Property disputes between separating couples are usually of course resolved within divorce proceedings.
But what if the parties were never married?
How does a cohabiting couple resolve a dispute over the occupation or ownership of the property in which they lived together?
There is a legal procedure available to people in such circumstances (and also to anyone having, or claiming, an interest in a property, irrespective of whether they cohabited with the other owner(s)).
The procedure is under the Trusts of Land and Appointment of Trustees Act 1996, commonly known by the acronym ‘TOLATA’.
Legal and beneficial owners of property
Before looking at what can be done under TOLATA we first need to explain an important legal concept: there are two ways in which property can be owned: as a ‘legal owner’ and as a ‘beneficial owner’.
A legal owner is, quite simply, any person who is named on the deeds as the owner of the property.
But the legal owner is not necessarily entitled to an interest in the property. The person or persons who are entitled are known as the ‘beneficial owners’. The legal owner is simply said to be holding the property on trust for the beneficial owners.
Obviously, the legal and beneficial owners will usually be the same people. However, the law recognises that sometimes someone else may be entitled to an interest in the property, despite not being named on the deeds. They may, for example, have acquired an interest by making a significant contribution towards its purchase.
In simple terms, you do not have to be named on the deeds to a property to be recognised as having an interest in the property.
What can be done under TOLATA?
There are three main ways in which TOLATA can assist with a property dispute:
1) It can be used to determine who should be allowed to occupy the property.
2) It can be used to obtain an order that the property be sold, when one of the owners is refusing to sell it. Obviously, this enables the party wanting a sale to realise their interest in the property. A sale will normally be ordered so that the interest can be realised, but may be postponed until some future date, for example if the property is required as a home for children, until they grow up.
3) Lastly, it can be used to determine who has an interest, or share, in the property and, if more than one person, the size of each party’s share. As this is the central issue in most TOLATA claims, we will concentrate upon it for the rest of this article.
How the court decides interests in property
The first thing the court will look at is of course the deeds to the property. Often it will be set out clearly in the deeds who has a beneficial interest in the property, and that will be the end of the matter.
But, as indicated above, sometimes someone who is not named in the deeds will claim to have a beneficial interest in the property.
There are various legal mechanisms under which such a person can claim an interest, and the relevant law can get quite complicated. We will not therefore go into detail here, but the two most common examples are the ‘resulting trust’ and the ‘constructive trust’.
A resulting trust can arise where the court finds that the party claiming an interest in the property has made a direct financial contribution towards the purchase of the property, and that contribution was not a gift.
A constructive trust, on the other hand, arises where the court finds that it was the common intention of the parties to share the beneficial interest in the property, and that the party asserting a claim to a beneficial interest has acted to his or her detriment in reliance on that common intention. The detriment may, for example, be making a significant contribution towards the improvement of the property.
As stated, this is a complex area of the law and anyone wishing to make such a claim should first seek expert legal advice.
How Prince Family Law can help
We offer a free 30-minute consultation for anyone interested in our services. Our excellent team of support staff are always on hand to offer reassurance and liaise with you and the fee earner involved in your case to ensure you receive a first-class service at a reasonable price.