Property prices in the UK have increased considerably over the past few years.  A lack of affordable housing has resulted in friends and/or family members pooling resources in order to purchase a property and get on the housing ladder, for example parents helping out adult children or elderly relatives releasing equity.  In addition many couples are choosing not to marry or to enter a civil partnership, but they may still decide to purchase a property together. As a result, co-ownership of property in the UK is on the increase.

But what happens if one of the co-owners wants to sell, for example if the relationship comes to an end or one party wishes to realise their interest?  Most people assume that, provided you are named as a joint legal owner on the Title Deeds, then you are entitled to an equal share of the equity. What is frequently not understood is that the legal ownership of the property and the entitlement to share in the proceeds of sale (the beneficial interest) are two separate things and it does not necessarily follow that the beneficial interest will be the same as the legal ownership. 

Many cohabiting couples still wrongly assume that they have some protection as a ‘common law spouse’, at least if they have been living together for some time.  There is no such thing as a ‘common law spouse’ and, at present, cohabiting couples have no extra claims, even if they have children together. 

Consequently, it is extremely important to ensure that careful consideration is given as to how the property is to be held.  A sole owner could still find themselves vulnerable to a potential claim, for example where a partner moves in at a later date.

Protecting your position

The best way to avoid future litigation is to have a written agreement in place from the outset. 

At the time of purchasing the property, your conveyancing solicitor will advise you about different methods of ownership.  If you are purchasing with another party the property may be held as either Joint Tenants or Tenants in Common and it is vital that you understand the implications of this before completing the paperwork:

As joint tenants, each party has an equal interest in the property.  On sale, the proceeds will be divided equally, regardless of contributions made to the purchase price or the outgoings.  Upon the death of one partner, their share of the property will automatically pass to the other regardless of the terms of any Will.

Tenants in common have specified interests in the property, which might or might not be equal.  A separate legal document sets out the shares which it is agreed each has in the property.  It can also specify the contributions which each must make towards the purchase price and the outgoings and the circumstances in which the property should be sold.  Further considerations are how the sale proceeds are to be divided, whether it is appropriate for there to be any adjustment in the event of one party defaulting or ceasing to occupy the property, and whether the remaining owner has the right to buy out the other’s interest.  On death, the deceased’s share does not automatically pass to the survivor, but passes in accordance with the deceased’s Will.

What happens if there is a dispute?

It is important to understand that this area of law is based on strict legal principles rather than fairness and the Courts do not have discretion to adjust ownership.  They will simply analyse the facts and you will be expected very early on to provide details of your contributions, any discussions you may have had, your intentions in relation to ownership, and any promises made or relied upon.

This area of litigation is complicated and can be protracted and expensive.  We therefore recommend that expert legal advice is sought as early as possible.

Our approach

At Blandy & Blandy we have an expert team who can deal with all aspects of property ownership, dealing with advice at the outset, drawing up agreements, or dealing with the dispute in the unhappy event that it all goes wrong.

Contact us

Contact Ian Sharman for advice about drawing up agreements
Contact Jessica Irwin for advice on friends and family
Contact Sue Marshall or Brenda Long for advice on cohabitation

Phone us on 0118 951 6800