The Trusts of Land and Appointment of Trustees Act 1996 is an important statute which allows the Court to determine disputes between co-owners about a property they occupied together. The TOLATA regime primarily applies to cohabiting couples who are not married or in a civil partnership.
Most commonly, disputes arise when a separating couple cannot agree on the sale of a property. Alternatively, a property may be in the sole legal name of one member of a cohabiting couple, and the other member may claim a beneficial interest in the property.
The main types of application that can be made under TOLATA are: –
- To decide whether a property should be sold,
- To decide the nature and extent of the ownership of a property;
- To decide whether occupation rent is payable; and
- To decide who is entitled to occupy a property.
The staring point is to review the property’s title register to determine who is the legal owner. The presumption is that equity follows the law. For example, if A is the sole legal owner of a property the presumption is that A is entitled to 100% of the beneficial interest in the property. However, party B may have made significant financial contributions to the property and subsequently they might claim a beneficial interest in the land. In this case, the sole owner is the trustee, and the other member is claiming that the trustee is holding the property on trust for them as a beneficiary.
When a property is transferred into joint names (either joint tenants or tenants in common) there is a presumption that the parties hold the property in equal shares unless there is an express declaration of trust. A declaration of trust may be signed when one owner has contributed more to the purchase price for example.
When deciding a TOLATA dispute, the Court will consider a number of factors including: –
- The intention of the parties at the time the property was purchased, and the trust was created i.e. was the property intended to be the family home?
- The welfare of any minor;
- The interests of any secured creditors; and
- The circumstances and wishes of any beneficiaries under a trust of land.
After making investigations into legal ownership, the person who wants to make a TOLATA claim (the Claimant) must send a letter before action to the other party providing full details of their claim. the factors above should be considered at the outset when deciding the merits of a claim.
The parties are expected to engage in correspondence and try to settle the dispute before issuing their claim. This could involve negotiation and mediation. TOLATA disputes are costly, meaning that Court should only be considered as a last resort.
If you require any advice or assistance in connection with a TOLATA dispute, then please feel free to contact a member of our Dispute Resolution team of specialists based in Bishop Auckland and Darlington.
