“Unmarried couples have very few rights on separation compared to married couples. But TOLATA claims can help. TOLATA gives the court the power to resolve property disputes between them by determining the legal and beneficial owners of the property and in what proportions. TOLATA also enables the court to order the sale of a jointly owned property.”
Mike Hansom, Head of Property Disputes
Contact the Team on 01225 462871 or by email.
Contrary to popular belief, there’s no such thing as a ‘common law’ spouse, and few legal remedies are available to cohabitees on separation, even after living together for many years.
In part, cohabitees can address these limitations by agreeing and signing a cohabitation agreement. And if they intend to co-own property, a declaration of trust is strongly advisable. However, many couples have neither in place, and that’s where TOLATA can help.
What is TOLATA?
The Trusts of Land and Appointment of Trustees Act 1996 (known as TOLATA) gives the court certain powers to resolve property ownership disputes, including:
- forcing a sale of a property.
- determining the party’s respective shares in a property.
- allowing a party to reoccupy the former family home if the other party refuses to leave.
- allowing a party’s parent or grandparent to recover their financial interest in a property.
Moreover, TOLATA claims are particularly useful if the property is in one party’s sole name. Typically, that arises when one partner purchases a property before the period of cohabitation. However, the non-owning partner can ask the court to determine whether they have acquired a beneficial interest (also known as an equitable interest) in the property. And if the court agrees, the judge will determine the parties’ respective shares.
How can a beneficial interest arise?
A beneficial interest can arise in three ways:
- constructive trust.
- proprietary estoppel.
- resulting trust.
Unfortunately, trusts law is highly complex, and whether you are an owning or non-owning partner, you should contact us for advice at a very early stage.
Constructive trust example
So, by way of illustration, let’s consider how a beneficial interest can arise for a non-owning partner through a constructive trust. Two elements must be present:
- a common intention to share ownership; and
- the non-owner’s detrimental reliance on that intention in contributing.
For example, let’s say the non-owning partner has made significant contributions towards the mortgage. And further, the non-owner can show that it was the intention of them both that in making those contributions, the non-owner would acquire a share. Therefore, both elements are present.
Proving common intention
In most cases, the non-owner relies on their partner’s express words and conversations over a period of time, possibly years. And ultimately, it may come down to one person’s word against the other. But after considering the evidence, if the court accepts it was more likely than not that:
- the non-owning partner was promised a share, and
- relying on that they made a financial or other contribution,
the court can find that a beneficial interest has arisen.
Can common intention be implied?
Sometimes, a non-owner alleges that common intention should be implied, although the subject was never discussed. So, in other words, their partner knew the non-owner’s contribution was always on the understanding they had a share. However, if the court accepts that nothing was said about ownership, they will generally not imply a common intention unless the non-owner contributed towards the original purchase cost.
Bank of Mum and Dad
Exacerbated by the cost-of-living crisis, the so-called ‘Bank of Mum and Dad’ (BOMAD) is now one of the UK’s largest mortgage lenders. In fact, according to research published by the Institute of Fiscal Studies, parents and/or grandparents gift or loan informally an incredible £17 billion each year to their adult children or grandchildren.
But contributing parents and grandparents are often concerned about what happens if their child or grandchild separates from the partner they buy the property with. And even if they are currently single, a partner can always move in later. So, how can their contribution be protected?