How to avoid co-ownership disputes

The issue of joint ownership usually arises in relation to a home or other property which has been bought or acquired in some other way by more than one person. Matt Collis – Associate in Blanchards Bailey’s Residential Property Team – looks at the two different ways in which jointly held assets can be held.

The first way in which property can be held is as beneficial joint tenants. This means that there are joint owners and there is no division of ownership between them; the owners will own the whole of the property as if they are one owner. This is the usual way that couples buy property together, especially where they have contributed to the purchase price equally. The arrangement has the advantage of simplicity and ensuring that, when an owner dies, ownership will pass automatically to the remaining owner or owners. An owner’s Will or intestacy (where a person dies without leaving a Will) will have no bearing on what happens to their ownership of the property when they die where there is a surviving owner or owners.

The second way in which property can be held is as beneficial tenants in common. This is where the owners have separate shares in the property. There could be an equal division of shares in the property or one owner can own a greater share than another owner/s. There could be a beneficial tenancy in common where the owners have put different sums of money towards the purchase of the property. The proportions of ownership in the property could reflect these different sums.

Joint ownership disputes can arise due to a number of reasons, such as:-

1. The relationship between joint owners may break down for whatever reason;
2. If one joint owner wants to sell their share of the property but the other does not; and,
3. If one joint owner dies and their executors want to sell their share of the property but the other joint owner does not.

The key to avoiding any such dispute is to make sure joint owners communicate with each other. As with any dispute, it is easier to find a resolution if both joint owners are willing to negotiate and compromise.

It is also prudent to have a written agreement in place between joint owners as to how they hold the property, also known as a declaration of trust. This document can detail how the sale proceeds are to be split upon the sale of the property. This document can also deal with how the joint owners will contribute towards future outgoings on the property, for instance, mortgage payments and improvements, and whether one joint owner has the option to purchase the other’s interest in the property should one of them wish to sell their interest in the property.

If it is not possible for the dispute to be resolved by mediation, joint owners may apply to the Courts in accordance with the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). The Courts can force a sale of the property. It is stressed that this option should only be considered as a last resort.

Before buying or acquiring a property, joint owners should always consider how they would like to hold the property. Contact Matt or any member of our Residential Property Team for further advice.

Alternatively, Blanchards Bailey’s Private Client Team can advise on the drafting of declarations of trusts and our Litigation and Disputes Team on all matters relating to co-ownership disputes. For all enquiries on the above please call 01258 459361.