Fair shares for part-owners

Pressure to change the law on shared property could be hindered by political controversy over the rights of cohabiting couples, says Grania Langdon-Down

The law governing the property rights of home-sharers is widely regarded as thoroughly unsatisfactory, but experts feel that the political and social sensitivities involved in reform could hinder vital changes.

The defects in the law affect all those who share a home, whether they are married or cohabiting couples, gay partners, extended families - such as elderly parents living with their children - or single people pooling resources for a mortgage.

The Law Commission has been studying the property law rules for the past two years and hopes to publish a consultation paper next spring, with a final report in a further two years.

The Court of Appeal commented last year that the Law Commission's project had the "potential to save a lot of human heartache as well as public expense".

But the second aspect of its project - considering whether contributions made by unmarried home-sharers, such as looking after the home, caring for children and sacrificing career opportunities, should be given legal recognition - is proving to be more controversial.

Josephine Hayes, a London barrister specialising in property law, wrote in the Legal Executive journal that the prospects for legislation did not look encouraging after the furore over the Domestic Violence and Family Homes Bill last year.

"I have come to the sorrowful conclusion that the mother of Parliaments and the press are both still too immature to treat such subjects with the careful understanding that they deserve," she wrote.

Ms Hayes, a member of the Chancery Bar, is a member of the steering group helping the Law Commission with the project. She said this week that some traditionalists seemed to think changing the law would in some way "reward immorality".

But, she argued, the law as it stood was serving ordinary people badly, and it was important that members of the public should understand the need for reform and press their MPs to take up the issue.

She said the law was stuck in the straitjacket of 1925 property legislation. This had successfully consolidated laws dating back to the late 1800s, but was not designed to cope with the massive social changes of the past 70 years which had led to about 70 per cent of homes in the UK now being owner-occupied.

"You can see the law is in chaos when you look at decided cases, as I have been doing, and try to reconcile them and extract principles from them," she said. "I would go so far as to say it is impossible."

The difficulty for the courts was in dealing with cases where sticking to strict property rights would lead to one party, usually a woman who had concentrated on looking after the home and children, being left almost empty-handed.

Some people living together believed that they had rights under a form of "common law marriage", but that relationship was not recognised under English law.

Where couples were married, Ms Hayes said, courts had the power under matrimonial legislation to ignore those rights and make a sensible distribution of assets between them.

But that broke down if a third party was involved, such as an elderly relative living in a granny annexe, or a trustee in bankruptcy.

She said that her heart sank when she was confronted with a case involving competing claims to a home, as few people buying a property together drew up agreements about their respective interests in it.

The result was emotional trauma for those involved, who were forced to argue over factually vague claims based on a mass of half-remembered events and conversations with frustratingly inadequate documentation.

The cases were hard to settle out of court, expensive and time-consuming to resolve in court and usually a financial disaster for one, if not both, of those involved.

Legal aid could also prove to be a mixed blessing, as the Legal Aid Board has first bite of any property recovered or preserved, and can put a charge on it to recover its costs.

One of the studies that has been carried out for the Law Commission project has been a review of cases to see what they are costing the taxpayer in legal aid, given the legal uncertainty involved.

Ms Hayes said that the best advice was to put the property in trust at the very beginning and draw up a clear agreement with everyone's interests properly represented. But this was one more cost to bear, and people did not believe that they would disagree.

She described one particularly painful case where an elderly parent was living with one of his children, and was accused of molesting one of the grandchildren.

"A court found this was not true, but family relations had been absolutely destroyed and he could no longer live with them. The problem was how to resolve his rights in the home, given he had expected to live there for the rest of his life.

"But owing to illness, he did not have a long life expectancy and the Appeal Court awarded him only the value of a home for the rest of his life, which was far less than the pounds 30,000 he had paid towards acquiring the property," she said.

Ms Hayes argued that there needed to be a legal framework which had broad public support and which would regulate claimants' positions where there were no agreements, as happened when people died without making a will, under the intestacy laws.

"I feel strongly that this is a matter for Parliament," she said. "I do not think the judiciary should develop the law by retrospectively declaring the position in individual cases."

The Court of Appeal acknowledged that argument in Burns v Burns more than a decade ago, when a woman was found to have no rights relating to her home despite sharing it with her de facto husband for 17 years. The court commented on the "unfairness" of the case but said it was a matter for Parliament to put right.

Charles Harpum, the Law Commissioner responsible for the project, accepted that there were very sensitive social and political nuances involved. But he stressed: "I do not see this project as in any way involving social engineering, and it is certainly not my intention that it should somehow undermine the fabric of society.

"But these cases are cropping up regularly. The legal principles have been stretched and strained to such an extent that it is reaching the stage where county court and district judges simply do not know what the law is. There is now so much doubt that it is very hard for a lawyer to advise a client what his or her chances of success are.

"What we are working on is very much a law reform project to make sure the legal principles that are being applied are coherent and just."