The law for cohabiting couples is different than for those who have been married. Unfortunately, at present, the law does not give any particular rights to couples who have cohabited.
There are two “types of rights over land”: Legal and Equitable.
Legal ownership means the owners who are registered on the title as owning the property.
Equitable ownership means that sometimes even if a property is owned in one person’s sole name, another person may have a beneficial interest in the property. If a property is owned jointly, it does not necessarily mean that the equitable ownership should be in the same proportion.
Co-owners of land are in equity either joint tenants or tenants in common in equity.
In a joint tenancy, when one joint tenant dies, their interest (legal and beneficial) passes automatically on death.
In a tenancy in common, when one tenant in common dies, their beneficial interest will not pass automatically on death to the survivor(s). Instead, it becomes part of the deceased’s estate and passes under their Will (if any) or under the intestacy rules.
Please see our leaflet on joint tenancy, tenancy in common and severance of tenancy.
Classic Trusts of Land
A trust of land provides for the equitable ownership of a property. In simple terms, a trust of land can be created by way of:
- An express trust
- A resulting trust
- A constructive trust
- Proprietary estoppel
An express trust is created where a person either expressly declared that he or she holds property on trust for another or transfers the property to another expressly subject to a trust.
A resulting trust is implied or presumed where a person purchases property in the name of another, or where a person makes a direct financial contribution to the acquisition of property in another’s name.
A constructive trust is implied to give effect to the common intention of persons, typically where there is an agreement, arrangement or understanding between them that a property should be shared beneficially on which agreement one person relies to his or her detriment.
Proprietary estoppel is the doctrine applicable where a person has been encouraged or allowed to believe by an owner of land that he/she has certain rights in or over it. That person then acts to his detriment in reliance on this belief. If it is unconscionable for the owner to deny the Claimant the rights in question, the court may grant relief to give effect to the expectation which has been engendered. The relief may or may not comprise of the grant of an interest in property.
Quantification of interest
The size of the beneficiaries’ interests will depend on the type of trust that has been created.
Express trust: the beneficiaries’ interest will be in accordance with the trust document (declaration of trust).
Resulting trust: the beneficiaries interest will be referable to the beneficiaries contribution to the acquisition of the property.
Constructive trust – the law is set out in the case of Stack -v- Dowden which sets out some guidelines to deal with those other trusts.
The starting point is that:
Sole legal ownership = sole beneficial ownership
Joint legal ownership = joint beneficial ownership
The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. Many more factors than financial contributions may be relevant to divining the parties’ true intentions. These include (but are not confined to):
- advice or discussions at the time of the transfer;
- the reasons why the home was acquired in joint names;
- the reasons why (if it is the case) the survivor was authorised to give a receipt for capital monies;
- the purpose for which the home was acquired;
- the nature of the parties’ relationship;
- whether they had children for whom they both had responsibility to provide a home;
- how the purchase was financed both initially and subsequently;
- how the parties arranged their finances; whether separately or together or a bit of both;
- how they discharged the outgoings on the property and their housing expenses;
- the parties individual characters and personalities: it should not be assumed that monetary considerations always take pride of place over natural love and affection.
Wherever a property is jointly owned, both owners would both have to agree to a sale. However, if this cannot be agreed, an application can be made to the Court for an order for sale under the Trusts of Land and Appointment of Trustees Act 1996 (“TLATA”).
An application to the Court for an order for sale is a civil law claim and there are a number of procedural rules which must be followed. In this, the person who is deemed to have not succeeded is likely to be ordered to pay the other person’s costs as well as their own.
Section 14 of TLATA provides the Court with wide powers which include making an order for sale or declaring the nature or extent of a person’s beneficial interest in a property, i.e., the Court would make a declaration as to the parties’ respective beneficial interest (share) in the property. In deciding how to exercise its power under TLATA, the Court has to have regard to factors, including the following:
- The intention of the person(s) who created the trust;
- The purpose for which the property subject to the trust is held;
- The welfare of any minor who occupies or might reasonably be expected to occupy the land subject to the trust as his home;
- The interests of any secured creditors of any beneficiary;
- The circumstances and wishes of any beneficiary of full age.
Once proceedings have been issued, there is a fairly inflexible procedure including disclosure of documents, inspection, exchange of witness statements and trial, with ever mounting costs. There is no arbitration hearing where negotiations can take place per say. It is therefore essential that the case should be in order, and if possible attempt to settle the matter prior to issue.
One of our experienced family solicitors will be happy to assist you in your children matters. Please contact Severine Vincent on 01926 422 101 or visit our Contact page. Alternatively, you can send Severine a message direct using departments contact form.