Preventing sale or disposal if one partner is the sole owner

In most cases, a sole owner can dispose of their property however they wish. If their partner who doesn't own the home has no beneficial interest in the property, the action they can take to prevent a sale of the property is limited to cases where the property is the subject of legal proceedings. It may then be possible for the partner who doesn't own the home to obtain an injunction to prevent a sale or disposal before a court hearing to decide who gets the property. The most common example of this is where the partner who doesn't own the home has applied for a property transfer under the Children Act.

Where a partner who doesn't own the home has a beneficial interest in the property, they have more chance of preventing any sale or disposal by the sole owner. In some cases, they will not need to take any action to prevent disposal of the property. In other cases, the partner who doesn't own the home will need to take specific action to prevent the sole owner disposing of the property, for example where a partner has established that they have a beneficial interest in the home or is in the process of establishing a beneficial interest or taking any other legal proceedings, for example under the Children Act. The specific action that needs to be taken will depend on each individual situation. In most situations, it will be advisable for the partner who doesn't own the home to take positive steps to protect their beneficial interest where this is an option. What action is taken will depend on whether the land is registered or unregistered.

Most land is registered at the Land Registry. If the land is registered, this means that the Land Registry holds conclusive proof of ownership and any charges registered on the property. To find out whether or not land is registered it is necessary to complete a form and send it to the District Land Registry. A partner who doesn't own the home may be able to prevent the sale or disposal of property on registered land where:

• they register a beneficial interest at the Land Registry

• they are taking legal proceedings concerning the property

Entering a notice or restriction on the register

A beneficial interest can be protected by a notice or restriction entered on the land register. 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. They have only to satisfy the Land Registry that the claim is one that can be protected by a notice

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 they have 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

A notice or a restriction may protect an overriding interest, but if the notice or restriction is later withdrawn or cancelled, the overriding protection will be lost, so advisers should not necessarily advise clients to seek the extra protection.

The most common interests affecting cohabitants, and the protection that can be sought, are as follows:

• an interest under an implied or resulting trust or a constructive trust may only be protected by a restriction

• an interest arising by proprietary estoppel can be protected by a notice, usually unilateral

• a freezing order is protected by a restriction

• a pending land action, that is a court case about property or the beneficial interest in property, can be protected by a notice, which may be agreed or unilateral, or by a restriction

For more information on registration procedures and options, see the Land Registry's Practice Guide 19.

Where a cohabitant is taking legal proceedings

There may be situations where a partner who doesn't own the home is taking legal proceedings in relation to the solely owned property. This might be, for example, an application for a property transfer under the Children Act or an application to the court to enforce the terms of a trust under the Trusts of Land and Appointment of Trustees Act 1996. In this case, they should make an application to the Land Registry declaring their interest in the property. This then serves to warn any prospective purchaser of the interest. An application is made on payment of a small fee on a form available from the Land Registry.

Where the land is unregistered, the partner who doesn't own the home may be able to retain their interest in the following circumstances:

• by recording the beneficial interest on the title deeds of the property

• where they are taking legal proceedings in relation to the property

• by entering a caution against first registration

Recording on title deeds

A beneficial interest can also be retained by it being recorded on the title deeds if the owner agrees, although this is not likely in most relationship breakdown situations. If the interest has been recorded, this means that the beneficial interest would survive against any loan subsequently taken out on the property or disposal by the owner.

Taking legal proceedings

There may be situations where a partner who doesn't own the home is taking legal proceedings in relation to the solely owned property. This might be, for example, an application for a property transfer under the Children Act (see the page on solutions involving the courts for details) or an application for a declaration of beneficial interest under the Trusts of Land and Appointment of Trustees Act.

Where court action has been started but not yet resolved, the partner who doesn't own the home can, if they wish, register the proceedings as a pending land action.[3] This has the effect of giving notice to any buyer or lender of the rights of the partner and the buyer or lender will normally make sure that the action is discharged before completing any transaction. A pending land action can be registered for a small fee on a form obtainable from the Land Charges Department.

It may also be possible to obtain an injunction to prevent anything happening to the home pending the outcome of proceedings. Whether or not the court would grant an injunction to enable a partner who doesn't own the home to continue to occupy the home would depend on the circumstances of the case.[4]

A partner who doesn't own the home who stays in the property after the death or insolvency of the owner may be liable for charges for use and occupation, payable to the trustees.[5]

Caution against first registration

A beneficial interest in unregistered land may be protected by a caution against first registration. Most transactions for value are now subject to compulsory registration, which means that, in order to complete the transaction, the buyer or lender must register interest. Where a caution against first registration has been entered, the cautioner will have the opportunity to object. Provided that the cautioner is able to establish their interest in the land, the transaction will not be registered, or will be registered subject to that interest. Any prudent buyer or lender will have carried out a search of the register before parting with any money, and would be unlikely to proceed unless and until the property interests had been resolved. A caution against first registration should almost always be considered when protecting unregistered land.

For more information on cautions against first registration, see Land Registry's Practice Guide 3.

In some situations, the partner who doesn't own the home will not need to take any action to prevent the owner disposing of the home without their knowledge.

Registered land: overriding interest

Where the land is registered, there is one situation where the partner who doesn't own the home does not need to take any action to prevent the sole owner from selling or disposing of the property: this is where the partner has an 'overriding interest' in the property. It does not apply to unregistered land.

If the partner who doesn't own the home has not protected their interest by registering a notice or restriction but is actually occupying the property, they may be able to establish an overriding interest.[6] The effect of this would be for their interest to be binding on any buyer or lender, whether or not they knew about the interest, unless enquiries had been made of the person claiming an interest and they failed to disclose it when they could reasonably have been expected to do so, or unless that person's occupation was not obvious on reasonably careful inspection and was not known to the buyer.[7]

To establish an overriding interest, the partner who doesn't own the home must prove that:

• they have a relevant interest in the property, for example a beneficial interest or a tenancy. A personal right to occupy (a bare licence) is not sufficient

• they were actually occupying the property at the time the buyer or lender registered title to the property

• the exceptions relating to enquiries in the previous paragraph do not apply

If an overriding interest is established, it may mean that a partner who doesn't own the home may be able to retain the right to occupy against, for example, a lender calling in a second charge taken out by the sole owner.[8] The overriding interest only extends to the part of the land in actual occupation, which may be significant where the property is large or subdivided. If, however, a mortgage or loan was already in place before the partner acquired a beneficial interest, their interests would not be protected. It is, however, now normal practice for lenders to make extensive enquiries of anyone living in the property, and to ask anyone living in the property at the time any loan is agreed to sign a document giving the lender's rights precedence over their own. This is often called a 'waiver'. If such a statement is signed, this would mean that although any financial interest could be claimed against the owner, the partner who doesn't own the home would not be able to prevent the lender from repossessing the property.

Unregistered land: transfer for no money or notice of beneficial interest

There is no register of ownership for unregistered land. Proof of ownership is found in the title deeds or an 'abstract of title', which is a summary of the most recent changes of ownership. Where there is a mortgage, the title deeds are usually held by the lender; where there is no mortgage, they could be held by the owner, by a solicitor or be lodged with a bank.

To find out whether or not land is registered, it is necessary to complete a form and send it to the Land Registry or to search online. Charges on unregistered land are found in the Land Charges Register, which is held at the Land Charges Department.

Beneficial interests in unregistered land can be registered as cautions against first registration. If not protected by such a caution, the non-owning cohabitant's beneficial interest will be lost if the property is sold or a loan is secured against it. It will only survive if:

• a transfer of property occurs where no money changes hands

• the lender or buyer had 'notice' of the beneficial interest when the transaction took place

Transfer for no money

All existing interests, including rights of occupation, will survive if a property is transferred without 'valuable consideration', without a reasonable amount of money or money's worth. For example, if the sole owner gave away the property to a relative while the partner who doesn't own the home was still in occupation, the partner could not be evicted. The courts have found that a nominal payment that is clearly not representative of the property's value is not sufficient to avoid this effect,[9] although a transfer at a substantially reduced price could qualify.

'Notice' of beneficial interest

A buyer or lender is only bound to honour beneficial interests of which they had notice. Where notice has been given to the buyer/lender, for example by the partner who doesn't own the home informing a lender of their interest when a loan is taken out on the property, this is known as 'actual notice'. If notice is construed from events, it is known as 'constructive notice' and is the area where problems arise. A buyer or lender can be said to have had 'constructive notice' of the interest of a partner who doesn't own the home if it can be shown that the buyer or lender would have discovered the interest if they had inspected the title deeds and the land itself, making reasonable enquiries and inspections.[10] In effect, the law deems that notice has been given if the buyer or lender ought to have known about the partner's interest in the property.

In order to avoid this, lenders usually ask a question about who else is living in the property on the form that has to be completed by the borrower. Where there is a partner who doesn't own the home living in the property, the lender would normally ask them to sign a statement that the lender's rights will take precedence. This is often called a 'waiver'. If such a statement is signed, this would mean that although any financial interest could be claimed against the owner, the partner would not be able to prevent the lender from repossessing the property. If the owner does not declare the partner who doesn't own the home, the partner may still be able to claim there was constructive notice if they can show that the lender should have known that they were occupying the property, for example if they had been present at the original interviews for the mortgage.