Joint ownership of a property may be a trouble-free experience – but it sometimes results in a stressful property dispute.
When things go wrong it can be difficult to resolve and it’s essential that you take expert legal advice on property disputes.
PM Law has recently been successful with a case which involved the purchase of a property by two brothers. One brother left the property after a short time and all financial outgoings were paid by our client. Decades later, his brother sought to claim a 50% share of the equity of the proceeds of the sale. PM Law successfully obtained 100% equity on behalf of our client.
Dispute Resolution expert Laura Thorpe, who handled this case, explains the rules around property ownership and how the Court deals with such cases.
The ownership of a property is usually either as Joint Tenants or Tenants in Common. The type of ownership can affect how the owners’ interest in the property is split.
What does Joint Tenants mean?
When the property owners are Joint Tenants they own the property in equal shares. This is regardless of what each person has contributed.
What does Tenants in Common mean?
When the property owners are Tenants in Common they may own it in equal or unequal shares. Each owner’s specific share in the property will depend on what they agreed when the property was purchased. This is usually detailed in a Declaration of Trust.
Problems start when there is no agreement and the relationship between owners breaks down. This often leads to disputes as to each owner’s share of the equity of the property.
All owners of the property must agree in order to sell a property held as Tenants in Common. If they don’t agree, an order must be obtained from the Court for the property to be sold. The issue then is how to divide the proceeds of the sale. It’s a mistake to assume that, if they can’t agree, the proceeds will be divided equally.
How does the Court handle property ownership disputes?
The Court will look at what the owners’ common intention was at the time of purchase and will also consider that this may have changed over time.
For example, a couple purchase a property as Tenants in Common, with the initial common intention that they own it in equal shares. However, the relationship breaks down soon after and one person leaves. They then make no further financial contributions towards the property. Years after they move out of the property, they then try to claim a 50% share. In such circumstances the Court will consider whether the common intention between the parties has changed, as the property was abandoned and may then award no share in the equity of the property to the owner who left.
If there is no Declaration of Trust with the precise shares of the owners of the property, then the Court will consider each case on its facts. Even if the property is thought to have been owned on a 50/50 basis, it will not necessarily mean that the Court will award this. The Court will consider the common intention of the owners, which party has benefited from the property and spent money on the property.
Trusts of Land and Appointment of Trustees Act 1996 (TOLATA)
The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) also sets out matters which the Court should consider when apportioning shares of the property. This includes:
- the interests of any mortgage company
- whether there are children living at the property
- whether rent can be charged against the occupier of the property
- whether mortgage payments should be compensated for if paid by only one owner
- whether any improvements to the property have increased its value
Ultimately, if there is no Declaration of Trust and the owners cannot reach an agreement, they need to apply to the Court for a declaration as to how the shares of the property are apportioned and for an order for sale. The Court cannot order one owner to sell their share to another owner.
Dealing with this type of property dispute can be complex and time consuming and it’s important to have the correct legal advice. For more details of how our expert team can help you, please call us on 0114 220 1795 or email email@example.com