The recent High Court decision in Fotheringhame v Nelson [2026] EWHC 632 (Ch) provides an important reminder of how English law determines property rights between cohabiting couples when relationships break down.
It also highlights the legal risks that arise where parties fail to clearly record their respective contributions or ownership intentions at the time of purchase. In such cases, the court may be required to reconstruct ownership based on conduct over time, which can lead to outcomes neither party anticipated.
This article explores the judgment and the key lessons for cohabiting couples seeking to protect their interests in the family home.
Written by Aurora Chan, Legal Assistant
Background
The case was between an unmarried couple, Fotheringhame and Nelson, who had cohabited for approximately 10 years before separating in 2003. After the separation, Fotheringhame remained living in the family home with the parties’ three children.
The family home was funded using various funds, including a joint mortgage, proceeds from the sale of the previous property (which Fotheringhame’s mother had paid the deposit for), and Fotheringhame’s inheritance from her grandmother. However, the parties had failed to define their respective interests in the property.
Following the separation in 2003, Fotheringhame became solely responsible for all the expenditures related to the property, including mortgage interest repayments, council tax, property maintenance, and buildings insurance. Nelson’s sole contribution was child maintenance payments.
This arrangement continued for many years, during which the parties did not formally discuss or document their interests in the property.
In 2023, Nelson brought a claim under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) seeking a determination of his beneficial interest in the property and an order for sale.
The Legal Position
Legal and Beneficial Ownership
In property disputes, it is important to distinguish between the two layers of property ownership:
- Legal ownership: refers to whose names are registered on the title at the Land Registry, and thus who has the authority to deal with the property, such as selling or mortgaging it.
- Beneficial ownership: refers to who is entitled to benefit from the property, such as the right to live at the property, receive rental income, or receive the proceeds of sale.
The two layers of ownership do not always align; even where legal title is held jointly, the beneficial interest may be held in unequal shares, or by different persons altogether.
The Default Position
Where:
- A couple purchases a family home in joint names
- Both are responsible for any mortgage, and
- There is no express declaration specifying their beneficial interests
Then the presumption (starting point) is that the parties hold both the legal and beneficial ownership jointly and equally.
This reflects the principle that equity follows the law, meaning that beneficial ownership will usually mirror legal ownership unless there is evidence to the contrary.
Displacing the Presumption: Common Intention Constructive Trust
This presumption of equal ownership can be displaced if the couple had a common intention, at the time or purchase or later, that the beneficial ownership should be held in unequal shares.
Where there is no direct proof of intention (such as a written agreement), the court can infer the parties’ intentions from their conduct and words. The court will objectively consider what a reasonable person would have understood the intentions to be.
Accordingly, the court will not consider the parties’ uncommunicated or subjective intentions, but how their conduct would reasonably have been interpreted.
Determining the Parties’ Shares
If it is determined that the property was not held equally, then the proportions in which the beneficial interest is held must be determined.
This will be assessed be considering the entire course of dealing between the two parties in relation to the property. The court takes a holistic approach considering all relevant factors, including but not limited to financial contributions to the property, to determine the parties’ intentions.
The Judgments
The First Instance Decision
At first instance, the court held that the parties intended the property to be held equally at the time of purchase. The judge held that Fotheringhame’s inheritance and her mother’s gift were held to be joint contributions for the benefit of both parties rather than being reserved as her separate property. This was because the funds had been applied towards the purchase of the family home, which the court held to be indicative of an intention to share the asset jointly.
Following separation, the court found that the parties’ common intention had changed. This was evidenced by Nelson ceasing to make any financial contributions towards the property and vacating the home, while Fotheringhame remained in occupation and solely met all ongoing expenses, including mortgage interest, council tax, and maintenance costs.
On this basis, the judge concluded that the parties’ beneficial interests had shifted over time, and determined the final shares to be 80.7% to Fotheringhame and 19.3% to Nelson, reflecting the parties’ respective contributions and overall course of dealing.
Fotheringhame was given the opportunity to buy out Nelson, or otherwise the property would be sold the proceeds divided accordingly.
Fotheringhame was dissatisfied with the outcome as she had argued for a 95/5 division. She applied for an appeal on the basis that the judge had failed to properly consider her contributions and had mischaracterised her case.
The High Court Decision
The High Court dismissed the appeal on both grounds and upheld the first instance judge. The High Court held that, though the trial judge’s reasoning could have been expressed more clearly, he had correctly understood and applied the legal principles. He had also duly considered all the relevant factors, including Fotheringhame’s mortgage, insurance, repairs and council tax payments. No material error in the evaluative judgment was demonstrated which would change the outcome.
he High Court further confirmed that where a common intention cannot be directly evidenced, it is permissible to impute an intention to the parties in order to determine their respective shares.
The court also reiterated that determining beneficial interests is not a purely arithmetical exercise based solely on financial inputs. Instead, it requires a broad evaluative assessment of the parties’ entire course of dealing in relation to the property.
Although Fotheringhame sought a strict calculation based on her financial contributions, the court noted that, when properly assessed (including Nelson’s child-related contributions), his effective contribution was 28.6%, which exceeded the share he had been awarded. The court observed that Fotheringhame therefore risked a less favourable outcome as a result of pursuing the appeal.
The Implications and Takeaways
Be aware of the limitations of cohabitation rights
Unlike other jurisdictions, England and Wales has no concept of “common law marriage” despite the widespread misconception. Cohabitating couples do not acquire automatic rights like married couples do.
In the event of separation, cohabitants cannot rely on the holistic, fairness-based regime available to married couples under the Matrimonial Causes Act 1973. Instead, property disputes are determined under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
As illustrated in this case, the court is confined only to considering the parties’ conduct and intentions in relation the property, rather than a comprehensive view of their entire relationship. They were also unable to carry out a broad redistribution of assets, as would be possible in divorce proceedings.
Therefore, it is important that cohabitants take proactive action to define and protect their financial positions.
Drafting cohabitation and separation agreements
Cohabitation agreements allow couples to regulate their financial arrangements during the relationship. These agreements can address:
- ownership of property;
- responsibility for mortgage and household expenses; or
- treatment of savings, debts, and other assets.
Where a relationship has already broken down, a separation agreement can record how assets, liabilities, and practical arrangements are to be resolved, enabling both parties to move forward with greater certainty.
While such agreements are not automatically binding, they are highly persuasive if properly drafted, entered into freely, and supported by independent legal advice.
Setting up Declarations of Trust
Where a property is purchased jointly, a declaration of trust is the most effective way to record the parties’ beneficial interests, especially where the property is not held in equal proportions as tenants in common.
This document can specify:
- the proportions in which the property is owned (e.g. 80/20);
- how sale proceeds are to be divided; or
- how contributions are to be treated over time.
This ensures that the property is held by the parties as they intended and according to their wishes.
Without a declaration of trust, the court may have to infer or impute the parties’ intentions based on their conduct, which introduces uncertainty and the risk of litigation.
Clearly define gifts or inheritance
This case highlights the risk that gifts and inheritance may be treated as joint contributions if they are used for the benefit of the relationship, such as funding the family home.
To avoid this:
- clearly document the intended ownership of the funds;
- record contributions in a declaration of trust where they are used to purchase property;
- consider using a cohabitation or nuptial agreement; and
- keep such funds ringfenced, rather than mixing them with joint finances.
Failing to do so may result in the court treating what was intended as a personal contribution as part of the parties’ shared assets.
How We Can Help
We can help individuals and couples to protect their financial interests whether they are cohabitating or married or in a civil partnership. We can assist at any point whether at the outset of the relationship or upon separation. Our services include:
- Tailored advice on cohabitation rights or marriage rights
- Consultation on safeguarding financial interests in a relationship
- Drafting cohabitation, separation or nuptial agreements to clearly regulate financial arrangements
- Preparing declarations of trust to accurately record ownership of property
Find out more on our family law page or contact us today.
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