Property co-ownership disputes

Disputes between co-owners

Co-ownership disputes generally break down into 3 types :-

where there is a dispute about beneficial entitlement whether the property is legally owned as co-owners or only 1 person is the registered legal owner.
where 1 co-owner wants to sell but the other doesn't.
where 1 of the owners stops contributing top the mortgage or other outgoings.

Many properties are bought by unmarried couples in long term relationships. Sometimes both are the legal owners, both have contributed 50% towards the deposit and both are on the mortgage. In other cases, for whatever reason, there is only 1 legal owner but both contribute towards the mortgage or other bills.Co-ownership disputes can also arise with family owned properties which may have been part of an estate when a relative dies.

Read on to find out what happens if the relationship fails or joint owners get into a dispute, such as where 1 wants to sell the property but the other doesn’t?

What is a Trust for Sale?

In the common scenario where there are co-owners of a property and both are the registered legal owners, they will legally hold the property on trust, for themselves, as beneficial owners. Under English law, without a further express agreement in writing (normally in the form of a declaration of trust, as to what happens if 1 party wants to sell but the other doesn’t, there is a presumption in English law for sale.

A property co-ownership trust deed will normally set out whether the property is held as joint tenants or tenants in common and if the latter, the respective percentages of equity owned. A co-ownership deed will also commonly include clauses dealing with what should happen in the event of a dispute, especially what happens where 1 party wants to sell but the other doesn't and a mechanism for resolving disputes. If there is no co-ownership declaration of trust, the presumption is that if 1 owner wants to sell, the property should be sold. This may need to be enforced by court order if the other owner refuses in practice to sell.

If there is no declaration of trust in place and you want to claim an interest in a property where you are not the legal owner, you will then need to consider a TOLATA claim.

What is TOLATA?

TOLATA is the abbreviated term used for the Trusts of Land and Appointment of Trustees Act 1996. TOLATA claims often involve situations where a couple are splitting up, there is a dispute between them over the equity in a property they live in, and monies have been also been lent for the property by parents or grandparents.TOLATA sets out the framework for the Court’s powers to decide on beneficial ownership rights of unmarried couples. The court will determine who are the beneficial owners of a property and in what proportions.

Under TOLATA, the Court has the express powers to decide :-

If only 1 party is the legal owner, whether the other party has any financial (beneficial)interest in the property
The respective proportion of equity each party is entitled to.
Whether the property must be sold.
If the property is not to be sold, who can live in the property and on what terms.

TOLATA does not give the Court the powers to force a sale or transfer of a property between co-owners and the Court, in applying TOLATA cannot overrule the terms of any express Declaration of Trust.

My partner is the sole legal owner but we live together. What rights do I have?

If you are not the legal owner of a property but have been living in the property with your partner you can claim a beneficial interest in the property on the basis of the legal concept known as Resulting or Constructive Trust. With a Resulting Trust, this is usually on the basis that you paid towards the deposit for the property i.e made a direct financial contribution.

With a Constructive Trust, even if you have not paid any money directly for the purchase of the property, you can assert a financial interest on the basis that there was a common intent with the legal owner that you would have a beneficial interest in the property. This is also usually evidenced by ongoing financial or other contributions to the property. The most obvious examples will be financial contributions towards mortgage payments or any work carried out to the property but even if you have not been making payments towards the mortgage or obvious direct improvements or repairs for the property, you may instead prove that you have contributed towards food and utilities. In this scenario, your evidence of the crucial common intention of co-ownership will need to be stronger and you may need to also claim based on a different legal concept known as Proprietary Estoppel.

What about non-financial contributions?

The most obvious example here is where an unmarried couple have children. Only 1 of them is the legal owner of the property. The other party does not contribute financially towards the property or contributes less because she or he looks after young children. In that situation, a claim can still be made to have a beneficial interest in the property.

What is Proprietary Estoppel?

This legal concept may apply where 1 party promises the other something or acts in a way that encourages the other party to believe something and that party than acts to his or her detriment based on that belief. So, if a non-owning property occupier contributes towards the outgoings of the property and the legal owner then claims the other party has no beneficial interest, the legal owner may be estopped from asserting that the non-owner has no interest.

Solicitors for disputes between property joint owners

Property co-ownership disputes and TOLATA claims are complex. As with all legal disputes but especially these types of disputes it is important to see if mediation can avoid a costly and risky court dispute.

Our specialist property dispute solicitors have a lot of experience in advising in this area so please do get in contact to discuss your situation and how we can help.