Property Ownership in England and Wales
Property ownership is split into two tiers (1) the legal interest and (2) the equitable interest, or more commonly known as, beneficial ownership.
The legal interest, also known as the legal title/legal ownership, is held by the individuals or co-owners of a property who are named on the title deeds and listed in the proprietorship register of the HM Land Registry office copy entry.
The beneficial ownership is the “true owner” of the property. A beneficial owner of a property has:
1. Rights to receive any profit/income from the land
2. Rights of occupation
3. The right to decide to sell the property and an entitlement to the proceeds of sale of the land.
More often than not, the legal title and beneficial title are owned by the same person. Where a property is held by more than one person, a trust of land arises. Again, the legal owners may be the same as the beneficial owners, but in some cases the legal owners hold the property on trust for different beneficial owners.
Generally, through the acquisition process of a property, parties will be asked by their solicitors how they wish to “hold” the property. This is with reference to the beneficial interest (the legal interest can only be held as joint tenants), as it can be held as either joint tenants or tenants in common.
However, this is not always done, or if it is done, it does not accurately reflect the true owners of the property, thereby leading to ownership disputes. It is also possible that the beneficial ownership changes over time, but this has not been accurately or fully recorded, which can also give rise to ownership disputes.
Why might a property co-ownership dispute arise?
A common property dispute we see relates to cohabiting unmarried couples following a breakdown of their relationship. However, property ownership disputes frequently arise where co-ownership of a property is between parents and adult children, siblings or even between friends.
It should be noted that, unlike married couples or those in a civil partnership, a cohabiting unmarried couple cannot rely on the remedies provided by the Matrimonial Causes Act 1973 following a breakdown of their relationship. Instead, they must rely on the Trusts of Land and Appointment of Trustees Act 1996 for any relief in respect of an ownership dispute as to shared property, which makes this an incredibly important piece of legislation.
Typically, an action is brought because one party does not have any formal interest in the property but believe they do, or they should, because either there is some common understanding/belief in place, or because they have made direct or indirect financial contributions towards the purchase of the property, or home improvements thereby increasing the value of the property. An individual may also be able to assert a beneficial interest in a property where a promise of ownership has been made to them by the legal owner, and they have acted on such a promise to their detriment.
However, ownership disputes over property can arise in all manner of situations, for example
- where a party has provided funds to assist with the finance or acquisition of a property (even though they do not intend to occupy the property)
- where property has been inherited by more than one person, and the parties dispute how best to manage the property
- where parties accept they both have a beneficial interest, but are unable to agree on their respective percentage ownership
- where one party wishes to purchase another’s interest in a property and is unable to agree on the value
- in a business context where parties enter a joint venture to purchase a property, or properties, for investment purposes.
- where the owner, or a co-owner of a property, has been made bankrupt, and it is necessary to assert an interest, or increased interest, against their trustee in bankruptcy.
How does the dispute resolution process work?
The law governing these types of co-ownership disputes is primarily the Trusts of Land and Appointment of Trustees Act 1996 (colloquially known as ‘TOLATA’ or ‘TLATA’).
Pursuant to the above, the Court can make an order:
- Declaring the nature or extent of a person’s interest in property/land
- Relating to the exercise by the trustee or any of their functions pertaining to a property/land
- Regulating the exercise of the right of occupation and use by the beneficiaries of property/land
- Partition the land
- Order the property/land to be sold, or refuse an order for sale
What else might TOLATA cover?
As noted above, TOLATA is far-reaching and covers many trust of land matters.
For example, when dealing with inherited property, there may be a period during which the administrators of the deceased’s estate assume control of the property. They do so for the benefit of the beneficiaries, until such a time that the property is sold or otherwise dealt with in accordance with the Will. The trustees may require directions from the Court as to how to manage the property together and/or any income from the property in the meantime.
Equally, in these circumstances, there may be several beneficiaries affected by the decisions of the trustees, which can, of course, give rise to competing interests. Perhaps some beneficiaries wish to occupy the property. Again, disputes can arise here, and an application to the Court may be unavoidable if the parties cannot reach a resolution.
Beneficiaries are also able to bring a TOLATA action seeking a declaration that:
- They are permitted to occupy the trust property
- If they are unable to occupy the trust property, they ought to be awarded a financial remedy in the alternative – an Occupation Rent.
As to the latter, this is often seen in situations where an unmarried cohabiting couple have separated, and one party leaves the property or otherwise feels ‘ousted’. The ‘ousted’ party may claim they are being prevented from their right to occupy the property. Of course, it may be open to the occupying party to argue that any such claim should be offset against any additional mortgage payments being made.
We shall cover this further when we discuss ‘equitable accounting’ and ‘occupation rent’.
Is it expensive? What are the likely costs?
Once we are informed of the dispute in question, we will provide you with an estimate of costs at the outset based on the type of work required.
Why are Grant Saw the best people for the job?
Grant Saw have experienced lawyers who are on hand to give their clients the best assistance and advice possible.
For more information concerning cohabitation agreements or to discuss a specific family matter, please email family@grantsaw.co.uk or contact the team on 020 8858 6971 today. If you have a cohabitation dispute, then please contact us on the same email and phone number as above or our litigation department by email litigation@grantsaw.co.uk.
We are currently offering a free, initial telephone consultation. Feel free to contact us or leave your details here and a member of the team will contact you at a time that suits.
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