A dispute over selling a jointly owned property – what next?

Unfortunately, things don’t always go to plan and disagreements can arise between the co-owners as to what should happen to the property in the future, including its sale.

There are various circumstances whereby co-owners of a property may dispute the sale. A breakdown of relationship between an unmarried couple or family/friends who invested in a property together may result in disagreement as to each party’s contribution (this topic is addressed in our Senior Associate Solicitor Daniel Flynn’s article here). Another typical example may be that their financial situations have changed and one may wish to sell the property to raise funds whilst the other party may wish to keep the property.

Often the cheapest and quickest way for co-owners to resolve the dispute is to negotiate and reach an agreement between themselves before resorting to the court to make the decision. One option may be that the owner ‘buys out’ the other’s interest in the property. Alternatively, there could be a compromise as to the terms of sale including a minimum sale price or perhaps when the property is to be listed. Sometimes, however, it may not always be possible to negotiate an agreement, and co-owners are left with no alternative but to seek an order from the court.

Order for sale

In circumstances where a property is owned jointly, save for very specific situations (for example, considerations involving children), if one of the co-owners wants to sell the property, then an order to sell the property is likely to be made by the court.

An order for sale requires a property to be sold. The court will often also order other provisions including the parameters of the sale.

The court’s considerations

In deciding whether or not to make an order for sale, the court must consider the list of factors set out under Section 15 of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA), being:

• The intentions of the parties.
• The purpose of the property, whether it be to house the parties, a holiday home, an investment project or otherwise.
• The welfare of children or vulnerable person occupying the property.
• The interests of any secured creditor including, but not limited to, housing association/bank by way of mortgage.

The court has a relatively broad discretion and is likely to weigh up a number of factors, for example, the risk of the property being sold at an undervalue will be taken into account.

Occupational rent

A co-owner may also be able to claim occupational rent. A claim for occupational rent arises where a co-owner has been excluded from occupying the property.

Similar to the above, the court exercises a broad discretion when deciding whether to allow a claim for occupational rent. Whilst the co-owner will need to convince the court that they were excluded from the property and that occupational rent has accrued, the court must conduct a review of “the whole course of dealing” between the parties which may include the facts surrounding the mortgage payments or any home improvements made during that period of time.

As to the rate of occupational rent, this is usually calculated on the basis of the market rental value of the property and the co-owner’s share of the property. However, the losses (for example, rent) incurred by the co-owner to house themselves elsewhere may also be taken into account.

How can Ellis Jones help?

Deciding how to proceed with a jointly owned property can cause difficulties, especially after the breakdown of a relationship, and it is worth trying to resolve disputes as soon as possible.

If you need advice regarding the above issues, contact our Dispute Resolution team by calling 01202 525333 or by emailing resolution@ellisjones.co.uk.