Cohabitation agreements: the key to a successful partnership

Cohabitation agreements can be the key to a successful partnership, providing clarity for couples as to how their living arrangements will work on a financial basis. They can also  provide greater certainty as to what will happen to any assets if the relationship fails or one partner dies. Below we answer some frequently asked questions about these types of agreements, from what they can include to how they can safeguard the rights of both parties.

What is a cohabitation agreement?

A cohabitation agreement is a written agreement between two people who have agreed to live together as a couple. This is used to record the financial arrangements between the couple during the period of cohabitation, including their rights and responsibilities in relation to the property in which they reside, or will soon reside, as well as their respective interests in any real or personal property in the event of either separation or death.

This will commonly include the financial rights and liabilities of each partner in relation to their home, whether this be owned outright, mortgaged or rented. It can also include provision in respect of individually or jointly owned assets, such as furniture and vehicles, which may be used by both parties during their period of cohabitation, but to be retained by just one partner if the couple separate, or to form part of one partner’s estate on death.

What are the benefits of a cohabitation agreement?

The rights of a cohabiting couple, regardless of how long they have lived together, differ significantly to those of the married couple, especially on the breakdown of a relationship or when one person dies leaving a surviving partner behind. As such, by documenting the rights and responsibilities of each party within a cohabitation agreement, and determining in advance their respective legal and beneficial interests in any assets, this can help to avoid any disagreements, or even costly litigation, if they go their separate ways or one person dies.

These type of agreements are a way of clearly recording the couple’s intentions about ownership of their property when they decide to live together, as well as the division of assets on either separation or death, providing the couple with the flexibility and freedom to organise their financial affairs as they wish both during and following cohabitation.

What are the drawbacks of a cohabitation agreement?

Cohabitation agreements can be complex documents, including various detailed and carefully worded provisions. To be enforceable, these agreements must be adequately drafted, and signed and witnessed, to help avoid any claims of fraud, duress or illegality. This will usually involve a cost to the parties. The cohabiting couple should also each consider making a will, in conjunction with any cohabitation agreement, to ensure that any individual or jointly owned assets are distributed in accordance with their wishes after they die.

Still, the benefits of putting in place a well-drafted cohabitation agreement, together with a last will and testament, especially in minimising the risk of any future litigation, will often outweigh any initial outlay. In this way, couples can provide each other with peace of mind that suitable provision has been made for every eventuality.

When can a cohabitation agreement be drawn up?

There is no hard and fast rule as to when two people should enter into a cohabitation agreement. An agreement can be put in place either prior to a couple living together or, alternatively, to regularise their financial arrangements at any time after they have moved in.

That said, if you are planning to buy a property together or take out a tenancy on a joint basis, it is advisable to have a cohabitation agreement in place prior to completion or signing, clearly recording your intentions from the outset. It is also best to seek expert legal advice on the provisions of any agreement, ensuring you cover all aspects of your finances and your future.

Legal disclaimer 

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

The court’s approach to maintenance pending suit applications

Applications for maintenance pending suit are designed to bridge the gap between the application being issued and a final order being made, providing financial relief for the applicant and any children in the interim. In the recent case of Rattan v Kuwad [2021] EWCA Civ 1, the Court of Appeal revisited the issue of how these applications should be dealt with, including whether a critical analysis of the applicant’s needs is always required.

On the facts of the case, the wife appealed an order made by HHJ Oliver in which he allowed the husband’s appeal from a maintenance pending suit order of £2,850 per month made by DDJ Morris. The Judge had set aside the order principally on the basis that the DDJ had not undertaken any critical analysis of the wife’s immediate expenditure needs.

In allowing the wife’s appeal, Lord Justice Moylan referred to the broad statutory power given to the court under section 22 of the Matrimonial Causes Act 1973 to make an order for maintenance pending suit. This provides the court with the ability to make such order as is considered “reasonable” in meeting the immediate financial needs of the spouse and children at an early stage in proceedings when the full evidential picture might be far from certain.

LJ Moylan made it clear that not all budgets require critical analysis, where the extent to which a budget or any other relevant factors require careful analysis will depend on the facts of the case. In Rattan v Kuwad, the wife’s budget was said to be a straightforward list of income needs which were easily appraised and did not require any extensive analysis. It was the type of budget which could be determined justly with a broad assessment of the relevant factors.

On this basis, the Court of Appeal held that the DDJ had undertaken a sufficient analysis of the relevant financial factors and had reached a fair conclusion as to what level of maintenance for the applicant would be reasonable pending the final financial remedy hearing.

Accordingly, the court is only required to undertake such evidential analysis as is sufficient to be satisfied that the award made is “reasonable”. In some instances, this might require a detailed examination of the applicant’s budget, while in others, it will be more than apparent whether the listed items represent a fair guide to the applicant’s income needs.

Indeed, there may well be cases, especially those involving exceptional wealth, where a more critical analysis is necessary in determining what is reasonable. That said, the budgets of the ultra-rich are very often far removed from the list of income needs provided by applicants in the majority of cases. As such, in most maintenance pending suit applications, the court is likely to take a broad view of means on the one hand, and income on the other, and come to a rough and ready conclusion in dealing with the applicant’s short-term cash flow problems.

Still, it is important to remember that the particular circumstances of a case will typically determine the issues on which the court will need to focus and the degree of scrutiny required. The courts' approach, therefore, should always be tailored to the facts of the case.

 Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Protecting your business - the importance of having a Will

As a business owner whose energies are undoubtedly invested in the here and now, not least in trying to survive the current economic crisis caused by COVID-19, it is just as important for you to consider what would happen to your business should something happen to you.

The prospect of us dying is a sobering thought. Still, by putting in place suitable measures to ensure that your business can continue in your absence, or that adequate financial provision can be made for those you leave behind, you can provide yourself and your loved ones with much-needed peace of mind. By planning ahead for all eventualities, you will also instil confidence in those you work with and those that work for you.

The starting point for any astute business owner, whether as part of a wider succession planning strategy for a partnership or limited company, or simply to ensure the financial security of your family after you die, is ensuring that you have a valid Will in place.

In England and Wales, if a person dies without making a Will, the rules of intestacy come into play. These restrict the beneficiaries of the deceased’s estate to specified classes of relatives, in a set order of priority, but making no automatic provision for unmarried partners. As such, there is potential for this to have unwelcome ramifications in relation to the distribution of both the deceased’s personal and commercial assets, in some cases solely benefitting estranged family members. It can also create problems for any surviving business, often adding an extra layer of confusion, delay and uncertainty to an already difficult process.

Where a person dies intestate, the task of handling their affairs usually falls to the deceased’s next of kin. However, in most cases, the next of kin will still need to apply for a ‘Grant of Letters of Administration’. This is the official document issued by the Probate Registry providing the personal representative(s) with the authority to administer the deceased’s estate. If the deceased’s affairs are especially complex and high value, involving the payment of inheritance tax, this could take weeks or even months to obtain.

Additional delay can also arise where a search needs to be undertaken to clarify whether a Will has been made or in verifying who is a valid member of the class of beneficiaries entitled to apply to the court for the Grant of Representation. This could be, for example, where the deceased has no surviving spouse, children or parents, or where their relatives are not known.

If you add into this mix the absence of adequate succession planning provisions within any partnership agreement or the company’s Articles of Association, post-death business problems can quickly escalate. This issue was recently highlighted in the case of Williams & Ors v Russell Price Farm Services Ltd [2020] EWHC 1088 (Ch).

On its facts, the late Russell Price was the sole director and shareholder of a contract farming company. However, there was no provision in the Articles for the executors to appoint a new director in the event of his death, leaving the executors of his estate without the authority to do so themselves prior to the Grant of Probate. This left the company in a precarious position as there was no-one to pay the company’s creditors to enable it to trade. As a result, the executors were forced to make an urgent application to the High Court requesting that they be entered into the company’s register of members so that they could appoint a director.

Yet, with prior planning, these problems could have so easily been avoided for the relatives and personal representatives of Mr Price. By putting in place a written Will, together with any suitable succession planning measures, you can help to safeguard both the financial interests of your loved ones and the future of your business you have worked so hard to build.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

New Vacancy: Legal Compliance & Conveyancing Assistant / Receptionist

Job Title: Legal Compliance & Conveyancing Assistant / Receptionist

Department: Conveyancing & Compliance / Reception

Reports to: Head of Conveyancing / Practice Administrator

Hours of work: Full time – 36 ¼  hours per week

(8:45am to 5pm Monday to Friday with a one hour unpaid lunch break)

Main duties

Conveyancing duties – New Business Team

• Providing quotations to Clients

• File opening

• Ordering searches

• Assisting with pre-contract enquiries

• Assisting with preparing contract documents

• Preparing files for completion

• Registration of title at HM Land Registry

• Assisting with the monitoring of compliance procedures within the Department

Legal Compliance duties

• The monitoring of legal compliance procedures across the firm, to include :-

  • Client File Reviews

  • Client Matter Listings

  • File opening / parameter checking

  • Client Feedback

• The production of regular reports on all of the above for analysis by the management team, using a risk management system.

• Assist with Credit Control procedures.

Reception duties

• Deal with telephone calls and visitors to the firm, ensure the effective use of the Outlook diary system in line with office procedures, deal with incoming faxes and emails, and provide statistics as required for marketing and business development purposes.

General administrative duties

• Deal with all DX/Royal Mail post.

• Retrieve and archive Client files, deeds and wills.

• Order stationery.

• Secretarial duties as and when required.

Required skills and experience

• Prior experience of working in a legal environment preferable.

• Experience of working in a busy reception environment preferable.

• Thorough knowledge of Microsoft Office - Outlook/Word/Excel/PowerPoint.

• Must be well organised and methodical with excellent attention to detail and prioritisation skills.

• Must be able to work under pressure.

• Positive, helpful and enthusiastic.

• A team player, able to work on own initiative but also as part of the team.

• Commitment to the continuous improvement of the practice.

To apply please send your CV and covering letter to Anna-Clare Mumby acm@blackhurstbudd.co.uk

New Vacancy: Residential Conveyancing Solicitor / Fee Earner

Blackpool's largest conveyancing firm, Blackhurst Budd Solicitors are recruiting for an experienced conveyancing solicitor / fee earner to join our residential property department.

The ideal person will demonstrate:

• Ability to manage your own caseload of sales, purchase and remortgage work effectively.

• Passion for your work, and you will be able to autonomously manage a varied caseload efficiently.

• Excellent time management skills and be able to work efficiently and professionally to clients' deadlines.

• Strong communication skills and the ability to build relationships with new and existing clients.

• Case management experience desirable.

In return we offer a competitive salary based on experience and the opportunity to progress.

Please send your CV and covering letter to acm@blackhurstbudd.co.uk

Back to basics under the Landlord & Tenant Act 1954

When leasing commercial premises, understanding the provisions of the Landlord and Tenant Act 1954 (“LTA") can be crucial for both landlords and tenants alike. The LTA essentially governs the rights and obligations of landlords and tenants of premises which are occupied for business purposes and offers important legal protections to both parties.

From the tenant's perspective, when leasing new premises, the future preservation and success of their business may hinge upon the 'security of tenure' provided for under the terms of their lease arrangement. Security of tenure refers to the tenant's right to remain in occupation of the business premises upon expiry of the lease term. As such, this is one of the most important basic rights for business tenants provided for by the LTA.

In broad terms, this means that the tenant has a statutory right to renew their tenancy, either on the same or similar terms, when their existing lease comes to an end. In addition, the tenancy will not automatically terminate on expiry of the current lease. Instead, it will continue on the same terms - otherwise known as the tenant 'holding over' - until it is renewed or formally brought to an end, for example, by written notice to quit from the tenant.

From the landlord's perspective, the LTA provides specific, albeit limited, grounds of opposition to the grant of a new tenancy that can be raised. These statutory grounds include where the tenant is in substantial breach of their contractual obligations, such as a failure to pay rent; where the landlord wants to let or sell the premises as a whole, and the tenant occupies only part of the premises; or where the landlord wants to redevelop the premises or occupy the property or land for the purposes of its own business or residence.

That said, even where a landlord is able to oppose the grant of a new tenancy successfully, they may still be liable to pay statutory compensation to the tenant where recovery of the commercial premises has been sought on a non-fault basis.

Accordingly, given the limited grounds upon which a landlord can object to the grant of a new tenancy and the potential exposure to pay compensation, the LTA also provides the parties with the ability to contract out of its statutory provisions before entering into a commercial lease. This may be, for example, where the landlord is only looking for a short-term let.

In these circumstances, where a tenant has effectively agreed to forfeit their security of tenure, they will lose their statutory right to renew their tenancy. Unless the landlord subsequently agrees to the grant of a new tenancy, it will determine on the expiry of the lease term. In this way, a landlord can regain possession of its property without justifying its actions by reference to specific tenant default or other non-fault grounds.

That said, the law governing security of tenure for business leases can be complex, not least when it comes to complying with the strict statutory procedures to be used by landlords and tenants of commercial premises in respect of requests, notices and statutory declarations.

In some cases, a failure to follow the correct procedure in the prescribed form can render the process void. By way of example, the net effect of a tenant failing to correctly make a statutory declaration agreeing to waive their right to renew their lease will result in them retaining their security of tenure, contrary to the intentions of the parties.

For detailed advice on the rights and responsibilities of commercial landlords and tenants, expert legal advice should always be sought from a commercial property specialist before entering into a new lease. In this way, your advisor can help to negotiate terms tailored to your specific needs and thereby protect your legal position moving forward.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought. 

Congratulations to Tom!

The team at Blackhurst Budd would like to congratulate Tom Fielding on qualifying as a Solicitor as of today, March 2nd 2021.

Tom joined Blackhurst Budd in April 2018 after graduating with a Law Degree from UCLan and completing his LPC. He began his Training Contract in September 2019 and deals with residential and commercial transactions at the firm. He has now accepted a role as a Solicitor in the firm’s residential conveyancing department.

Briony Haley, Director and Head of Property commented:

“Wherever possible we always look to promote from within and invest in training for staff at all levels within the firm. Tom has shown the legal acumen and dedication required to excel in his role and I’m delighted he will be staying at Blackhurst Budd.”

The scope and effect of “subject to contract" negotiations

The term “subject to contract” is a well-known phrase in ordinary legal parlance and used daily by parties when seeking to compromise disputes. Still, in the recent case of Joanne Properties Ltd v Moneything Capital Ltd [2020] EWCA Civ 154, the Court of Appeal was required to reassess the scope and effect of this commonly used phrase, and whether or not there can be a legally binding agreement where this qualification has been used during the course of negotiations.

 On the facts of the case, Joanne Properties Ltd (the Appellant) borrowed money from Moneything Capital Ltd (the Respondent), secured by a legal charge over a property in Wandsworth. When the Appellant fell into arrears, it challenged the Respondent’s appointment of LPA receivers on the ground that both the loan agreement and charge had been procured by undue influence. The Appellant then applied to the court to set aside both the agreement and the charge, and claimed injunctive relief against the receivers preventing them from taking any steps to realise the security.

 The parties were able to compromise the injunction application, agreeing that the property should be sold, with an order for distribution of the proceeds of sale. The issue on appeal was whether the parties had reached a further binding contract of compromise about how the ring-fenced sum of £140,000, after repayment of the sale costs and the loan capital, was to be shared between them.

 In allowing the appeal, Lord Justice Lewison provided a useful review of the origins of the “subject to contract” formula and the reasons behind it. Put simply, the effect of these words mean that neither party intends to be legally bound unless and until a formal contract is executed, and that each party therefore reserves the right to withdraw from any proposed agreement until such time as a binding contract is made. This allows the parties to see at once whether there is a contract, or whether they are still in the negotiation stage. The court reminded itself that without this principle there would be a great deal of uncertainty in law in respect of those agreements that have been fully concluded and those that have not.

 The court went on to acknowledge that even where negotiations have begun "subject to contract", the parties may waive this qualification, but only if they both expressly agree that it should be expunged or if such an agreement was to be necessarily implied. The mere fact that parties get close to a contract or are of one mind is not, in itself, sufficient to create a legally binding agreement. There must be either a formal contract in place, or a clear factual basis for inferring that the parties must have intended to waive the qualification. In the case before the court there was neither.

 On its' facts, both the alleged offer and acceptance were each headed "subject to contract”, and the parties also plainly contemplated that a consent order would be needed in order to embody the compromise, just as the earlier settlement agreement had been embodied in a formal signed contract. All that had happened here was that correspondence had been exchanged, and even though there had been an agreement in principal, this was not enough to be enforceable.

 Legal disclaimer

 The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

 Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Blackhurst Budd Awarded Lexcel Quality Mark Once Again

We are pleased to announce that Blackhurst Budd has once again been successful in retaining the Law Society’s Lexcel Practice Management Standard. Following the review process the Lexcel assessor’s report stated:

“It is clear from this assessment Blackhurst Budd Solicitors continues to maintain a sound Lexcel standard. The partners have continued to invest in IT systems and hardware improvements, and this has enabled the quick and effective establishment of homeworking necessitated by the current crisis.

The management structure of the firm is sound, communications are excellent and people appreciate the openness and support of partners. Standards of client care continue to be excellent, and the firm continues to attract and retain clients.”

Managing Director Warren Spencer said:

“It has been a challenging year for most businesses, so to receive such high praise from the assessor is a great achievement. The Coronavirus pandemic was the first time we have had to rely on our business continuity plans and IT infrastructure for mass remote working. I’m extremely proud of the way our staff approached the situation and were able to continue providing excellent client service.”

Abbreviated hearings within financial remedy proceedings

There is no doubt that the suitable use of an abbreviated procedure to determine the status of an alleged agreement is an extremely useful case management tool available to the courts, provided it is fair and appropriate to short circuit financial remedy proceedings in this way. This is essentially the broad proposition re-affirmed by the High Court in FN v AC [2019] EWHC 3806, subject to the qualification that every case is dependent on its' particular facts.

FN v AC concerned the husband's appeal from a case management order made within the context of financial remedy proceedings in which the husband sought to enforce a compromise agreement reached with the wife. The issue on appeal was whether the judge at first instance had been wrong to deny the husband's application for the wife to show cause as to why an order should not be granted in the terms of the agreement reached.

On the facts, there was no dispute that the parties met on three occasions with their respective solicitors in an attempt to resolve proceedings, in total spanning several hours and concluding in the signing of a document at the end of the third and final meeting. This document set out, in broad terms, the division of assets and what other terms had been agreed between them.

However, when the wife sought to resile from the agreement on the basis that she did not consider herself bound by it, this prompted the husband to issue the show cause application.

In opposing the application, the wife raised the issue of undue influence, with reference to various potential vitiating factors in relation to how the agreement was reached. This included the pressure exerted on her by the circumstances of the meetings, especially in the context of what she said reflected the husband's coercive behaviour towards her during the marriage.

The wife also referenced the overall unfairness of the arrangement, amounting to a substantial departure from equality in a sharing case where, in addition, such capital as she would derive from the agreement would have to be used in part to generate income, unlike her husband.

At first instance, the court refused to direct an abbreviated hearing, finding that there was "no clear substratum of established fact in this case", where even the net effect of the agreement was in itself in dispute. As such, the court would be required to case manage towards a final hearing, at which a detailed analysis of the agreement would form one of the section 25 factors under the Matrimonial Causes Act 1973. The husband appealed to the High Court.

In dismissing the husband's appeal, Theis J acknowledged the comments made by the judge at first instance in the desirability of upholding agreements that had been entered into between the parties. However, as that judge had rightly reminded himself when considering whether to direct a shortened hearing, each situation is fact-specific in relation to the individual case.

Given the factual dispute on the information available to the court as to the circumstances of the meetings that led to the agreement, including whether or not the wife was placed under undue pressure, this could not be determined at a 'show cause' hearing.

Accordingly, it was held that the judge had not been wrong to refuse to deny the husband a hearing of the notice to show cause application. The court also held that there was no authority to support the proposition that the issuing of such an application created some kind of entitlement that the application should be heard unless doing so would serve no purpose.

That said, the High Court echoed the warning provided by the lower court, that dismissing the appeal was not to give the wife false hope. On the facts, the existence of the agreement did not appear to be in dispute, where there were, and could be, valid points on both sides.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.