In England and Wales, unlike in many other jurisdictions, there are no hard and fast rules about how the property of unmarried couples is divided when they separate. When unmarried clients consult us about a possible separation this is often a cause for concern and confusion.
The most common situation our clients face is one where the property in which they have cohabited – often for many years – is registered in the sole name of the other partner at the Land Registry. How does the unregistered partner recoup the contributions he or she has made to the upkeep and mortgage of the property? And should a cohabitee who has given up work to look after the children for example, be entitled to a share in the other’s property as a result?
We have highlighted before how a cohabitation or ‘Living Together’ Agreement can help protect unmarried couples in the event of a separation. Here we look at a specific piece of legislation – the Trusts of Land and Appointment of Trustees Act 1996 (‘TOLATA) – that provides a potential remedy to unmarried couples who are in dispute about ownership of property like the family home. We explain when TOLATA might be used, how you can start a TOLATA claim, and we examine some alternatives to using TOLATA to resolve your property dispute.
What is TOLATA?
TOLATA is a complex piece of legislation, involving the application and interpretation of, among other legal principles, the law of trusts. In TOLATA cases judges look at all the circumstances of the case to try to reach a fair outcome. If you are considering bringing a claim, or you are in a position where you are being forced to defend a TOLATA claim we strongly advise you to seek legal advice.
S14 of TOLATA states:
‘Any person who is a trustee of land or has an interest in property subject to a trust of land may make an application to the court for an order under this section.’
So the courts are tasked with deciding whether a trust of land has been created over the property in dispute. If a trust exists, the courts will then decide on the nature or extent of a person’s interest in the property. In reaching the decision the court may take into account:
- the intentions of the person or persons (if any) who created the trust
- the purposes for which the property subject to the trust is held
- the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and
- the interests of any secured creditor of any beneficiary
Can I make a TOLATA claim?
It’s well-established that cohabitees do have the right to make a claim under TOLATA to determine what, if any, share they have in a property that’s registered in the sole name of the other cohabitee. As we’ve said if the court decides that you do have a beneficial interest it will create a trust over the property that will effectively ensure your interest is secured.
At Brookman we bring and defend TOLATA claims where there is a dispute between unmarried couples about property ownership. The courts use the law to decide how the property is owned and resolve cases by making specific orders relating to the property. For example the court can decide:
- What proportion of the property is owned by each partner
- That the property should be sold, and the proceeds divided
- Whether a share in the property should be transferred from one party to the other
- The rights and obligations each party has in relation to the property
- Who should occupy the property
The court’s powers are narrowly defined. It cannot for example, adjust the proportion in which the property is owned.
Can I avoid a TOLATA claim?
Bringing a claim under the TOLATA legislation is both expensive and risky. A long line of cases since the legislation was introduced demonstrates that if your name is not on the property register as a joint owner it can be extremely difficult to convince the court that a trust (and therefore a beneficial interest) in the property has come into existence. This is why it’s crucial for cohabitees purchasing property to enter joint names on the ownership register at the Land Registry if the intention is for them to jointly own the property.
The division of assets of unmarried couples continues to be a contentious matter. And there are regular political calls to change the law so that the property rights of unmarried couples are more easily enforced.
We would always encourage clients to try to resolve matters by way of mediation or some other form of ADR. And in any event the courts will encourage out of court settlements and may even penalise you if you do not negotiate in a reasonable manner with the other party.
If ADR is not successful and you decide to bring a claim you will be obliged to disclose a great deal of information about now the property was owned, what contributions you made to its upkeep and what you understood the purpose of these contributions to be.
In our experience this process of disclosure often serves to concentrate the minds of each side as to the relative strengths and weaknesses of their position and can often lead to a settlement.