Anyone who owns property jointly with anyone else, or who lives with anyone else, might be interested in the recent Court of Appeal case of Ely v. Robson, which serves as a reminder of the need for property owners to exercise care in dealing with their fellow owners and occupiers.
The case concerned a co-habiting couple who, after almost 20 years together, began to separate.
The property in which the couple lived was owned solely by Mr Ely, but in the course of separating a verbal agreement was reached that Miss Robson would obtain a 20% share in the property, and have a right to live in it during the lifetimes of certain relatives of hers who would often stay there.
Following the deaths of these relatives, Mr Ely sought to force a sale of the property and make Miss Robson move out. Miss Robson refused, partly because the verbal agreement reached with Mr Ely was not enforceable, as it was not intended to bind the parties and the necessary documentation to formalise it had not been prepared. By this time, Miss Robson was claiming a half-share in the property.
Mr Ely was however successful in claiming that Miss Robson only owned 20% of the equity of the property, with both the trial judge and the appeal judges accepting that the parties’ verbal agreement could be relied upon. This was mainly because the parties had intended their agreement to be conclusive, and Mr Ely had relied on this by not applying to force a sale of the property earlier. It would therefore be unfair on Mr Ely for Miss Robson not to be held to her agreement that she only owned 20%.
Some might consider it surprising that a verbal agreement of this kind could be upheld by the courts, without formal documentation having been completed to give effect to it. However, when the courts are considering the shares in which a property is held, rather than just the bare facts of legal ownership, it is open to them to consider factors such as fairness and the conduct of the parties.
Joint owners or occupiers therefore need to be very careful before entering into any discussions about how their property is held, however informal such discussions may seem.
The best solution is to have all arrangements properly documented in advance, and the Property Team at David Gray Solicitors can help in acting in the transfer of property, and in preparing Declarations of Trust setting out how the parties intend to hold their property beneficially.
Call 0191 232 9547 for expert advice.