Sales and Ownership Disputes
Often people buy property together. Sometimes they do not agree about how it should be managed or if it should be sold, and things change over time.
In some cases, the property is only registered in the name of one of the buyers because they have an informal agreement that it is held for and on behalf of both buyers or for the benefit of their joint business. This can happen in the context of a personal relationship, where a couple are not married, or in the context of friends or business partners entering into a joint venture.
When the joint purpose that the property or assets such as shares was bought for comes to an end, there can be a dispute about whether the property should be sold. This can arise at the end of a business relationship where one person wants to carry on trading and the other party wants to leave and realise the value of the property, or at the end of a development where one party wants to sell and the other wants to run it as a buy to let.
In these situations, there are often issues of corporate law and/or partnership law that need to be dealt with at the same time. Our specialisms in commercial and property law mean we are well placed to quickly resolve this kind of ownership and property dispute.
In most cases of joint ownership each owner has an absolute right to have the property sold by agreement or court order, as long as such a sale doesn’t breach the terms of any agreement the parties entered into before the dispute arose. Where a co-owner obtains a court order for sale the party who has resisted the sale is usually ordered to pay the other party’s costs. We offer a full range of funding options to pursue such cases.
Trusts of Land (TOLATA) Claims
One of the ways that we’re able to pursue forcing the sale of assets jointly owned, even where only a small percentage is owned, is via the use of ToLATA claims.
ToLATA is a reference to the Trust of Land and Appointment of Trustees Act 1996. This Act can assist in situations where property or land is in joint ownership outside the protection of a legal marriage or some sort of formal commercial arrangement like a business partnership or company holding.
If you have jointly owned assets but never set anything out in writing and/or didn’t obtain legal advice, there is a strong prospect that you may have inadvertently (almost accidentally) created a trust relationship. If you’re now wanting to force sale, ToLATA may assist us in helping you do so.
The Act gives the Court powers in property disputes between unmarried couples. ToLATA is of particular relevance in situations of cohabitation where two unmarried people who jointly own a property, but the same law also assists where joint owners are friends, and can apply in business dealings although that might also crossover into a partnership or shareholder dispute.
ToLATA can also apply where one occupant of the property is the sole owner and is cohabiting with another person who does not have any claim on the legal title (because they aren’t names), but who considers they have, or might have, a claim against the beneficial interest. If an occupier has been contributing towards costs and expenses it is possible that might give rise to an entitlement to a share of the proceeds of sale, again using ToLATA, if that was the common intention of the parties at the time.
What Is a ToLATA Claim?
Without the formal legal protection of a contract, a marriage or some sort of other commercial arrangement, cohabitating partners or friends in shared ownership of a house or assets. This can become a hotbed of potential dispute, most often property disputes.
In simple terms, a ToLATA claim is where two or more individuals dispute some legal aspect of their period of cohabitation within a property and is so-called as a reference to the Trust of Land and Appointment of Trustees Act 1996. There are numerous possible areas of dispute and a ToLATA claim can also involve a property where there is a shared business interest such as a farm.
When Can a ToLATA Claim Be Issued?
In any dispute it is important to first explore alternatives to litigation, and so initial steps must be taken in accordance with the Civil Procedure Rules. These include setting out the details of your claim, and trying to avoid a need to escalate the dispute to court proceedings.
Handing these early stages carefully is incredibly important not least so that later you can show the court (and can prove) how reasonable and proportionate you have been. That gives you maximum chance and prospect of recovering your legal costs. We work in this way at the outset.
A ToLATA claim can be issued where joint parties dispute some element of house ownership or equity in a property, and no other resolution can be agreed.
A common example is a party using funds from a previous house sale and relationship to put into another property with a cohabitee as the full deposit, but then both parties pay the mortgage jointly.
Who then owns what share of the property? What if improvement works have also been funded?
Obtaining advice can assist in resolving these issues. Ultimately, where there is uncertainty, it can be necessary to obtain court orders not only to confirm who owns what, but also to enable (and force) sale.
What Are The Main Types of Application of a ToLATA Claim?
The main type of ToLATA claim is a claim for a declaration from the court confirming who actually owns what percentage of the property. This may arise because any legal documentation is silent or non-existent or a property owner could be seeking clarification relevant to the financial contribution they have made towards buying the property such as a deposit contribution or using their own funds to improve the value of the property or pay a mortgage.
It can often be necessary to obtain simultaneous orders at the same time. For example if only one person has been living in the property, or benefiting from the asset, it can be necessary and appropriate to obtain a court order that that party pay the other (not in the property) a ‘use and occupation rent’ for the time period they have been present. Obviously over time this can be significant. Usually we calculate the level of use and occupation rent by looking at a typical rental property of similar size and characteristics in the same area, and then applying the percentage owned- leaving an amount that should be paid to the other party each month (because they don’t have the benefit of the use and occupation of the property).
In ToLATA disputes it is also often sensible for us to simultaneously use the same court proceedings to obtain court orders not only confirming the percentage owned by all parties, and any use and occupation rent, but also for us to confirm that the property/asset should be sold, the sale price and the mechanism for sale, as well as what should happen to the proceeds. It isn’t uncommon for one party (the one living in the property) to drag their feet or to be happy to delay any sale. Sometimes there can be bitterness and an emotionally based refusal to engage.
We often act in these types of claims. Dealing with everything in one set of court proceedings saves time, and ultimately saves money as well as ensuring items such as a joint mortgage are brought to an end.
ToLATA allows someone to claim even if they are not named on the Deeds; however, this can involve quite technical legal argument to prove the claim. The court can decide who are the legal and beneficial owners of a property and in what proportions/percentages.
Sometimes when we are reviewing a potential ToLATA claim we find the current issues and problems are due to poor advice having been received from other lawyers at an earlier stage. For example when buying a property as unmarried co owners it is sensible (we say essential) that a deed of trust is entered into. Within such a document the parties can agree their respective percentages of ownership and many of the issues that can later result in a dispute, can be discussed and agreed transparently before there is ever a problem later. We frequently look at these situations in the context of professional negligence claims if appropriate and necessary.
What’s The Process For Making A TOLATA Claim?
Our first step in the process is to review the position with you, and to confirm our advice. We will typically need to obtain copies of core documents such as the mortgage application and conveyance files from any broker and solicitor/conveyancer. We then confirm our advice with you and discuss and agree next steps.
At that stage, where we are clear on the detail of your position, we will draft a detailed Letter of Claim. This is required in accordance with the Civil Procedure Rules as above, and sets out to the opposing party what your legal position is and what action we expect to see taken.
We then allow a period of time for a response; if they agree to the content of the Letter of Claim then the matter will go no further, however, if they disagree then their response will set out their reasons why and what they would like to happen next.
At this stage we will usually take stock with you and review the position. Any resolution achieved via negotiation is likely to be quicker and cheaper than litigation but equally if one party won’t act reasonably, ignores what is said or simply won’t meaningfully engage, then ultimately we will advise that court proceedings are issued.
If a claim does end up in Court then the court may decide to order the sale of a property and before doing so will take into consideration the factors set out in section 15 of TOLATA.
- the intention of the person or parties who created the trust;
- the purposes for which the property is held;
- the welfare of any children who currently live in the property; and the interest of any secured creditor or beneficiary – if there is negative equity in the property then the interests of the lender have to be taken into account.
A court is more likely to issue a TOLATA order requiring a property to be sold if there are no children involved.
How Helix Law Can Help
We are dealing with ToLATA claims and disputes across the country advising Claimants and Defendants in these types of disputes.
Our Property Disputes team are experienced in dealing with these types of claims and will be happy to assist you in reviewing your position and advising you on where you stand.
We’re skilled property dispute negotiators, well versed in the technical arguments of proving a financial interest in property on behalf of someone who does not own it. Ultimately, where necessary, we also handle all stages necessary for force sale of the property or asset.
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