When co-owners don’t want to co-own

Helena French, Associate in the Russell-Cooke Solicitors, family and children team.
Helena French
5 min Read

These days it is increasingly hard to buy property as a single person due to the high cost of many properties. This, combined with the fact that people are getting married later, means that more people are jointly owning property either as unmarried couples or with family members.

This can of course have benefits when buying property, often providing a bigger budget than one person alone. However, if the relationship breaks down or there is a disagreement as to what to do with the property, it could lead to problems in the future.

The best way to avoid this is to consider the possibility of a disagreement down the line and enter into a legal document when buying the property. This should set out what will happen if one person wants to sell and the other does not, as well as a number of other matters such as how the bills will be paid, the exact interests each person has in the property, and a whole host of other items to cover off any eventuality.

Often, however, people do not take this step when jointly purchasing a property. If that is the case, you can end up in a scenario where one person wishes to sell a property to get their money out, while the other wants to stay in the property and will not agree to sell.

What can you do in that scenario?

The best option, if you can do so, is to try to reach an agreement. This might be to buy one person out of the property if that is an option financially. If this is an option, something to consider is whether there is a mortgage on the property. If so, the person wanting to remain in the property would need to make sure the bank would allow them to take over the mortgage or if they are eligible for a different mortgage covering the amount outstanding. The person being bought out would be entitled to their equity in the property as well as being taken off the mortgage. Both owners would therefore need to agree on the value of the property even though it is not being sold, to work out how much the person being bought out should be entitled to.

There are a number of ways to reach an agreement. The most cost-effective is to simply discuss matters directly and agree. However, sometimes that is not an option. In that case, mediation can be a good choice as a neutral, third party mediator will help you have a discussion and work out what is reasonable in terms of payment, time frames for any transfer and moving out, and anything else that arises.

Unfortunately, sometimes it is not possible for people to reach an agreement. This could be because neither person can agree who should be the one to be bought out of the property or because it is not an option financially.

In that case, if an agreement cannot be reached despite attempts to mediate or negotiate, the remaining option is for the person who wants to sell the property to make an application to Court. They would apply under the Trusts of Land and Appointment of Trustees Act (TLATA), which gives the Court the power to order a sale of a property if it is appropriate to do so. This is because the property being jointly owned means that it is held on trust for all of the beneficial owners.

When deciding if a property should be sold, the Court will consider the intentions of the people who created the trust (i.e. the owners), the purpose of the trust, the welfare of any minor children if that is applicable, and the interests of any secured creditors.

The intentions of the people creating the trust are very relevant, as is the purpose of it. For example, if the property was bought to be the home for a couple who were living together in a relationship which has now broken down, there is a strong argument to say that the purpose of the property being jointly owned has finished, and so it is more likely to be sold. On the other hand, if it was purchased for example by two family members with the intention that one would live in it and the other person was a joint owner to help them qualify for a mortgage, the fact that they had fallen out might not change the purpose of the trust. The welfare of a child would be relevant as if the child would not have anywhere to live, for example if the property was sold, this might affect a judge’s decision. 

On top of this, where relevant, the Court can also consider the circumstances and wishes of the beneficiaries (i.e. the people who would be entitled to the proceeds of sale). This is not necessarily determinative, and of course, does not help much when one person wants to sell and the other does not. However, the circumstances can be relevant. If, for example, both people can easily afford to rehouse with the proceeds of sale, this would help to mitigate any concerns about the welfare of a child. Or if somebody’s financial situation had changed and they desperately needed the money, this would be relevant. In addition, if there are more than two beneficiaries and the majority of them have one opinion that may help to sway a judge.

No one factor would overrule the others, but they will all influence the Court in making a decision.

While the Court does not have the power to order a transfer of the properties to one of the beneficiaries, there have been cases where the Court has ordered a sale of the property, but with one of the owners having the first opportunity to buy this. The Court can also consider if one person is being excluded from the property and order occupational rent to be paid to them if appropriate.

Something to bear in mind, however, is the cost of litigation. Court proceedings can be costly and can take a long time. There is also sometimes the risk, if you are unsuccessful, of having to pay some or all of the other person’s costs. This can be mitigated with sensible offers but is still something to consider.

On that basis, if it is possible it is best to reach an agreement. Even if proceedings begin, this does not prevent an agreement from being reached during the process, whether through direct negotiations, solicitor correspondence, or mediation.

Relationship breakdown and family disagreements can be a stressful time for anyone, but with the right support and advice you can navigate it as smoothly as possible.

For more information or for assistance with any of the issues raised, please contact Helena French or any member of our family team. 

Briefings Individuals & families joint ownership property family law co-ownership separation divorce relationship breakdown