When purchasing a property, it’s surprising how often cohabitants and other co-owners or co-occupiers fail to specify the extent of their respective beneficial interests in the shared home.
A beneficial interest is a right to receive benefits on an asset or assets held by another party. A ‘beneficial’ interest doesn’t necessarily follow a person’s ‘legal’ interest and this can create a significant uncertainty if, for example, the relationship between cohabitants/co-owners suddenly breaks down or if one of the parties wants to exercise their rights.
If the legal title is in one party’s sole name then a co-occupant may well have a beneficial interest in the property. Similarly, if the legal title is shared by joint owners then the beneficial title can still be held in unequal shares, depending on the facts of the case.
It is important therefore, says Guy Platon, to be as clear as possible about the ownership of a property and to seek legal advice if there is any doubt.
In a recent case heard by the Court of Appeal (O’Neill v Holland (2020)) some of these issues were considered.
The facts of the case were that a father bought a house in his sole name for his daughter and her partner and their 3 young children to live in. Nine years later, the property was transferred into the sole name of the partner. Their relationship unfortunately broke down and the daughter sought a declaration that she and her partner both held the ‘beneficial’ interest in the property in equal shares.
At the first hearing, the Court found that the circumstances gave rise to a ‘trust’’ in favour of the daughter and there her beneficial interest in the house was a half share despite the fact that her partner was the sole legal owner of the house.
Her partner appealed this decision and the Court agreed that the daughter had failed to act to her detriment at the relevant time and time and therefore the elements of a ‘common intention’ trust did not exist.
This decision was again appealed and this time the daughter was successful. In the author’s opinion this was the correct decision.
It was found that when the father transferred the property into the partner’s sole name it surely would have been a common understanding between all 3 parties that his daughter would have a beneficial share in the property, particularly as he had originally bought the property to provide a home for her and her family. The necessary ‘detriment’ on her part could be shown by her having to exchange a situation where her father was the sole legal owner to one where her partner was the sole legal owner.
If you need advice relating to your beneficial interest in a property, or you are currently co-habiting or co-owning a property and wish to protect your interests in it, we can help.