Spouses and civil partners staying in the home after sale or disposal by sole owner

If the spouse or civil partner who doesn't own their home has registered their right of occupation (see 'registering a home right' on the page on Preventing sale/disposal of home for details) then they will have the right to remain in the home unless the rights have been waived.

If the spouse or civil partner who doesn't own their home waived their rights before any loan was taken out or the property was sold, then they will have no rights to remain in the property, unless they can show that they were persuaded to sign away the rights as a result of undue influence.

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influence' of one party on the other, or by 'material misrepresentation', it may be possible to get the transaction rescinded (set aside).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.[1]

Some success has been had in cases involving banks, for example where a loan is being taken out solely for one partner's benefit, such as for a business.[2] 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 is enforceable, it would need to take reasonable steps to protect the cohabitant, to avoid being fixed with notice of the wrong, for example by making sure that the person who may be affected has independent advice. The area of undue influence is a complex one that is subject to developing case law, and it should be stressed that the courts are often very reluctant to make a finding of undue influence. It will always be necessary to seek expert opinion before pursuing this option.

If the home right is not registered, it is not binding. Even if a purchaser or lender actually knows that the spouse or civil partner who doesn't own their home wishes to remain in the property and has done nothing to gain consent, the right to occupy becomes void, ie without registration, the spouse or civil partner has no matrimonial right to remain if the property were sold or a lender took possession action for an unpaid loan.

This is different from the other rights to occupy that a spouse or civil partner who doesn't own their home may have as a result of a beneficial interest or other rights of occupation that may be enforceable even without registration.

It is possible for a right of occupation to survive, even where it is not registered, if the property is transferred without 'valuable consideration', ie a reasonable amount of money or money's worth. If the owner gave the property away, for example by transferring it into a relative's name while the spouse or civil partner was still in occupation, the spouse's or civil partner's right to occupy would still hold good against the new owner.

The practical result for the spouse or civil partner who doesn't own the home is that their rights to occupy the property will take precedence over those of the new owner or lender. This could mean that the spouse or civil partner who doesn't own the home is allowed to remain in occupation, although the other spouse or civil partner no longer owns the property and the new owner is not able to occupy. If the spouse or civil partner who doesn't own the home remains in occupation, they may have to pay an 'occupation rent' to the new owner or lender.

In exceptional circumstances, a sale or gift of property or a loan or second mortgage raised on a property can be set aside by the court under section 37 of the Matrimonial Causes Act 1973.[3] The court can also order that the property be transferred back and that any purchase money be repaid. This can only be done where it can be shown that the owner has deliberately disposed of the property to avoid the claim of their spouse or civil partner, and the person to whom it was disposed was aware of this. Section 37 orders to set aside transactions cannot be granted where the buyer or lender acted in good faith and did not know, nor could be reasonably expected to know, that the seller was trying to defeat their spouse's or civil partner's claim.[4] This is known as having 'constructive notice'. If rights are registered, it will be held that the buyer or lender should have known about it and, therefore, a section 37 order may be obtainable.

These orders must be made in conjunction with proceedings for divorce, dissolution of civil partnership or, judicial separation or nullity under the Matrimonial Causes Act 1973. The hearing is generally in front of a district judge in the divorce county court, and if it is practical, it must take place at the same time as any connected application for financial provision.