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Cases where no action is necessary

This content applies to England & Wales

Situations where no action is necessary to protect the non-owning cohabitant's beneficial interest in the home.

In some situations, the non-owning cohabitant will not need to take any action to prevent the owner disposing of the home without her/his knowledge.

Registered land

Where the land is registered (see the page on What is sole ownership for more information), there is one situation where the non-owning cohabitant does not need to take any action to prevent the sole owner from selling or disposing of the property: this is where the non-owning cohabitant has an 'overriding interest' in the property. It does not apply to unregistered land.

Overriding interest

If the non-owning cohabitant has not protected her/his interest by registering a notice or restriction (see registration on the page on Cases where action is necessary for details), but is actually occupying the property, s/he may be able to establish an overriding interest.[1] The effect of this would be for her/his 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 s/he failed to disclose it when s/he 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.[2]

To establish an overriding interest, the non-owning cohabitant must prove that:

  • s/he has a relevant interest in the property, for example a beneficial interest or a tenancy. A personal right to occupy (ie a bare licence) is not sufficient
  • s/he was actually occupying the property at the time the buyer or lender registered her/his/its 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 non-owning cohabitant 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.[3] 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 non-owning cohabitant acquired a beneficial interest, her/his 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 her/his 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 non-owning cohabitant would not be able to prevent the lender from repossessing the property.

Unregistered land

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 (see the page on cases where action is necessary for details). 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 in the following circumstances:

  • if a transfer of property occurs where no money changes hands
  • if 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', ie 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 non-owning cohabitant was still in occupation, the non-owning cohabitant 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,[4] 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 s/he/it had notice. Where notice has been given to the buyer/lender, for example by the non-owning cohabitant informing a lender of her/his 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 a non-owning cohabitant's interest if it can be shown that the buyer or lender would have discovered the interest if s/he/it had inspected the title deeds and the land itself, making reasonable enquiries and inspections.[5] In effect, the law deems that notice has been given if the buyer or lender ought to have known about the non-owning cohabitant'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 non-owning cohabitant living in the property, the lender would normally ask her/him 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 non-owning cohabitant would not be able to prevent the lender from repossessing the property. If the owner does not declare the non-owning cohabitant, the non-owning cohabitant may still be able to claim there was constructive notice if s/he can show that the lender should have known that s/he was occupying the property, for example if s/he had been present at the original interviews for the mortgage.

[1] ss.29-30 and para 2, Sch.3 Land Registration Act 2002.

[2] para 2(b) and (c), Sch.3 Land Registration Act 2002.

[3] William and Glyn's Bank v Boland [1981] AC 487 HL.

[4] Peffer v Rigg [1977] 1 WLR 285.

[5] s.199(1) Law of Property Act 1925.

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