Where real estate is owned by two or more people, they each have a simultaneous interest in the land and are known as "co-owners".
FORMS OF CO-OWNERSHIP
There are two ways in which co-owners may hold property:
As joint tenants
As tenants in common.
To find out whether you are joint tenants or tenants in common, if your home has been registered with the Land Registry you can do a search, which currently costs £3. If it is owned as tenants in common, it will have the words ‘Form A restriction’ next to the ownership information.
As there are these two ways in which co-owners may hold property, it is important to agree which way you will hold your property as the treatment of the property on your death is very different:
As joint tenants: Under a joint tenancy, if you were to die, your share would automatically pass to the other joint tenant, no matter what it says in your will. Similarly, if the other joint tenant was to die, their share would pass automatically to you. This is known as the right of survivorship.
As tenants in common: If you hold the property as tenants in common, you each have a distinct beneficial share in the property. This could be a half share or it could be another proportion, as agreed between you.
If you were to die, your share would pass according to your will (or the “intestacy rules” if you do not have a will). The “intestacy rules” mean your estate will be passed to your closest living relative. There is an official line of inheritance so if you have children they will share your assets equally, if you have no children the next in line will be your parents, then any brothers and sisters and so on. The same “intestacy rules” will apply to the estate of your partner if he or she does not have a will.
CHANGE OF FORM OF CO-OWNERSHIP ON SEPARATION
If you decide to hold the property as joint tenants, but later change your mind (for example, if your relationship breaks down), it is possible to sever the joint tenancy, and change your ownership to tenants in common in equal shares. This is straightforward and can be done by a simple letter (see model letter in the end of this text). You then need to register the change at the Land Registry by applying for a Form A restriction. The form that you need to complete to do so is available here:
WHAT HAPPENS TO THE MORTGAGE ON SEPARATION
If you are both named on the mortgage, you are both responsible for the payments - including any arrears - even if one of you moves out. If only one of you is named on the mortgage, then only that person is legally responsible for the payments.
HOW TO SELL THE PROPERTY ON SEPARATION
In order to sell the property, you should put the house on the market. You will need to agree the sale price, who the estate agents will be and who you will instruct to do the conveyancing.
If you agree that you each have a 50% share in the equity or you agree an alternative division of the equity, then you can proceed on that basis. Make sure that you tell the conveyancing solicitor the shares in which you own the property.
If you do not agree the shares in which you own the property: If one of you believes that they are entitled to more than half of the equity, and this is not agreed, then matters are much more complicated and you will need to take advice from a lawyer. You may need to make an application to court to resolve the position. The court will determine whether there was an agreement between you and your ex-partner that your shares should be something other than 50/50 or whether there are reasons why the court should imply or infer that there was such an agreement.
You will need to find out and tell the lawyer you instruct:
whether you and your partner declared the shares in which the property was to be owned at the time of the purchase either through a Declaration of Trust or otherwise?
if there was an agreement at the time, reflected in a Declaration of Trust or otherwise, and has something happened that has changed your understanding. Did you invest significant further monies into the property on the basis that your shares would change, for example. Was this understanding recorded in any way?
If there was no agreement about the shares in which you would own the property at the time of purchase, why is it that you believe you should be entitled to more than half of the equity?
This is a hugely complicated area, and it is highly recommended that you take legal advice.
SALE OF THE PROPERTY THROUGH COURT
All the legal co-owners must agree to sell or transfer the property, which can present problems if one of you wishes to sell and the other owner does not want to do so.
If you cannot agree, either of you can apply to the court for an order. The court may make an order for sale or partition the property or regulate its occupation, although that is an unusual option. The court cannot order one cohabitant to buy out the other, but it can make an order that says the property must be sold and give the other cohabitant a fixed period during which he or she has the first opportunity to purchase the property.
When the court decides the best course of action they must consider several factors:
the intentions of the person or persons (if any) who bought the home;
the purposes for which the property in question is held;
the welfare of any minor who occupies or might reasonably be expected to occupy the property as his home; and
the interests of any secured creditor of any beneficiary of the property.
The court will apply these factors to the particular facts of the individual case, acknowledging that they are not exhaustive and no factor has priority over any other.
This is a hugely complicated area, and it is highly recommended that you take legal advice.
Before you can make a claim, you must comply with the Practice Direction on Pre-Action Conduct and Protocols:
This is mandatory and will ensure that both parties understand each other's position, and have considered other ways to settle the dispute.
The claimant must write to the defendant with concise details of the claim. This should include:
the basis for the claim;
a summary of the relevant facts;
the claimant's objective, that is, what they would like from the defendant; and
where money is sought, how the amount has been calculated.
The defendant must respond within a reasonable time. A reasonable time is 14 days in a straightforward case, and no more than 3 months in a very complex case. Any reply should confirm whether the claim is accepted and, if not, why. It should also set out which facts and parts of the claim are disputed and, if the defendant is making a counterclaim, any details of this.
Both parties must show any documents that are relevant to the issues in dispute.
If you do not comply with the Practice Direction on Pre-Action Conduct and Protocols: http://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct, the court may impose a number of sanctions, including making a costs order against you as the non-compliant party.
If there is a significant dispute of the facts, then an application can be made under Part 7 of the Civil Procedure Rules. In this case you will need to complete Form N1:
If there is no significant dispute of the facts, you may make your application under Part 8 of the Civil Procedure Rules. In this case you will need to complete Form N208:
IN PRESENCE OF AGREEMENT TO KEEP THE PROPERTY FOR ONE OF YOU
If you agree that one of you should keep the property, it is possible to transfer ownership from your joint names into one party's sole name.
You must make sure that the mortgage company (the lender who can be a bank, a building society or any other lender having a mortgage on your property) agrees to the transfer. They will need to give their permission before the transfer can take place, as the mortgage will also need to be transferred into the sole name of the person retaining the property.
If the mortgage company does not agree to the transfer taking place, the person retaining the property may be able to re-mortgage the property with another mortgage company. If this is not possible, it may be necessary to sell the property and divide the proceeds of sale after the repayment of the mortgage.
You will need a conveyancing solicitor to help you.
VALUATION ON TRANSFER TO ONE OF THE SPOUSES
How to decide how much money should be paid in consideration if the property is transferred from joint names to one person's name? The easiest and most straightforward approach is to agree a value for the property with the assistance of local professional advice (for example, you could invite three estate agents to provide you with marketing appraisals and use this as the basis for your discussions).
If you cannot agree the value this way, you could agree to pay a valuer to provide a "red book valuation" of the property, and treat this as the value. A red book valuation is a valuation report that adheres to the Royal Institution of Chartered Surveyor's Valuation Professional Standards, also known as the Red Book.
Ultimately, if you cannot reach an agreement, either party can apply to court for an order that the property is sold. The court can only order a sale of property in the event of disagreement. The person who wishes to remain in the property can ask the court for an Order that says that within a specified time period they have priority in purchasing the property.
If you are buying your partner's share you will need to pay stamp duty if the consideration paid plus the sum of the mortgage being transferred is over the stamp duty threshold.
For further information: https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property#if-you-transfer-or-divide-up-jointly-owned-property-or-land-unmarried-couples-and-other-joint-owners
You can calculate your stamp duty by following this link:
It is important for you to make a will whether or not you believe you have many possessions or much money. It is important to make a will because:
If you die without a will, there are certain rules which dictate how the money, property or possessions should be allocated. This may not be the way that you would have wished your money and possessions to be distributed;
Unmarried partners and partners who have not registered a civil partnership cannot inherit from each other unless there is a will, so the death of one partner may create serious financial problems for the remaining partner;
If you have children, you will need to make a will so that arrangements for the children can be made if either one or both parents die;
It may be possible to reduce the amount of tax payable on the inheritance if advice is taken in advance and a will is made;
If your circumstances have changed, it is important that you make a will to ensure that your money and possessions are distributed according to your wishes.
Changes in relationship status:
If you were living with your partner and had included them on your will, but you have since separated, you may want to change your will to prevent them from inheriting upon your death.
If you get married or enter into a registered civil partnership, any previous will you have made will usually be revoked unless your will shows that, at the time you made the will, you were expecting to marry or form the civil partnership with that person and you did not intend the marriage or civil partnership to change your will.
It is generally advisable to use a solicitor or to have a solicitor check a will you have drawn up to make sure it will have the effect you want. This is because it is easy to make mistakes and, if there are errors in the will, this can cause problems after your death. Sorting out misunderstandings and disputes after your death may result in considerable legal costs, which will reduce the amount of money in the estate.
USE OF THE FAMILY HOME: OCCUPATION ORDERS
In the meantime while you are deciding on the status of the co-owned real estate, an occupation order manages who can live in the family home.
In ordinary circumstances, both of you have the right to remain living in the matrimonial home until your financial claims against one another are resolved. However, in certain circumstances, one of the parties can apply for an Occupation Order. If the order is granted the court can:
Exclude one party from the family home, even if they are a joint owner.
Regulate the occupation of the home by either or both of the parties, which means it can set times when you or your spouse (or both of you) can use the property and limit which parts of the home they can use.
Exclude a party from the entire home and an area around it. For example, the non- resident ex-partner is not allowed within 100 metres of the property.
For an application to be successful it must be against a respondent who is an ‘associated person’.
Associated persons are:
Someone to whom you are or have been married
Someone with whom you have or have had a civil partnership
Someone you have lived with as though you were married
Someone to whom you are or have been engaged (if the engagement has been terminated, the application must be within 3 years of the termination)
Someone who has lived in the same household as you, except an employee, tenant, lodger or boarder
Someone with whom you have had a personal intimate relationship for a significant amount of time
Someone who is the other parent of your child or who has parental responsibility for your child.
The first thing you’ll need to do is fill in the application form. You can see a copy and download the form here:
The form asks for:
Your name, address and date of birth. If you do not wish to reveal any contact details, complete Form C8:
The name and address of the person you are seeking the order against, the ‘respondent’
If there are already family proceedings involving you and the other person, the name of the court and the case numbers, if known, and the type of case (for example, an application for residence of a child)
If there are criminal proceedings and the other person was arrested and charged, the name of the criminal court and case number if known, and the date of the hearing or trial
If you are applying for an occupation order, in which you are asking the court to consider changing a rental or mortgage agreement, a copy of the agreement may help the court.
You’ll also need to write out a ‘witness statement’ and attach it to the form. This is your chance to explain what has happened and why you need the occupation order. Sign and date your witness statement and write ‘I believe that the facts stated in this witness statement are true’ at the bottom.
Send 3 copies of your application with copies of your witness statement attached to your nearest court.
You can find your local court at https://courttribunalfinder.service.gov.uk/search/
They will arrange for a copy to be sent to your ex-partner. They will ask them to write their own witness statement.
The court will get in touch with a date for the court hearing. If you’re worried about being in court with your ex-partner, you can ask to have the hearing in separate rooms.
The court applies two tests to decide whether to grant the order:
The balance of harm test – the court must make an order if it appears that the applicant or any relevant child is likely to suffer significant harm at the hand of the respondent if an order is not made.
There are however exceptions to this test. If it appears that the respondent or any relevant child is likely to suffer significant harm if the order is made; or the harm likely to be suffered by them is as great as, or greater than, the harm likely to be suffered by the applicant or child if the order is not made.
In cases where it can be established that there is a significant risk to a child, the interests of the child will be the court’s main consideration.
The core criteria test – the court can grant an occupation order having considered circumstances such as the below:
the housing needs and resources of each of the parties and of any relevant child;
the financial resources of each of the parties;
the likely effect of any order, or of any decision by the court not to grant the order on the health, safety or well-being of the parties and of any relevant child; and
the conduct of the parties in relation to each other and otherwise.
IN CASE OF EMERGENCY
You can apply for an emergency order to be made. In section 3 of the form there is a box you can tick to flag the order as an emergency. If you ask for an emergency order you will need to explain in your witness statement that your ex-partner is likely to:
Your hearing will be held at your nearest family court. At the end of the hearing, the court will either decide:
HOW TO SEVERE A JOINT TENANCY
You will first need to give notice to the other owner that you wish to sever the tenancy by using the document below. Then you will apply to register the change at the Land Registry by applying for a Form A restriction. When you apply for the Form A restriction, you will need to produce either:
The original or a certified copy of the notice of severance and a signed acknowledgement of receipt by the other registered owner; or
The original or a certified copy of the notice of severance and a certificate confirming that the notice was given to the other registered owner; that it was sent by registered post or recorded delivery service to them at their last known place of abode or business and has not been returned undelivered.
It is therefore important that either:
the other owner completes the acknowledgement section of the document below, and returns the original notice to you so that you can send it to the Land Registry, or
that you obtain proof that you have sent the notice to them in the proper way. You must therefore send it by registered post or recorded delivery to the other owner by name, at their last known place of abode or business.
If you have any concerns, please ask a conveyancing solicitor to help you.
[ADDRESS LINE 1]
[ADDRESS LINE 2]
Intention to sever a joint tenancy
I, [NAME], by this letter, give you notice that from [DATE], I wish to sever our joint tenancy in the property known as [ADDRESS] (the Property), registered at HM Land Registry under title number [TITLE NUMBER].
We will now hold the Property as tenants in common in equity in [equal shares.] [the following shares1:
[ %] for [NAME]
[ %] for [NAME].]
[NAME OF SENDER]
[NAME OF RECIPIENT]
I, [NAME] confirm that I have received and accepted the above Notice of Severance from [NAME] and agree that he/she may from [DATE] apply to HM Land Registry for a restriction to be placed on the proprietorship register of the Property indicating that we now hold the Property as tenants in common.
[NAME OF SENDER]
[NAME OF RECIPIENT]
1 Unless you have specifically agreed to hold different shares, the tenancy will generally be split equally between you.
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