Protecting Assets From De Facto Claims: 2026 Guide

By The Chipkie Team, Personal Finance Editorial Team  ·  Last updated 7 September 2026

Search for guidance on protecting assets from de facto claims and almost everything you find will be written for Australia or New Zealand. It does not apply here. England, Wales and Northern Ireland have no “de facto” property regime, no binding financial agreement legislation, and — despite what most people believe — no such thing as common law marriage. What the UK does have is a patchwork of trust law, the Trusts of Land and Appointment of Trustees Act 1996, and the Children Act 1989, under which an unmarried partner can absolutely make a claim on a home your money helped buy.

According to the Office for National Statistics, cohabiting couple families have been the fastest-growing family type in the UK for more than two decades. That makes this a live risk for any parent lending a deposit, and for anyone moving a partner into a property they already own.

Key Takeaways

• There is no common law marriage in England, Wales or Northern Ireland — but an unmarried partner can still claim a beneficial interest in property through trust law and TOLATA 1996.
• Scotland is different: the Family Law (Scotland) Act 2006 gives cohabitants limited financial claims, subject to a very short time limit after separation.
• Money given to a child without paperwork is presumed to be a gift, and a gift into a jointly owned home is exposed to the partner on separation.
• A loan documented as a deed carries a 12-year limitation period under the Limitation Act 1980, compared with six years for a simple written contract.
• A repayable parental loan used as a mortgage deposit must be disclosed to the lender. Signing a gifted deposit letter for money you expect back is a false declaration and is treated as fraud.

What does a “de facto claim” actually mean under UK law?

In the UK there is no de facto property division. Instead, an unmarried partner claims a share of a home by arguing they hold a beneficial interest under a resulting or constructive trust, and asks the court to enforce or force a sale under TOLATA 1996. Married couples are dealt with entirely separately, under the Matrimonial Causes Act 1973.

The practical consequences differ sharply depending on status:

• Unmarried cohabitants (England, Wales, NI): no automatic right to the other’s property. Claims rest on evidence of common intention — conversations, contributions, conduct. The leading cases are Stack v Dowden and Jones v Kernott.
• Unmarried cohabitants with children: Schedule 1 of the Children Act 1989 allows a claim for housing and capital provision for the child, regardless of any agreement between the adults. This is the route most often overlooked.
• Cohabitants in Scotland: section 28 of the Family Law (Scotland) Act 2006 permits a claim for an economic disadvantage payment, but a claim must be raised within a strict statutory window after cohabitation ends — take advice immediately.
• Married couples: everything is in scope. A pre-nuptial agreement is not automatically binding, but following Radmacher v Granatino (Supreme Court, 2010) the court will give it decisive weight if it is freely entered into with full disclosure and independent legal advice, and is fair.

So the UK analogue of a binding financial agreement is a cohabitation agreement or a nuptial agreement. Neither ousts the court’s jurisdiction — but both dramatically change the evidential starting point.

How do you stop family money being absorbed into a property settlement?

Document it before the money moves. Where a parent advances funds without paperwork, the courts and HMRC treat the transfer as a gift by default. A gift into a jointly owned home becomes part of the pot. A properly documented parental loan remains a debt owed to you, repayable ahead of any division of equity.

Our experience across the agreements users create is consistent: the disputes that turn ugly are almost always the ones where the money was described verbally as “help”, and the paperwork was written months or years later, after the relationship soured.

1. Decide gift or loan, and say so in writing. Half-positions (“a loan unless things go well”) are unenforceable and look evasive in court.
2. Execute a loan as a deed, not a casual note — a deed gives you the longer 12-year enforcement window under the Limitation Act 1980.
3. Lend to your child alone, naming a single borrower, if the intention is to benefit them and not the couple.
4. Register the reality of ownership. Buy as tenants in common and complete a declaration of trust recording exact beneficial shares and how contributions are repaid on sale. Update the title at the Land Registry with a Form A restriction.
5. Consider a legal charge over the property to secure the loan — but only with the mortgage lender’s written consent.

Our step-by-step guide to writing a loan agreement in the UK sets out the clauses that survive challenge.

Will a mortgage lender accept a parental loan as the deposit?

Often not. Most mainstream UK lenders require the deposit to be a genuine, non-repayable gift and will insist on a gifted deposit letter confirming the giver retains no interest in the property. A deposit that is really a repayable loan must be disclosed. Some lenders refuse such applications outright; others accept them but reduce affordability.

This is the tension nobody warns families about: the very documentation that protects your money from a partner’s claim can make the deposit unacceptable to the lender. You cannot solve it by staying quiet.

What makes a gifted deposit letter false: stating the money is a gift when you expect repayment; stating you retain no interest when a side agreement or charge exists; or omitting a repayment schedule agreed privately. A false declaration to a lender is mortgage fraud under the Fraud Act 2006 and can result in the mortgage being called in, prosecution, and loss of the property. Read more on the practical difference between a gift and a loan for a deposit.

Workable alternatives include a genuine outright gift to your child combined with a declaration of trust recording unequal beneficial shares; a disclosed unsecured family loan with a lender that permits it; or a joint borrower sole proprietor arrangement. Check affordability rules with the Financial Conduct Authority-regulated broker handling the case, and see the guidance at MoneyHelper.

Which document does which job?

Each instrument protects a different asset against a different risk. Most families need two or three working together, not one.

Note the tax overlay. According to HMRC, the inheritance tax nil-rate band stands at £325,000 and remains frozen, and the annual gift exemption is £3,000 per tax year, with one unused prior year able to be carried forward. Larger gifts are potentially exempt transfers under the seven-year rule; taper relief between three and seven years reduces the tax due, not the value of the gift itself. A loan, by contrast, stays in your estate as an asset. Also check the higher rates of Stamp Duty Land Tax before anyone is added to a title, and the personal tax position on any interest you charge.

What else do people ask about protecting family money from a partner’s claim?

Can my child’s partner claim a share of a house I paid for?

Yes, if they can show a common intention that they would share ownership, plus detrimental reliance — for example paying the mortgage or funding a major renovation. A declaration of trust signed at purchase, recording the actual shares, is the strongest defence against that argument succeeding.

Is a cohabitation agreement legally binding in the UK?

A cohabitation agreement is a contract and is generally enforceable on financial matters, particularly property and debts, provided both parties gave full disclosure and took independent legal advice. It cannot bind the court on arrangements for children, and cannot override a Schedule 1 Children Act 1989 claim.

What happens if the loan was never written down?

You must prove the money was advanced as a loan rather than a gift, usually through bank records, emails and contemporaneous messages. Without documents, the court’s default assumption favours a gift. Late paperwork created after separation is heavily scrutinised and frequently disbelieved.

Does a partner moving in gain rights over my home?

Simply living in your property gives no automatic ownership rights in England, Wales or Northern Ireland. Rights can accrue where they contribute financially to the mortgage or improvements. A short written occupancy or cohabitation agreement at the outset removes the ambiguity entirely.

The consistent lesson is timing. Documents drafted at the moment money changes hands are respected; documents drafted after a relationship breaks down are treated as self-serving. If you are advancing family money into property, take advice on the tax and lender position, then record the terms properly — and if separation has already happened, our guide to documenting loans after separation explains what can still be salvaged.

You can create a clear, written family loan agreement in minutes with Chipkie — so the money you lend stays a loan, and stays yours.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial or legal advice. Property and lending laws in the United Kingdom vary and may change over time. We always recommend consulting with a qualified solicitor and mortgage broker before entering into a property purchase or financial arrangement with another party.