TOLATA disputes - What happens to jointly owned Property after a break-up or dispute?
Released On 14th Jul 2023
Every year, couples, friends or family buy Property in joint names. This could be as a first home, an investment opportunity, or as a buy-to-let dwelling. However, there can often be disputes as to what to do with that Property if one of the joint owners no longer wishes to reside there, or no longer wishes to own their share of the Property.
This often leads to questions such as:
Can I force my joint-owner to sell the Property?
Can my ex exclude me from the Property?
What happens if I can’t afford to buy the joint-owner’s share? Do we have to go to Court?
This is all governed by TOLATA, and will be addressed below. Please note that the below advice is in respect of Litigation and for joint-owners who do not have children residing at the Property. In the event that there are children at the Property, our Family team will happily assist with these enquiries.
What does TOLATA mean?
The relevant legislation for Property ownership disputes is the ‘Trusts of Land and Appointment of Trustees Act 1996’ (TOLATA). Through this mechanism, the Court can determine ownership entitlement and equity apportionment for jointly-owned Property disputes. This also allows the Court to make an Order for Sale if necessary.
I jointly purchased a house/flat with my partner, but the relationship has broken down. I want to move out and buy somewhere else - what are my options?
Unfortunately, relationships or family/friend agreements can break down, and this can often lead to disputes as to how the jointly-owned Property is to be dealt with. In the event that the joint-owners cannot agree that the Property is to be sold (for example, one party wants to remain living in the Property), then both parties should obtain independent legal advice to protect their respective positions.
However, typically the respective parties only have a few options:
The joint-owners agree to avoid a dispute and decide to sell the Property. The Property sale proceeds would be split in accordance with the ownership and conveyancing documents or altered by joint agreement;
If one of the joint-owners wishes to retain ownership of the property, they can have the Property valued and make an offer to buy-out the other joint-owner(s). To do so, the remaining individual would need to have the funds to do this, and if a mortgage is needed, approval from the mortgage provider that they are happy to lend on this basis would be required. Unfortunately, mortgage companies are often reluctant to agree for a joint-owner to be released from the mortgage due to affordability concerns, and therefore the parties may have to agree to a sale if one of them cannot secure suitable funding;
If funding cannot be obtained and one party refuses to sell the Property, TOLATA Court Proceedings may be needed to obtain an Order for Sale from the Court. This is essentially a last resort option, incurring significant legal costs and months of delay. Unfortunately however, it is often needed due to the opposing views of the joint-owners. Early mediation and settlement negotiations should be encouraged.
Can I be excluded from the Property?
Joint-owners have an entitlement to attend and occupy their Property. If the joint-owners cannot agree on who should reside there, typically after a break up, it often leads to one of them moving out. This could lead to claims in respective of occupation rent, and may lead to financial offset calculations later down the line in respect of mortgage contributions and other equitable entitlement decisions. It is therefore advisable to agree matters in writing at the outset so that each person knows where they stand.
Are TOLATA disputes expensive?
As TOLATA falls under a litigation claim, Court costs and fees can escalate quickly and substantially if the matter proceeds all the way to a final hearing. Valuation and expert fees will likely be incurred, along with Solicitor costs and Court fees for initiating the claim.
However, in the event that you are forced into commencing a TOLATA claim due to the non-cooperation of the joint-owner, or one party unreasonably refused to settle and merely buried their heads in the sand, the Court will typically award a proportion of costs incurred in favour of the winning party. This can mean that the costs are taken out of the losing parties equitable entitlement when the Property is sold, leaving them with less than their ownership entitlement, and costing them more than settling/agreeing to a sale at the outset.
Specialist Property Advice
Porter Dodson have a dedicated Property Disputes team who specialise in this area of law. We will be able to advise you on the appropriate way of proceeding, as well as represent you throughout negotiations and Court proceedings if necessary.
