October 3, 2014

Jointly owned property and cohabitees property rights

In my earlier article about joint property ownership for couples who are not married or in a civil partnership I looked at using a ‘Trust Deed’ to protect your interests in case your relationship breaks down but what happens if you don’t have a Trust Deed and you break up? Can the property be sold to recover your initial and any further investment and, if so, will you get out what you put in? What are your cohabitee property rights?

Order for sale
Where two or more people own property together a ‘Trust of Land’ is created. As a result of that Trust either party can apply to the court seeking an order for the property to be sold.

There is no guarantee that an order for sale will be awarded by the court but if the property was purchased as a home to live in together then ultimately the purpose of the Trust can no longer be fulfilled and the property is sold. If one person wishes to buy out the other, the court will usually allow a period of time for this to take place before making the order that the property must be sold.

As well as being able to order for the property to be sold, the court can also be asked to make a declaration as to what share of the sale proceeds each person should receive following any sale.

Property registered in joint names
As to who gets what out of any sale proceeds, if the property is registered at the Land Registry in joint names, without a Trust Deed setting out unequal shares, then the starting position will be that each joint owner is entitled to an equal share of any sale proceeds after the costs of sale and any mortgage are deducted.

The reasoning behind this is that if the parties had wanted to record different shares then they could have done so e.g. by entering into a Trust Deed to document specific shares.

Despite this the law relating to joint ownership is complicated and it is possible for the court to determine that one party is entitled to more than the other if it’s proven that it was not the parties’ intention for a 50:50 split, despite the absence of any documentation.

Property registered in only one person’s name
If the property is registered in only one name then all is not lost. The burden will be on the non-registered individual to prove that they should have an interest in the property and any sale proceeds.

What should I do if I have a property dispute relating to jointly owned property?
The law surrounding jointly owned property for those not married or in a civil partnership can be complicated and it is important to seek legal advice at an early stage in order to fully understand your rights.

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