You have moved in with your partner who already owns their property and you both decide to complete renovations to your partner’s property at your expense. Unfortunately, things have not worked out and you have separated with your partner, moving out of the property.
Where do you stand with your partner having invested a big sum of money into your partner’s property? Can you recover the money invested?
In the above example, a dispute has arisen between cohabitants regarding their interests in the property. Whilst the property is owned solely by one partner, the other has put funds into its renovation and will understandably want to ensure their financial contribution is acknowledged and returned.
What is the Law?
Where a property is registered at HM Land Registry in one of the two partner’s names only (and therefore suggesting sole ownership) yet in reality the other partner has invested significantly into the property, the aggrieved partner may be able to demonstrate that they have a beneficial interest in the property. This is because the law separates the legal and beneficial titles to a property and a common intention constructive trust may have arisen and you may be able to make a claim under the Trusts of Land and Appointment of Trustees Act 1996 (‘TLATA’).
What is the “legal interest” in a property?
The legal interest in a property represents the right to possess and dispose of the property as well as mortgage it. It belongs to the legal owner, i.e. the person who is registered at the Land Registry. In this case, this will be the partner who owns the house.
What is the “beneficial interest” in a property?
Comparatively, the beneficial interest is an interest in the ultimate entitlement to the benefit of a property. It belongs to the beneficial owner, who is entitled to the financial value of the land, regardless of the title entries at the Land Registry. In this case, this might well be both parties.
Common Intention Constructive Trusts
However, to demonstrate that a beneficial interest has arisen, it will not be enough to say money has been spent on renovations. The interested party must prove a trust has arisen, demonstrating:
1. That the parties had a shared common intention that the beneficial interest in the property would be held otherwise than in accordance with the legal title.
This can be either through express conversations made between them or can be inferred from the parties conduct in respect of the property; and
2. That in reliance upon that intention they have acted to their detriment (i.e. spent the money).
This means whilst improvements and renovations could be an indication that the parties intended to divide the ownership of the property, they will not necessarily be enough. For example, the general approach is that general repair and maintenance of the property will not be considered enough to establish a beneficial interest. While larger expenditures, such as substantial renovations or improvements, or direct financial investments in the property, are more likely to be regarded as establishing a beneficial interest. Ultimately, the parties intentions at the time the money spent will be the key, and not what happened subsequently.
However, each case requires a detailed study of the facts and the courts deal with these claims on a case-by-case basis.
How can Tozers help?
We are here to help and our solicitors have experience of dealing with these sorts of matters. If you have been affected by anything mentioned in this article, please do not hesitate to contact one of our specialist solicitors today. We offer fixed fees and flexible funding arrangements and your initial conversation with our team will be free of charge.
