Avoiding Disputes over Home Ownership

[Celestine]

AVOIDING DISPUTES OVER HOME OWNERSHIP


Before buying a property jointly, it is wise to have a TRUST DEED drawn up by a solicitor.
The trust deed will set out the intended ownership of the property which can be agreed on between the cohabitants.
The trust deed can also cover other issues:

Granting the option for either party to buy the other out in the event of a split.
Define issues which would lead to sale or delay a sale (eg. childs school leaving age)
Agreements on how mortgage payments, repairs and running costs will be shared.
Provisions for allowance to sell share to another party.

Trust deeds are not usually open to challenge in the court. Trust deeds can be used by any persons purchasing property together, not just cohabiting couples.

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The Privately Owned Family Home

The family home is usually the source of the main legal and financial problems that seperating couples face.

If the couple are married, the law assumes that they are both entitled to a share. If the property is owned in one persons name is largely irrelevant.
The court will view the home as an asset to be split if the couple divorce.

The courts will will view it as a priority that the wife and children are housed and this may extend to signing over the home to the wife in addition to any maintenance for herself and the children. Each family circumstance is different and the courts will ensure that the husband gets a roof over his head too.

However if the couple are unmarried the court will take a less generous view toward the female cohabitant (if she is living in her partners home) for it is primarily concerned with who is the strict legal owner of the property. As there is no marriage, the courts will be unable to treat the home as a family asset, therefore if it is owned in the mans sole name it is likely that he alone will be entitled to it, especially if he has paid all the mortgage payments due on it. By the same reasoning, if the property is jointly owned then each of them will be entitled to 50%

The legal starting point of an unmarried couple will be that the property will go to the person who legally owns the property, the fact that it has been used as a family home is unimportant. This presumption is rebuttable only if the person who is not on the title deeds can show it is in fact jointly owned. This is often difficult to prove, the sort of evidence required to show the property is jointly owned would include:

* correspondence between the couple which shows that the property was intended to be jointly owned even though it was placed in one persons sole name.
* if the deposit for the property was provided by the person whose name was not on the title deeds
* if mortgage payments (capital payments carry more weight than interest only only payments) were financed by the person whose name is not on the title deeds.
* if the person whose name is not on the title deeds has done a great deal of work to the property hence increasing its value (furnishings and decorating do not count)
* if the person whose name is not on the deeds can show there was an agreement or common intention to share ownership of the property and has acted in reliance on that to her financial detriment.

If there is a dispute as to whether a property is jointly owned, the person whose name is not on the deeds should seek legal advice urgently. This area of law is very complex and a solicitor would need to advise on each case individually, as the case law varies widely.

[Celestine]

Cohabitation

If it seems that a cohabitant may be likely to a share of the property they can commence proceedings under the Trusts of Land and Appointment of Trustees Act 1996.

This Act provides that a cohabitant who can prove that he/she is an owner of the property can occupy the property on such terms as the courts see fit (this had been unclear prior to the 1996 Act). The court can make a declaratory order stating the extent of the persons interest in the home but it does not necessarily go as far as what may be called 'fair' property readjustment orders, hence the old legal principles still need to be referred to.

Alternatively, one may make a claim under the Family Law Act 1996 which again can can establish certainty about occupation of the property. (see chart below for comparisons between the Acts).

Many legal advisors prefer the Family Law Act 1996 as it has a more welfare orientated approach, the courts are able to consider the practical impact upon each of the family members.

A drawback of the Family Law Act 1996 is that courts are often reluctant to make occupation orders as this ousts one person from the family home, simply put, the courts see this as a draconian measure. The courts will weigh up the balance of harm to both sides before making such an order and will consider the childrens needs as a high priority.

Legal proceedings will almost certainly be slow and expensive, taking at least 12 months. In the meantime the 'owner' of the property will be unable to sell. This is done by registering the non-owners claim as a 'charge' against the property making it virtually unsellable. Mediation is also often recommended as a method of resolution.

CASE LAW: Lloyds Bank plc v Rosset 1990