will benefit: Ask your partner to set it out in writing; if he or she says you will have a share in the property, take steps to get this finalised legally. Have a Declaration of Trust drawn up.  If the partner refuses, or drags heels, it may be better to consider the relationship before handing over any more money. Sadly, ‘taking someone’s word for it’ can lead to difficulties later on, as Ms Rawlings experienced.

 

If you are considering investing in a property with your partner and have any questions arising from this about your rights and responsibilities, our expert lawyers will be happy to help. Contact our experts http://www.rowberrymorris.co.uk/site/people/profile/julie.gallimore

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.