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Preventing sale/disposal of the home

This content applies to England & Wales

How a joint-owning cohabitant may be able to prevent sale or disposal of the home by the other joint owner.

Action to protect own interest

Where a property is jointly owned, both joint owners have rights to occupy and both joint owners need to give consent where any action is taken concerning the property, for example, a sale. Joint owners whose relationship has broken down do not necessarily, therefore, need to do anything to protect their property rights. If, however, relations between the parties are hostile or there is domestic violence, a joint owner may wish to protect her/his interest by entering a restriction or notice on the land register (for registered land only), for example to prevent the court making an order that the consent of one of the joint owners can be dispensed with. Forms can be obtained from the Land Registry and there is a small fee for the registration.

Notice

A notice records a claimed property interest on the register.[1] Its purpose is to give notice of the interest to someone viewing the register and to give the holder of the notice priority against other transactions relating to the property. There are two kinds of notice:

  • an agreed notice is either agreed by the registered proprietor of the land or accepted by the Land Registry, having been satisfied by the validity of the notice. While the notice is not binding proof of the validity of the interest protected, it shows that the notice has been approved by the owner or the Land Registry
  • a unilateral notice is made on the application of the person making the interest only, without evidence. S/he has only to satisfy the Land Registry that the claim is one that can be protected by a notice.

Restriction

A restriction is an entry in the land register that prevents or regulates the making of a subsequent entry in the register.[2] It may be indefinite or for a specified period, and absolute or conditional (for example, on a consent). There are three kinds of application:

  • applications made with the consent of the registered proprietor, typically as part of the conveyancing process
  • compulsory applications. These are of a type that the Land Registry have to register
  • other applications. The applicant must prove that s/he has a sufficient interest in the making of a restriction. Unless there is a court order requiring the restriction to be entered, the Land Registry will notify the registered proprietor, who will then have the opportunity to dispute the making of the restriction.

Where one joint owner wishes to sell the property and does not have the consent of the other joint owner, or the other joint owner has disappeared, s/he can apply to the court for an order for sale under the Trusts of Land and Appointment of Trustees Act or, for a couple engaged in the last three years, the Married Women's Property Act (see the page on Solutions involving the courts for information). If an order for sale is made and the whereabouts of the other joint owner are not known, her/his share of the proceeds will be kept in trust. This means that the court will order that the money is put in a bank account and the joint owner or another person is appointed as a trustee.

Action after a sale or disposal by one joint owner

In very limited circumstances, it may be possible for the joint owner who has not consented to the sale to get the transaction set aside on the grounds that it was affected by the 'undue influence' of one party upon the other or by material misrepresentation.

Undue influence or material misrepresentation

Where a transaction can be shown to have been procured by the 'undue influence' of one party on the other, or by 'material misrepresentation', it may be possible to get the transaction rescinded (set aside). To establish undue influence it is necessary to show that one person has abused a relationship of trust and confidence (by exercising some form of pressure or domination) and exploited the emotional involvement and trust of another. To establish misrepresentation it is necessary to show that one person misrepresented information to the other by making a false statement, for example about the amount of a loan or the purpose for which the loan was required. In both cases, it is also necessary to show that, as a result, the second person has entered into a transaction. If a third party is involved in the transaction, it will also be necessary to show that the third party was, or ought to have been, aware of the likelihood of undue influence or misrepresentation.[3]

Some success has been seen in cases involving banks, for example where a loan is being taken out solely for one partner's benefit, such as for a business.[4] If the lender is aware of the possibility of undue influence or misrepresentation to a cohabitant then, in order to make sure that any charge or mortgage on the property is enforceable against her/him, it would need to take reasonable steps to protect the cohabitant to avoid being fixed with notice of the undue influence or misrepresentation,[5] for example by making sure that the person who may be affected has independent advice.

Similarly, in cases involving one partner taking charge over the other partner’s financial affairs and exercising a position of power to induce her/him to enter into unfair transactions.[6] For example, if one partner lacks mental capacity and transfers her/his own property into the joint names of both partners for no (or inadequate) consideration, then a presumption of undue influence will arise, which is for the partner presumed to have exercised undue influence to rebut. In order to rebut this presumption, s/he will have to show that her/his partner entered into the transaction of her/his own will after taking independent advice on the nature of the transaction. If the presumption is not successfully rebutted, then the court can order that the transfer is set aside.

However, the area of undue influence is complex and subject to developing case law. It should be noted that the courts are often very reluctant to make a finding of undue influence.

[1] s.32(1) Land Registration Act 2002.

[2] s.40(1) Land Registration Act 2002.

[3] Royal Bank of Scotland Plc v (1) Chandra (2) Chandra [2011] EWCA Civ 192.

[4] Barclays Bank plc v O'Brien [1993] 26 HLR 75 HL; Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 43; Annulment Funding Co Ltd v Cowey [2010] EWCA Civ 711.

[5] Link Lending Ltd v Bustard (by her litigation friend Walker) [2010] EWCA Civ 424.

[6] Smith v Cooper (by her litigation friend the Official Solicitor) [2010] EWCA Civ 722.

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