Placing a Property in Joint Names? Do You Understand the Consequences?

Loved ones who place properties in their joint names may not give any thought to the legal consequences of doing so. However, relationships can sour and, as a Court of Appeal ruling reviewed by Suzanne Moore showed, it is vital at the outset to seek a lawyer’s help in precisely defining the nature of your respective interests.

The case concerned a father and son who were registered owners of a property. The son was 19 when the property was purchased and he made no financial contribution to either the purchase price or the mortgage repayments. The father said that the son, who was working and earning, was only included on the title deeds in order to make it possible to obtain a mortgage.

The dispute that subsequently developed between them hinged on a manuscript ‘X’ that had been inserted in a box on a Land Registry Form at the time of the purchase. It indicated that father and son held the property on trust for themselves as tenants in common in equal shares.

The dispute that subsequently developed between them hinged on a manuscript ‘X’ that had been inserted in a box on a Land Registry Form at the time of the purchase. It indicated that father and son held the property on trust for themselves as tenants in common in equal shares.

The father applied for the Form to be rectified as he argued that his son was never intended to have a beneficial interest in the property.

Following a hearing, a judge found that neither of them ever intended that they should be joint beneficial owners of the property. He ruled that the father was the property’s sole beneficial owner and that the insertion of the ‘X’ was clearly a mistake.

The son’s first appeal to the High Court against that outcome was rejected by a more senior judge, who directed that the Form should be rectified so as to remove the ‘X’.

The son made a second application to appeal the decision. The appeal was allowed and rectification of the Form (TR1) was refused for the following reasons:

  • There was no finding that father and son agreed on legal title only;

 

  • There was no agreement as to the sharing of beneficial interests, nor any discussion about how the property should be held between them and in what shares.

 

  • The father never expected to be a 100% owner of the beneficial interest and the son had no expectation that he would get a full 50%;

 

  • The father nor son had considered the matter of beneficial ownership

However, the Court noted that it must be fairly common for family members who acquire property jointly not to discuss openly how the beneficial interest is to be held.

There was no such discussion between father and son at the time of the property’s purchase and they simply gave no thought to the matter.

In those circumstances, it had not been established that their common intention was that the property should be held beneficially by the father alone. It could also not be shown that the insertion of the ‘X’ represented a mutual mistake. There was thus no basis on which the power to rectify the Form could be exercised.

The Court noted that the merits of the case were not all one way in that the son had been lumbered with legal liability under the mortgage that had prevented him from buying a house of his own.

The dispute was also one that cried out for mediation and the Court expressed the hope that a sensible solution could still be found.

If you are looking to purchase a house under shared ownership, it is essential to attain sound advice upfront to prevent issues such as this down the line.

Contact Suzanne on 01257 83 38 14, email enquiries@watsonramsbottom.com, talk to us via live chat or alternatively complete our Contact Us form and one of our expert advisors will be in touch.

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