TOLATA (Orders for Sale)

Where clearly established (see below) beneficial owners of property have fallen out and disagree on whether the property should be sold, they can ask the court to determine the issue under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).

Under TOLATA, where there is only one registered owner of the property the court can also make a ruling that there is more than one beneficial owner.

TOLATA is of limited use in a claim for an order for sale where a property is jointly owned and the owners entered into a declaration of trust when the property was bought. Commonly, if a declaration of trust was entered into, it will specify the respective percentage equity in the property and set out agreement as to what should happen if one party wants to sell but the other does not.

Proving a beneficial entitlement if you are not the legal owner

For a person to have a beneficial interest where they are not the registered legal owner of, they will need to demonstrate an express agreement to a share the beneficial ownership or that an agreement can be inferred by the conduct of the parties. The person claiming the interest also has to show that they acted to their detriment or significantly altered their position in reliance on the agreement.

Proving an express agreement is rarely easy and usually relies on evidence of a verbal agreement. Establishing an interest based on conduct may involve evidence of contributing to the property purchase price, payment of mortgage instalments, paying the bills or undertaking home improvements for example.

Joint owned property – one wants to sell

As stated above, the starting point is generally to check whether you own the property in equal shares and whether you entered into a detailed declaration of trust when you bought the property. If you didn’t enter into a declaration of trust, the presumption is that if one owner wants to sell, the property will be sold. This presumption can be set aside. by factors such as :-

• When you bought the property you agreed that the beneficial ownership would be in unequal shares – in this situation, the majority owner, if they do not want to sell, will have a better chance of defeating an Order for Sale application under TOLATA.
• Evidence of intentions when the property was purchased
• The purposes for which the property subject to the trust is held – for example, where the property was bought as a family home and the children have now moved out;
• The welfare of any child who occupies or might reasonably be expected to occupy the property – in this scenario, the court can also consider making an order for sale but postponing the sale, for example until the child is 18; and
• The interest of any secured creditors (normally only if there is a risk of negative equity) of any beneficiary.

As is apparent from the above, in the absence of a clear documented agreement about what happens if 1 party wants to sell a property but the other, whether clearly a beneficial owner, or who might argue that they have an interest in the property, does not want to sell, is complicated. We are experienced in dealing with disputes between property co-owners so please do get in contact to discuss how we can assist you.

To talk to a solicitor about your situation please call 020 8464 4242 for our Bromley office, 020 7481 2422 for London, 01732 457575 for Sevenoaks or 01372 750100 for Surrey. Alternatively, you can email enquiries@wellerslawgroup.com and we will get back to you as soon as possible.