Property disputes, cohabitation, and TOLATA

Every year, the marriage rate in the UK continues to decline. More and more people are opting to cohabit without marrying. Unfortunately, the law has not kept up with this shift in social attitudes, meaning unmarried couples can find themselves in an uncertain situation if they own property together when the relationship breaks down. Unless you are married, the ownership of any joint property is dealt with under the law of trusts of land and a piece of law called the Trusts of Land and Appointment of Trustees Act 1996, or “TOLATA” which is online here.

What is TOLATA?

TOLATA is a law which gives the courts the power to make decisions in disputes about property. The court can decide:

• who owns what shares in a property
• whether the property should be sold
• if one co-owner should pay rent to another and other related decisions about co-owned property.

Who can apply for a decision

TOLATA applies to anyone who owns property jointly with another person, not just unmarried couples. This regime will apply if you own a property jointly with a friend or family member as a home or as an investment. This can also apply where you are not named as the legal owner of a property but consider that you should have some share in that property, for example if your partner owns a property that has served as your family home and that you have contributed to.

How does the court decide the ownership of a property under TOLATA?

Determining the shares in a jointly-owned property can be a complicated and uncertain process. If there is a written agreement setting out the shares in the property then this will usually decide what those shares are. If there isn’t any written agreement then the court will have to make a decision based on the facts of ownership of the property and how the co-owners have dealt with the property. The court would look at who is named as the legal owner of the property, who has paid money towards the purchase of the property or the mortgage, what agreement there might have been between the co-owners, and what the co-owners have done with the property since it was bought. The main bases on which the court can decide the ownership of a property are:

• an express trust
• a resulting trust
• a common intention constructive trust
• proprietary estoppel

What is an express trust?

This is a written agreement that records the ownership shares in a property. This can be recorded in the transfer document when the property is purchased or it can be in a separate document. If there is an express trust then it will usually be the final word as to the shares in a property unless the agreement came about as a result of a fraud by one of the parties, a mistake, or the trust is a sham designed to deceive as to the true ownership of the property.

A type of express agreement suitable for unmarried couples is a cohabitation agreement. Ellis Jones Solicitors can help you prepare a cohabitation agreement for you and your partner. You can find more detail here.

What is a resulting trust?

One of the ways that a court can determine the ownership of a property in dispute is on the basis of a resulting trust. In broad terms, this is where the ownership shares in a property are determined on the basis of the value of the contributions made by the co-owners. So if you paid two thirds of the purchase price of a property and your co-owner paid one third, the court might decide that you owned the property in those shares. This is more common for people who own a property as an investment rather than couples.

What is a common intention constructive trust?

Where there is no written agreement about who owns a property, the court can find that the parties did agree as to the ownership of a property, they just didn’t write that agreement down. The court has to be convinced that the co-owners of a property shared a common intention about what the shares in the property should be. This can then create a common intention constructive trust. This is more usual for couples where perhaps one party holds the legal ownership of the property but they both intend for the property to serve as their family home and be a joint asset.

What is proprietary estoppel?

Proprietary estoppel arises where one makes a promise about the ownership of property and the person to whom that promise was made relies on that promise to their detriment such that it would be unconscionable for the promise not to be enforced. For example, in a famous case a farmer said to a worker on his farm that he would leave the farm to the worker in his will if the worker worked on the farm for low wages. The worker relied on this promise and worked on the farm for many years. When the farmer died, having left the property to someone else, the worker claimed that the farm should be his under proprietary estoppel.

How can Ellis Jones help?

If there is no written agreement as to the ownership of property then convincing evidence about how the property has been dealt with is critical. Our solicitors are experienced in advising on disputes over property, so we can help you to gather and present evidence that will be relevant and effective. We can advise you about how to prepare for a dispute, what to expect as you go through, and how to give yourself the best chances of success. Call our dispute resolution team on 01202 525333 if you need to discuss a dispute over property.