Property Co-Ownership Disputes

In the normal course co-ownership issues arises where two people buy a property together. Both individuals will have their names recorded as property owners within the Title Deeds to the property. Disputes can arise where the relationship between these two individuals breaks down and it is not possible for an agreement to reached regarding what should happen to the property. For example, one of the owner’s wishes to sell it whilst the other does not.

These days it is increasingly common for property purchases to be funded with monies provided by third parties such as relatives and friends. Purchases of this sort usually do not record the family member or friend as an owner of the property within the Title Deeds. This is because when the agreement to provide a contribution is arrived at it is always assumed that relations will remain amicable. However, relations can break down and in such circumstances the individual who has contributed purchase monies may want to have their interest recognised so that they can seek to recover their monetary contribution.

The best way to protect yourself is to plan and to take advice before buying a property with someone else. This will enable you to understand the impact of living together and what needs to be considered to ensure that you are protected as much as possible.

A Cohabitation Agreement is an agreement which can outline the practical and financial arrangements of co-ownership. It can include details such as who will pay the mortgage, the household bills and how the property would be divided or dealt if you were to go your separate ways.

Declarations of trust can be used where property is bought in one person’s name using a financial contribution provided by someone else. In such circumstances, the trust document would serve to formally record the contribution and interest of the third party and will ordinarily provide details as to how the proceeds of sale are to be divided when the property is sold.

Disputes of this nature are usually resolved by the co-owner who wishes to remain at the property buying the equity of the owner who wishes to sell. In such circumstances there are two main points to overcome. Firstly, the value of the outgoing owner’s equity needs to be agreed. Secondly, the co-owner who is remaining needs to be able to raise the monies required to purchase the other’s equity.

It is not unusual for one co-owner to refuse to cooperate where the other wishes to sell the property. For the most part, any deliberate lack of cooperation is normally driven by three main factors. Firstly, the frustrations caused by the breakdown in any relationship between the co-owners. Secondly, one of the co-owners may have a significant attachment to the property. Thirdly, the co-owner who wishes to remain in the property may be unable to raise the monies required to buy the other’s equity and may also be unable to secure a mortgage on the property in their sole name.

If it is simply not possible for one co-owner to reach an amicable agreement with the other the matter can be referred to court as a last resort. Where a matter is referred to court the judge will be asked to either enforce the terms of any agreement which binds the co-owners (such as declaration of trust or co-ownership agreement), or alternatively, if the co-owners did not make any prior arrangements, the judge will need to decide matters such as whether the property is to be sold and/or the value of each co-owner’s share.