Couples in search of a home together already have a lot on their minds. Sitting down for a formal discussion about how much they should be entitled to if they split up is unlikely to be one of them, but it may be time to take off the rose-tinted glasses.

A recent landmark ruling by the House of Lords has made it clear that the courts have little scope when awarding the assets of an unmarried couple whose relationship has broken down, unless the parties have put their intentions in writing. Under current rules someone who puts down a bigger deposit on a house than his or her partner, or who paid a bigger chunk of the mortgage, could still lose half the property if they split up.

The decision in Stack versus Dowden stated that property bought in two names would be considered to be owned in equal shares between partners, regardless of how much each party paid.

The Law Lords found in favour of Miss Dowden, who argued that, since she had covered most of the cost of the £770,000 house she shared with Mr Stack for 20 years, she should be entitled to a larger share of the proceeds from the sale. However, the Law Lords were at pains to point out that their decision was made only because “very unusual” circumstances applied.

Unmarried couples are at a disadvantage to those with rings on their fingers because the courts have much more discretion when it comes to dividing the assets of married couples. Furthermore, where the property is bought in one name only, an unmarried partner has very little chance of being awarded a share of that property, whether or not one was promised.

William Selby-Lowndes, a family law solicitor at Darbys, the firm of solicitors, says: “It does not matter if one party paid the grocery bill so the other paid the mortgage. Unless it is explicitly stated when you buy that a second person should have an interest, the courts are generally powerless to award any share to the aggrieved party.” After Stack versus Dowden, lawyers and financial and relationship experts agree that unmarried couples who wish to protect themselves, and each other, should discuss their property ownership arrangements and put these in a written document similar to a “prenuptial” agreement before they move in together.

After you have broached the subject with your partner, there are a few straightforward measures you can take.

Among the forms you will need to fill out when you complete the purchase of your home is a transfer document, filed with the Land Registry office, known as form TR1.

On this form, you are given the option to tick one of three boxes stating how you want to divide the house. If you opt to become “joint tenants” or “tenants in common with equal shares”, the property will be deemed to be owned 50-50. However, you can sidestep this by ticking the box for “tenants in common with unequal shares” and writing down how you want the property divided.

In addition to the transfer document, it is wise to draw up a separate “declaration of trust”. This is especially important if you want the house to be in one name only but for the other party to be entitled to a share, or if you want to divide joint savings accounts or the contents of your home.

You can draw up your own declaration of trust using a template from the internet, but the courts are more likely to set store by a document drawn up by a solicitor. Most firms charge between £100 and £200 for the service, but you could negotiate for this to be part of the conveyancing when the house is bought.

There is some good news on the horizon for unmarried couples in England and Wales. In August the Law Reform Commission is likely to propose that divorce-style rights be given to unmarried partners. The commission is expected to recommend that partners be entitled to maintenance payments and a share of each other’s property, including pensions, if they have been living together for more than two years.

However, David Allison, chairman of the cohabitation committee at Resolution, the family law solicitors association, says that any legislation is unlikely to come into effect before 2009.

CASE LAW: Slow progress

The path to creating property rights for unmarried couples is littered with failed relationships and disgruntled ex-lovers.

In the 1984 case of Burns versus Burns, Valerie Burns, who took her husband’s name although they never married, was left with nothing when the couple separated after 22 years together.

Despite having raised the couple’s two children, done the housekeeping and bought household items such as furniture, the courts ruled that she was not entitled to a share of the family home, which was solely in the name of her husband, Patrick, and Valerie ended up living in her car.

Her subsequent appeals were dismissed and the original ruling was upheld by the House of Lords in 1988.

Unmarried partners have been treated differently to married couples since 1752, when “common law” partnerships, in which unmarried couples had the same rights as married couples because they lived together, were outlawed.

For centuries since then, it has been the case that unless unmarried couples who buy a home together write down their intentions about how their property and assets should be divided, the court will split all “joint” assets 50-50.

Twenty three years after Burns versus Burns, the case of Stack versus Dowden, which was decided in the House of Lords last month, has entrenched this position.

In Scotland, unmarried couples have more rights. Since new laws came in last year, either party can make an application to the courts for a lump sum payment to compensate for any financial disadvantage suffered as a result of the relationship or to cover the costs of looking after a child.

Action plan

Discuss with your partner how you want your property to be divided.

If you are happy for your property to be split 50-50 and to pass to your partner when you die, then you can elect to be “joint tenants” on the title deeds of your property and you need take no further action. Lawyers say that unmarried partners buying a home together should almost always put a home in both names.

Even partners who are named as “tenants in common” on the title deeds are advised to sign a declaration of trust, similar to the prenuptial agreements often used by married couples.

Draw up a declaration of trust either by using a template on the internet or with a lawyer. This deed will outline what share of the property you each own and how the proceeds of its sale should be allocated.

The declaration of trust must be signed by both parties and witnessed by a third party to be considered valid by the courts.

A declaration of trust should also be drawn up if you move into a house already owned by your partner but you intend to help with the mortgage repayments.

You can also adjust the deeds to have both parties named, but this may incur stamp duty if the mortgage is more than £125,000.

Individuals with substantial wealth should seek independent advice.