The legal ownership of property is not always the same as the beneficial ownership and disputes can arise when no documentation is executed to show the two are different. Such was the case in a recent dispute which occurred after a couple who had two children but never married broke up. The male partner worked in the IT industry and earned the greater part of their income. The female partner was a midwife, who switched to part-time working then gave up work to look after their young children.

The couple had moved to Hampshire from London, buying a property for £740,000 financed largely by the sale of the male partner’s property and a joint mortgage of just under £500,000. The female partner paid £39,000 to assist in the purchase, which was registered in joint names.

When the couple broke up, the ownership of the property was disputed. At the heart of the dispute was whether they intended to purchase it as joint tenants, as the female partner contended, or as tenants in common, as the male partner asserted. If they had purchased it as joint tenants, the value would be split between them equally. If they had purchased it as tenants in common, it would be owned in unequal shares corresponding to their respective contributions to its purchase.

Among the evidence given was that the male partner said in a conversation in a pub, "We are now 50:50 owners but that means you owe half the debt as well." The ownership of the property was recorded at the Land Registry as being a joint tenancy, this being consistent with the advice of the solicitor who acted on the purchase that in the event of either partner’s death, the title in the property would pass to the survivor.

At the original hearing, the judge ruled that the value of the property should be split equally. The male partner applied for permission to appeal, arguing that whilst he would have been content for title to pass if he died, while he was alive he would not have accepted a 50:50 split on a sale as he had provided more of the capital for the property’s purchase. He also contended that the evidence presented at the first hearing could not displace the assumption that the ownership would be in the ratio of the respective partners’ contributions.

In refusing the right to appeal, the High Court placed emphasis on the fact that the male partner did nothing to show that it was intended for the beneficial interest he had in the property to be different from the legal interest.

The moral of the story is that if you are buying a property with someone else and the legal title rests with all the buyers, you must ensure that if the beneficial interest is different, the appropriate documentation is put in place.

Source: Private Client Library Content