Sharing Ownership of a House: What Happens if There is a Dispute?

The ownership of a property is usually either as; Joint Tenants or Tenants in Common and the type of ownership can affect how the owners’ interest in the property is split.

If a property is owned as Joint Tenants then regardless of what each person has contributed, everyone (can be 2 or more) will own the property in equal shares. If a property is owned as Tenants in Common than the property may be owned in unequal shares. Each owner’s specific share in the property will depend on what was agreed when the property was purchased, usually detailed in a Declaration of Trust. When there is no agreement and a relationship between the owners breaks down, it can often lead to a dispute as to each owner’s share of the equity of the property.

How to Sell a Property Held as Tenants in Common

All owners of the property must agree to be able to sell a property held as Tenants in Common, failing which an order must be obtained from the Court for the property to be sold. The issue then is often how the proceeds of the sale will be divided. If there is no agreement as to how the shares are to be split, it is often assumed that the property is held in equal shares. The Court, however will look at what the owner’s common intention was at the time of purchase and will also consider that this may have changed over time.

An example would be where a couple purchase a property as Tenants in Common, with the initial common intention that the property would be split in equal shares. However after a few weeks the relationship breaks down and one person leaves and makes no further financial contributions towards the property. Years later after they moved out of the property, they then try to claim 50% share of the property. In such circumstances the Court will consider whether the common intention between the parties has changed, as the property was abandoned and may then award no share in the equity of the property to the owner who left.

This firm has been successful with the case which involved the purchase of a property by two brothers. All financial outgoings were paid by the Claimant and the Defendant left the property after a short time. Decades later the Defendant sought to claim 50% share of the equity of the proceeds of the sale. This firm was successful in obtaining 100% equity on behalf of the client.

How Important is a Declaration of Trust?

If there is no Declaration of Trust with the precise shares of the owners of the property, then the Court will consider each case on its facts and even if the property is thought to have been owed on a 50/50 basis, it will not necessarily mean that the Court will award this. The Court will consider the common intention of the owners, which party has benefited from the property and spent money on the property.

The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) also sets out matters which the Court should consider when apportioning shares of the property. This includes the interests of any mortgage company and whether there are children living at the property. Lastly the Court will also consider whether rent can be charged against the occupier of the property, whether mortgage payments should be compensated for if paid by only one owner and also whether any improvements to the property have increased its value.

Ultimately, if there is no Declaration of Trust and an agreement can not be reached between the owners as to the share of the equity of the property, then a claim will need to be made to the Court for a declaration as to how the shares of the property is apportioned and for an order for sale of the property. The Court can not order for one owner to sell their share to another owner.

Dealing with such matters can therefore be often complex, time consuming and emotional for the parties, it is therefore important to obtain the correct advice. If you would like information on how our experts can assist you, please call us on 0114 220 1795 or email disresenquiry@pm-law.co.uk.