Solicitors Not Negligent When Advising Cohabitees on Transfer of Property Into Joint Names (County Court)
The County Court ruled in the case of Turner v Bromets Jackson Health LLP and others (2016) EW Misc B15 (CC) that a firm of solicitors had not been negligent when advising cohabitees on the transfer of the property from one party’s sole name into joint names.
Cohabitees do not hold the same legal interests over a property as a married couple do, therefore it is vital that cohabitees legal interests are dealt with cautiously when it comes to owning a property. In this particular case, one of the cohabitees invested £20,000 in the property that had previously been purchased by the other cohabitee for £160,486. The property was transferred into joint names and a declaration of trust provided that on the property’s sale the net proceeds would be divided with one cohabitee receiving their invested £20,000 and the other receiving their purchase funds of £160,486, with any surplus due to an increase in value, to be shared equally between them. Unfortunately, the relationship broke down and the cohabitees claimed that the solicitors had been negligent in advising them.
The issue for the court was to determine whether the solicitors had acted negligently breaking any of the codes in the SRA Code of Conduct. The court found the terms of the declaration of trust had been adequately explained to the cohabitees, there was no significant risk of a conflict of interest between the couple and even if the solicitors were under a duty to advise one of the cohabitees to seek independent advice, neither of the cohabitees suffered a loss, as they would have executed the declaration anyway.
This case reminds solicitors there is no definitive practice when it comes to dealing with cohabitees and emphasizes that solicitors should take on board the merits of the case carefully. For instance, if there is an unfair agreement the parties may need to take separate legal advice.