Engaged this Valentines? Have you considered your property rights? 

Unsurprisingly, Valentine’s Day is one of the most popular days for popping the question.  

While many couples are basking in their ‘newly-engaged bubble’, it is also an important time to consider future-proofing your position in respect of your property. Although it may not be the most romantic topic, discussing what should happen to your property if the relationship ends can provide peace of mind and help minimise potential disputes. It is also a conversation that is becoming increasingly important with the trend towards longer engagements.  

How does an engagement change rights in property? 

While married couples benefit from a comprehensive legal framework that protects them in the event of divorce, unfortunately unmarried, cohabiting couples do not enjoy the same legal rights and will usually be forced to navigate a more complex and uncertain landscape under the Trust of Land and Appointment of Trustees Act 1996 (‘TOLATA’).  However, engaged couples do enjoy a somewhat special status as they have some enhanced protections.  

Section 2(1) of the Law Reform (Miscellaneous Provisions) Act 1970 amends section 37 of the Matrimonial Proceedings And Property Act 1970 to provide that an engaged (or formerly engaged person) may claim a share, or an enhanced share, based upon substantial contributions they have made to improve the property in money or money’s worth. An example might be financial or labour contributions to an extension.  

Unfortunately, there is a lack of authority as to how these provisions should be interpreted. Therefore, the extent to which any contribution constitutes an “improvement” to the property which is of a “substantial nature” is likely to be fertile grounds for dispute.  

What can I do to protect my property rights should the relationship end? 

To avoid the risk of a legal dispute, you may wish to consider entering into a cohabitation agreement. Although many couples will sign up to a cohabitation agreement to record their agreements regarding the ownership of a shared home and financial arrangements, such agreements can also be used to cover what will happen if your relationship breaks down, as well as wider day-to-day living arrangements.  

A cohabitation agreement can help to provide financial security for both parties to a relationship. For example, a financially stronger individual in a relationship may benefit from knowing their generosity is not going to backfire should the relationship break down. Equally, a financially weaker partner may be provided with some financial security before making life-changing decisions, such as leaving employment.  

Once you have an agreement in place, it is possible (and indeed encouraged!) to update your agreement, should circumstances change. 

To avoid any potential argument about whether the agreement is legally binding, it is advised for both parties to seek independent legal advice before signing the document. 

Considerations before marriage 

Without wishing to burst that ‘newly-engaged bubble’, engaged couples may want to think about protecting or safeguarding their assets if they were to separate. This can be done in the form a pre-nuptial agreement. 

Despite not being legally binding in England and Wales, the courts can and do place a considerable amount of weight on the terms of a pre-nuptial agreement signed prior to a marriage. To ensure that any pre-nuptial agreement is given weight by a court, both parties should seek independent legal advice as to the fairness of the agreement, full financial disclosure should be provided, neither party should sign the agreement under duress, and the agreement should be signed more than 28 days before the wedding.  

It is worth pointing out that if your circumstances with your spouse were to change significantly from the date at which you entered into the pre-nuptial agreement, for instance, you won the lottery, the court would be less likely to uphold the terms of the pre-nuptial agreement. As is the case with cohabitation agreements, it is possible, and encouraged, to update your pre-nuptial agreement in the form of a post-nuptial agreement if your circumstances change materially after you have married. Further, it is usual for your nuptial agreement to contain review clauses to prompt reflection on the fairness of the agreement at certain stages (for instance, if you have children or purchase a property). 

Before tying the knot, make sure that you do not become tangled in uncertainty. You may want to consider having open and honest conversations with your partner about your assets and what will happen to them in the event of separation, to help to minimise or indeed alleviate the acrimony that so often arises upon divorce. 

If you would like further advice on entering into a nuptial agreement, or family law matters more generally, please contact the Family Law Team at Birketts. 

If you would like further advice on entering into a cohabitation agreement, or property disputes generally, you should contact Birketts’ Home Ownership Disputes Team.