One of the questions we ask people when they first come to see
us about their separation is whether they have signed any
agreements about property rights. This might be at the beginning of
the relationship or during it. There might be an inheritance
received during the relationship that prompts a discussion around
It is always hard when we have to tell a client that the
"agreements" they thought they had regarding pre existing
assets, bank accounts or inheritances are unlikely to be honoured
and if they are not there may be nothing we can do to save the
asset as separate property.
To be binding there are certain formalities that are required in
the Property (Relationships) Act. For instance they must be in
writing, completed through lawyers, one for each party from
different firms, and there must be disclosure of assets and
liabilities and an absence of pressure.
A Court does have the discretion to give effect to an agreement
that has not met the formalities of the Act if it is satisfied that
non-compliance has not materially prejudiced the interests of any
party to the agreement.
In one famous case the wife's comments that "it's
your house, you own it" was not enough on a later separation,
nor was a comment in another case that the husband would leave his
wife "the lot".
Even if an oral agreement is found to exist, the Court will not
give effect to it if there is material prejudice to one of the
parties. If a careful lawyer would have advised against entering
into the agreement then it is unlikely to be given effect to.
On rare occasions an oral agreement might be upheld. One such
case concerned a couple who came together already with their own
assets. The wife asserted there was an oral agreement that she
would retain her house and her husband would retain any property he
purchased, even if she helped with the purchase. In this case the
Court found that had the parties taken advice they would have
entered into an agreement.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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To ensure that all possible problems are considered and addressed, the transactions must be appropriately documented.
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