Where beneficial owners of property have fallen out and disagree on whether the property should be sold, they can ask the court to determine the issue under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).

When deciding whether to order a sale of the property, the court will take into account the factors in section 15 of TOLATA.

1. The intentions of the person or persons who created the trust;
2. The purposes for which the property subject to the trust is held;
3. The welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home; and
4. The interest of any secured creditor of any beneficiary.

These factors are best described by giving examples. For instance, if a couple buy a property as a family home and the children have subsequently moved out, the purpose of the trust has come to an end and the court is more likely to order that the property be sold.
If there are children living at the property, then the upheaval that would be caused to them by ordering a sale of the property will be an important factor. In this scenario, the court can postpone the sale, subject to arguments about the property being much larger than is reasonably required. If there are no children, the court will most likely order the property to be sold.
Where there is negative equity in the property, the interests of the mortgage lender has to be taken into consideration. The lender will not want the property to be sold as the sale price will not exceed the debt owed by the borrower(s).
If the property is to be sold, the court has to decide whether to give owners credit for monies paid and expenditure incurred on the property. The most important factors to take into consideration are mortgage payments, occupation rent (a percentage of the notional market rent of the property to reflect the loss of benefit by being excluded from the property), and improvements.
For advice please contact a member of our dispute resolution team

 

Joe Reeves London 020 7481 6383
Patricia Wollington London 020 7481 6390
Rosalind Webster Bromley 020 8464 4242
Craig Batko Surrey 01372 750 109
Jonathan Tyler Sevenoaks 01732 446 361
James Manning London 020 7481 6396