PROPERTY OWNERSHIP DISPUTE
Property ownership disputes often occur when friends, family, couples or business associates pool money to buy a property together. The fun starts when the relationship breaks down and the property needs to be sold. Questions arise over who gets what share of the equity.
How do property disputes arise?
Property Ownership Disputes tend to arise when one party wants to sell but the other doesn’t. It might also arise when all parties agree to sell, but there is a dispute on how the equity will be apportioned.
When there is no written agreement or the intentions of the parties from the outset are not clear things can get messy and solicitors are often needed to help resolve the dispute.
Common property disputes include:
- Investment properties owned between friends, family or business partners.
- Co-habitants where one party owns the property, but the other party has made significant contributions to the purchase price and/or maintenance of the property.
- Family or friends loaning money towards the deposit or purchase price.
- A co-owner dies and other seek to recover money used to help purchase a property.
- A probate property in which the beneficiaries can’t decide what to do with it.
The different ways of owning property
Property can be held in one of three ways:-
- Sole Ownership
- Joint Tenants
- Tenants in Common
This is where the property is where a single person is registered as the owner. This does not mean however, that another person cannot make a claim for beneficial ownership. This may arise if the non-legal owner contributes towards the mortgage costs and renovations.
If a dispute arises, a court will look at financial contributions made, and any detriment suffered. If persuaded, a court can award the non-owner a beneficial interest.
This is where you buy a property with a co-owner. The property is held equally. If one owner dies, ownership automatically passes to the co-owner. This is often the most common way of holding property.
If there is a dispute here about the apportionment of equity on sale, there has to be strong evidence to rebut the presumption of equal shared ownership.
TENANTS IN COMMON
Here, the owners will have a specific share in the property, for example on a 70/30 basis. This can be used where one party puts in more money from the outset. When property is held like this, ownership does not automatically pass when the co-owner dies. The deceased’s share will be distributed according to the terms of the will or intestacy rules if there is no will.
DECLARATION OF TRUST
How to avoid a future property ownership dispute
If you have purchased or are looking to buy a property as joint tenants and you have yet to marry, the advice would be to get a solicitor to prepare a declaration of trust, if you do not intend to hold equally.
This will set out the intentions of the parties. It will typically explain the percentage share each owner has and how mortgage costs will be split.
We have prepared a useful PDF Guide on declaration of trusts which can be Downloaded HERE>
If a dispute then arises, the court will have a document setting out what the intentions of the parties were at the outset and will be much more likely to make an order for settlement on that basis, unless something drastic has changed.
ALTERNATIVE DISPUTE RESOLUTION
Dealing with these types of dispute can cause stress and problems within relationships and especially family. They can also be complex. You should try to deal with things amicably without falling out, if at all possible! If that fails, see a solicitor.
Alternative Dispute Resolution (ADR) is a great way to try and resolve disputes quickly and without incurring hefty legal fees or going to court. A good solicitor, will always suggest this.
As a matter of course we always try to reach a resolution with all parties without the need to commence court proceedings, but if that is necessary, we have the experience to move quickly
How do the courts decide?
If ADR fails, you will need to make an application to the court under the Trusts of Land and Appointment of Trustees Act 1996, (TOLATA).
The court will then make a decision looking at a number of factors including:-
- The original intentions of the parties at the time of purchase.
- Any beneficial interests in the property.
- The rights and needs of any children living in the property must be considered.
- The reason for buying the property in the first place.
- The market value of the property.
The court will usually be asked to consider one of the following:-
- The extent of ownership for each party.
- Which of the interested parties will be entitled to occupy the property.
- Whether to order the sale of the property.
Once the court has made an order, it should be complied with. In some instances, it may be necessary to enforce the terms of the order in the event that one of the parties fails to comply.
How can we help with your property dispute?
Our property ownership dispute solicitors at Kumari Hart can be part of your team to help you resolve your dispute as quickly as possible.
All initial enquiries are completely free of charge, so please do not hesitate to call us on: 02477 981545