Property co-ownership disputes – whose house is it anyway?

During recent years the Courts have regularly been asked to resolve disputes between cohabiting couples or joint owners of properties as to the rights each have over and in relation to the property after a relationship breaks down or the property is sold.

The issue when one co-owner dies

We are also regularly asked to advise clients as to what happens in relation to a jointly owned property when one joint owner passes away. Complications in this scenario can include whether the deceased’s legally owned share passes automatically to the surviving owner, whether they were married or not, which would be the case if the property is owned as joint tenants, or whether the share of the deceased co-owner is to be dealt with in accordance with his/her wishes as set out in a Will (or if there is no Will then in accordance with intestacy rules) if there is a tenancy-in-common.

Joint Tenancy v Tenancy In Common

In England jointly owned property is held in one of two ways, either as “a joint tenancy” or “a tenancy in common”.

If there is a joint tenancy then following the death of one joint owner then the surviving co-owner then automatically takes the entire property. This is known in legal terms as the right of survivorship

If there is a tenancy in common then each co-owner has a distinct share of the property and they can leave that to whomever they wish after they die as set out in their Will or to his/her family in accordance with intestacy rules.

It is very important that when you buy a property jointly with someone that you take legal advice as whether the property is to be owned as joint tenants or tenants in common and the position is clearly recorded. Ideally, if there is a tenancy in common, a trust deed should be prepared to clearly record each party’s rights and entitlements, including what happens if one party wants to sell and the other doesn’t.

What if it’s not clear how a property is beneficially owned?

It might seem that the simple answer as to what happens after the death of a joint co-owner is just to establish whether there was a joint tenancy or a tenancy in common. Indeed, whilst that is the correct question, the answer may not be so easy to establish.

Restriction At The Land Registry

When a property is jointly owned as a tenancy in common the Land Registry will enter a restriction against the property stating that a sale by a sole owner will not be registered.

This means that the surviving sole co-owner will need to appoint a second person to sell the property and to account to the estate of the deceased co-owner’s share of sale proceeds.

Many people, even some solicitors, therefore take the view that if there is such a restriction at the Land Registry the property was owned as a tenancy in common (although the exact entitlements such as whether each party is entitled to 50% or otherwise will still need to be considered) and if there is no such restriction then it was owned as a joint tenancy, resulting in the presumption of equal ownership and the right of survivorship.

However, that is not necessarily correct. The way in which the Land Registry register the property is not conclusive as confirmed by the House of Lords decision in Stack v Dowden.

Indeed, if no clear indication is given to the Land Registry as to whether there is a joint tenancy or tenancy in common then the Land Registry will adopt a default position of entering a restriction even if a joint tenancy has been created.

Severing a Joint Tenancy

If a property is initially owned as a joint tenancy it is possible to later convert it to a tenancy in common. There are several ways in which this can be achieved including by written notice given by one joint owner to the other, by agreement or by mutual conduct between the joint owners.

Once the joint tenancy has been severed this can be registered at the Land Registry who will enter a restriction against the property.

However, not all severances of a joint tenancy will necessarily be registered. Furthermore, the Land Registry will not check whether the joint tenancy was properly severed before it enters a restriction. It is therefore possible for a restriction to be entered against the property but a joint tenancy to remain.

Practical ways to check property co-ownership

The starting point is to obtain a copy of the Land Registry title for the property. However, as mentioned above this will not provide conclusive evidence as to whether a tenancy in common or joint tenancy existed and further investigations need to be undertaken.

The Land Registry will often hold historic information such as the application to register the property as well as the signed Transfer document pursuant to which the property was transferred to the joint purchasers by the seller in which the buyers should have indicated which form of co-ownership was intended and various legal presumptions will arise as a result of the language used.

If they are still available the files of solicitors who dealt with conveyancing when the property was purchased can reveal useful information including what the Transfer deed indicated about choice of joint tenancy or tenancy-in-common (the standard Transfer Deed has fields which should be completed by buying co-owners to indicate this.

It is also important to check whether a detailed Declaration of Trust was prepared and if not and/or the transfer deed form was not fully completed whether the buyers solicitors advised them of the importance of the co-ownership choices and how to minimise risks of a dispute or confusion later. If not, they may have been professionally negligent.

The conduct and beliefs of the joint owners can be investigated to try and establish the intention of the co-owners at the time of the purchase and subsequently.

Finally, if a severance of a joint tenancy has been registered at the Land Registry then enquiries and investigations can be undertaken to establish whether a valid severance actually took place.

The particular facts of each case needs to be considered – it is not sufficient to simply undertake a search at the Land Registry and to form a conclusion based solely upon the presence or absence of a restriction.

If you are confused or concerned that you may have a problem relating to property co-owenership, please do get in touch – we would be happy to advise.

If you would like to discuss any aspect of family law, are considering divorce proceedings or a trial separation, or want to draw up a pre or post-nuptial agreement or deal with a property dispute following a relationship breakdown, call us in absolute confidence on 03456 381381. Alternatively, email us at familylaw@ibblaw.co.uk.