• Contact Us

Interest in property acquired through financial contributions made 'towards the house'

on Tuesday, 24 May 2016.

The recent Court of Appeal case of Liden v Burton [2016] shows that someone can acquire an interest in their unmarried partner's house even if their financial contribution to the home is documented as rent.

Facts of the case

Miss Liden moved in with her partner Mr Burton in a house that he owned. There was a mortgage secured against the property. Miss Liden paid Mr Burton £500 a month. This arrangement was documented in a letter and described as rent. However, Mr Burton later assured her that £200 of the rent was a payment 'towards the house'.

Upon breakdown of the relationship, Miss Liden argued that, despite the payment being described as rent, she understood that £200 was a payment towards the house.  She had relied on this and assumed she was accruing equity in the property. After the relationship ended she wanted to establish her stake in the property, which the court decided was approximately £32,000 based on the monthly £200 payments and including interest.

Court of Appeal decision

The Court of Appeal confirmed the County Court's decision and found in favour of Miss Liden. They relied on the doctrine of proprietary estoppel, as follows:

If the following criteria are established, it is possible to acquire an interest in property:

  • Assurance - the owner must assure the claimant that they will acquire an interest in the property.
  • Reliance - the claimant must rely on the assurance, and take some action accordingly. In this case, Miss Liden relied on the assurance by making the monthly payments.
  • Detriment - the claimant must suffer some detriment or loss through reliance on the owner's assurance. In this case the loss was the £200 per month which Miss Liden understood was a contribution towards her ownership of the house.

Conclusion

Despite documentary evidence confirming that the payment was rent rather than a contribution towards the house, in this case the court favoured the claimant's version of the facts. Where an unmarried couple are living together, a rental agreement may be construed as accruing equity in the property for the partner without legal title.

If you require property advice please contact Edward Connolly in our Commercial Property Law Team on 0117 314 5343.