How to resolve a joint property ownership dispute

Joint ownership is one way to make the process of purchasing property more affordable. Instances of joint property purchase include unmarried couples buying a property, friends clubbing together, siblings buying a property together, parents lending money to their child and siblings inheriting property in a will. To avoid the potential for disputes, which are surprisingly common, we have provided a guide to joint ownership.

In this guide, we explain how disputes occur, how to resolve them, and how professional advice can help.

Joint ownership can make the process of purchasing property more affordable. Read our guide to joint ownership to find out how to resolve & prevent disputes.

Click on the link to each section:

How does joint property ownership work?

An unmarried couple who wish to buy a property together should be aware that their legal rights are limited if they split up. However, there are ways each party can protect themselves to avoid disputes. Siblings and friends who are jointly buying a property should take the same precautions.

How you hold the property is very important as there are significant differences. If you choose to be joint tenants if either one of the co-owners dies the surviving co-owner will automatically inherit the entire property, regardless of whether the deceased co-owner made a will to the contrary. Therefore, joint tenancy means that you cannot leave your part of the property to a third party in your will as the property automatically passes to the surviving joint tenant.

An alternative way of holding your property is "tenants in common", on the death of a co-owner the surviving owner will not automatically inherit the whole property, they will only retain their share. The deceased’s share will be shared out in accordance with a will, if there is one, or in the absence of a will, in accordance with intestacy law.

If the shares in the property are uneven (not fifty/fifty) the property must be held as tenants in common. Therefore you must agree on the proportions of each share and draw up a declaration of trust at the time of the purchase to off-set potential disputes later on.

All co-owners should consider a Co-habitation Agreement to set out each owners’ obligations and what each party is financially responsible for. This includes mortgage payments, property taxes, and maintenance.

How do joint owner disputes commonly occur?

Joint ownership disputes arise due to a range of reasons. The relationship between owners may break down, causing inevitable friction. Frequently, the proportion of the financial obligations cause issues.

If one person wants to sell their share of the property and the other does not, this is an obvious cause of a dispute. However, if one owner feels that they have “put in” more to the property (financially or in maintenance), this frequently leads to a disagreement regarding the value or size of their share. The person with the smaller proportion of the property may not feel that they have to do or pay as much towards the maintenance of the property or any other obligation, as the other party.

An inherited property is often the cause of the contention, if there is more than one benefactor, the owners may disagree on whether the property should be sold on receipt of the inheritance or at any other time. As each benefactor is a joint owner and equally entitled to the property, this can be another cause of disputes.

house divide

Resolving a joint property dispute

Initially, you should try and keep the channels of communication open between yourself and the other property owner. While this can be challenging, remaining civil and discussing the situation calmly can help to salvage your relationship and also avoid a lot of avoidable problems.

Resolving joint property disputes is far easier if any formal agreements in writing can be found to support the settlement of the dispute.

However, it is advisable to seek legal advice from an experienced property lawyer. The experienced lawyers in Giambrone’s real estate team can assist in settling contentious issues by means of alternative dispute resolution (ADR). This method is often successful in avoiding lengthy and expensive civil litigation proceedings. Also, it may assist in maintaining cordial relations between yourself and the other owner.

You can find out more about our dispute resolution services here, or contact us to request a callback.

If it is not possible for you to resolve the issue by discussion or ADR, you may have no alternative but to revert to the courts to intervene via the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). This should be regarded as a last resort. The court will consider:

  • What the joint property owners’ intentions were upon buying the property
  • Why there is joint ownership of the property
  • What the current market value is
  • Any beneficial interests the property has
  • If there are children living at the property and what their rights are

It should be remembered that a court decision is final and enforceable, it is best to make every effort to resolve the dispute in a way that is acceptable to all parties.  

How to avoid joint property disputes

The best course of action is, from the onset,  to be advised by an expert real estate lawyer who will draft an agreement or contract setting out clauses to consider and address all possible future situations.  The legal position and each party's responsibilities and entitlements will be clear from the start. The lawyers in Giambrone & Partners' real estate team are highly experienced and familiar with the range of issues that commonly cause disagreements and can ensure that your interests will be protected.

A written agreement or contract signed by all relevant parties considerably limits the opportunities for disputes to arise. This makes it much easier to see your rights and responsibilities and manage your expectations, giving everyone the best chance of a successful joint ownership experience.

Joint tenancy ownership disputes – Frequently asked questions

Does joint tenancy avoid inheritance tax?

Yes, if one owner dies, the other owner automatically takes full possession of the property with no inheritance tax.

What is the difference between co-ownership and joint ownership?

Joint ownership is equal by design. With co-ownership, it is considered to be an equal 50/50 split; however, if one owner can prove that they should own more of the property, this will be taken into consideration.

What happens if there is joint ownership with mortgage default or repossession?

All parties who own the property are liable for keeping up mortgage repayments and therefore all those involved will be responsible in the case of repossession.

If I were to leave the property that I jointly own, do I forfeit any rights?

You will not automatically forfeit your rights to the property; however, there are some legal implications related to your leaving the property.

If the property is sold, what share of the sale proceeds will I receive?

Should the property be sold, you will receive an amount from the proceeds of sale proportionate to the percentage of your ownership of the property.

What are the dangers of joint tenancy?

Joint tenancy can become difficult if your relationship breaks down, either in a personal or business capacity.

What is the difference between joint tenants and tenants in common?

Joint tenants own the property equally, while tenants in common can own disparate shares. Tenants in common may also leave their share of a property to their beneficiaries in a will, rather than it being transferred to the co-owner.

Is it easy to change from joint tenants to tenants in common?

It is not an easy process. You will need to apply for a “Form A restriction”.

On separation, should the property be sold or transferred to one of the parties?

This is a personal choice that will be decided based on your finances, the nature of your relationship, and the desires of both parties.