A Dispute Over Selling a Jointly Owned Inherited Property - What Next?

Partner Philip D'Arcy, head of our Dispute Resolution team, explains the problems faced when a house or property is inherited by individuals who do not agree on what do do next. 

'My brother and I are at odds over selling a £1 million house we inherited.'

This was the headline in a recent article in the Mail Online.  The case concerns two brothers who inherited a £1 million house. The enquirer was renting and wanted to sell this house in order to be able to buy a home for himself.  His brother was opposed to a sale, as he wanted to continue living there.

Inheriting a property jointly can often lead to tensions where the two owners have very different ideas about what should happen next. Because the property is owned jointly, both owners have to agree before anything can be done with the property. If the property is empty, one may want to move in and live there or let it out so as to produce an income or sometimes to try to develop the site whilst the other may simply want to sell.

The house will initially be part of the estate and vest in the personal representative of the deceased who may or may not be the same as the beneficiaries. The PR’s have to consider what should be done with the property in the light of the will or intestacy and the position of the estate. The property may need to be sold, to pay debts or inheritance tax. However, it will often be possible for them to transfer the property to the beneficiaries.

If the house has been transferred to two or more beneficiaries, they will hold the property on a trust for land. As a result, they have general powers to sell, mortgage or let the property, but must act together. If they are unable to agree usually, the first consideration is whether one might buy out the other interests. If that is not possible however and all possible compromises have been exhausted, then one or more can apply to court for an order for sale.  On such an application, the court has to consider:

1. The intention behind the creation of the trust.
2. The purpose for which the property is held in trust.
3. The welfare of any minor occupiers or any minors who might reasonably be expected to occupy the property as their home.
4. The interests of any secured creditors of any beneficiary.
5. The circumstances and wishes of all adult beneficiaries entitled to a share in the property and in the case of a dispute of the majority of them (by value of their combined interests).
6. Any other factors the court considers relevant.

Where the house is empty, then a court will normally order a sale. Cases where one sibling is living at the property at the date of death, can give rise to a number of issues.  For example, the resident sibling may be unable to purchase a home with their share and so be very reluctant to move. They may have been promised the right to live in the house for their lifetime or have a case that that they had already acquired a beneficial interest in the property before the date of death so only the remainder falls to be divided between the two. Another possibility is that they pursue a claim for “reasonable provision” under the Inheritance (Provision for Family and Dependants) Act 1975.

In the absence of any such claims, a court will have to weigh up the factors mentioned above in order to decide whether a sale should be ordered.  Generally, a sale is to be favoured as this is the easiest way to break the logjam, produce a clean break and allow each beneficiary to receive their share of the proceeds, to with as they wish.

The important thing if faced with this situation will be to take early advice from a solicitor who specialises in this area of work. Solutions can often be found that do not result in a family dispute but this will often require compromise and goodwill on both sides.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.