In this article, we are going to look at what happens when unmarried couples can’t agree on their property.
I Want To Sell The Property But My Partner Does Not – What Can I Do?
If you are a couple that cannot agree on what should happen to your property (for example, if one of you wants to sell the property and another wants to live in it), either one of you may apply to the court to determine what should be done.
If this is something you need to do, you can apply for a ‘declaration of trust’, which is similar to a cohabitation agreement. Applications are made under the Trusts of Land and Appointment of Trustees Act 1996.
A ‘trust of land’ is automatically created when a property is owned by more than one person. This means that the owners are trustees, and hold the property for one another as beneficiaries of the property.
This Act allows the court to step into the shoes of the owners and deal with the property as the court thinks fit.
Please remember – There is no guarantee that an order for sale will be awarded by the court, as the court has a wide discretion in these matters. When considering whether or not to make an order, the court must have regard to specific considerations, including;
- the intentions of the parties at the time the property was purchased,
- the purposes for which the property is held,
- the wishes of the owners.
It is, therefore, very important to consider and remember what was agreed and understood between you and your partner.
What Happens If Our Relationship Has Broken Down?
If, for example, your relationship has broken down between you and your partner, then the purpose of the trust can no longer be fulfilled and an order for sale will almost always be granted when one owner wants to sell, and where there are no children residing in the property.
If you reside in your property with a child or children, the court is specifically required to show regard to the welfare of this child, and in some instances require the sale of the property to be postponed until the child reaches a particular age if the court deems it be not in the child’s interest. i.e. if it meant changing schools.
When considering the child welfare, the court will consider what alternative accommodation might be available to the owner with care of the child from their share of the sale proceeds.
There are also supplementary powers under the Children Act 1989 which can temporarily transfer the property to the parent with whom the child mainly (or primarily) lives (even where that parent does not own the property), whereby the owner of the land would own it as a trustee, and the parent caring for the child would have the right to live in it only until the child reached as specified age – usually 18, but it could be until the end of university.
What Happens If We Can’t Agree To Sell Our Property?
If you are living away from your property, whilst your partner continues to live in your jointly-owned property, you can apply for what is known as an ‘occupation rent’.
Much like traditional rent where you pay to live somewhere, occupation rent is a rent that is paid by the owner currently occupying the property, to the non-occupying owner, in payment for their use of the property.
The amount of rent that needs to be paid completely depends upon the beneficial shares of the owners in the property. For example, if you shared beneficial interest in a property equally, then the rent you would need to pay would be 50% of the market rent for the property as a whole.
Occupation rent is not automatically payable, but will be more likely where the sale of the property is deferred.
Other powers available to the court include the ability to partition the land into separate parcels for each owner where possible.
If Our Property Is Sold, How Much Will I Receive?
In addition to deciding whether or not your property should be sold, the court can determine what share of the sale each party should receive.
If your property has been jointly purchased (as ‘joint tenants’), the Court will assume that the beneficial interest in the property (and thus the sale proceeds) will be shared equally.
Don’t think that just because you paying off the mortgage or paying more for substantial improvements to the property that you will be the one who as a greater share of the equity. That’s because the court will presume that the parties intended to split the equity equally, even where the financial contributions of the parties are unequal.
This presumption can be rebutted where a contrary common intention can be shown. Such an intention (which must be common between the parties), can be that which the parties shared at the time of acquiring the property, or that which evolved during the term of the relationship.
An intention can even be imputed from the conduct of the parties in the absence of an express agreement.
Disputes as to shares can be avoided if the parties have entered into a written agreement known as a declaration of trust, either at the time the property was purchased or subsequently.
Since January 2013, it has been more straightforward for parties to declare their beneficial ownership during the conveyancing process by completing Land Registry form JO. The completion of form JO is not mandatory.
It is possible for an oral agreement to suffice, although this is of course much more difficult to prove as evidence. Evidence as to what was or was not agreed can often be highly contentious.
If you need further advice about this matter, please don’t hesitate to contact Sinclair Law direct.