With an increasing number of people struggling to get on the property ladder, it is not surprising that there has been a corresponding rise in the number of properties being bought by friends who have pooled their resources, or by parents who have agreed to bankroll their child if they agree to take on a lodger to help pay the mortgage.
‘While these sorts of arrangements can work well when everyone knows where they stand, there can be problems if no formal agreement exists to determine the circumstances in which a jointly owned property can be sold or when someone invited to be part of a house share on an occupancy only basis can be asked to leave,’ explains Selwan Yousif a dispute resolution lawyer with Hatten Wyatt in Gravesend.
In a trio of case studies, he outlines your rights as an owner or occupier where a house share goes wrong and explains your options for sorting things out with the help of a solicitor.
What are my rights as an owner?
Scenario A: You bought a property with friends when you were younger to avoid wasting money on rent. Although there is nothing in writing to confirm this, it has always been your understanding that as soon as one of you was ready to move on, the property would be sold. However, your friends are now disputing this and are reluctant to move.
If you share legal ownership of a property, then it may be possible for you to force a sale against the will of your co-owners by making an application to the court under the provisions of the Trusts of Land and Appointment of Trustees Act 1996. Alternatively, you may be able to persuade the court to order your co-owners to buy you out.
While each case will turn on its facts, and will be influenced by your intentions at the time the property was acquired, an order for sale will usually be made where you can prove that the property was purchased as an investment or was only ever planned to be held onto until such time as one or all of you could afford to strike out and purchase a home of your own.
Where the court decides that a sale is appropriate, but that it ought to be delayed for a short time to avoid hardship, then you may also be able to apply for an order directing your co-owners to pay you rent while you wait for matters to be finalised.
What are my rights as a lodger or tenant?
Scenario B: You have recently moved into a new area for work and rather than renting a small bedsit, you have accepted an offer from a colleague to live with them and some of their friends. Things were going well until you had an argument which resulted in you being asked to move out with immediate effect. You are not sure if your colleague owns the property or whether they are renting along with everyone else.
If your occupation of a shared property is as a lodger or tenant, then your rights will depend on the nature of the arrangement you have and on whether the law provides any specific protections.
This is a complex area but broadly speaking, if you are a lodger (which is likely to be the case where you share occupation of a property with the person who owns it) then there will be little you can do to stop yourself being forced out if you are asked to leave, although you will be entitled to reasonable notice of the need to go.
If you are a tenant (which is likely to be the case where the owner of the property lives elsewhere) then the situation is slightly different. The landlord will still usually be able to get you to leave, but they will have to follow a set procedure to do this and will need to obtain a possession order from the court, together with a bailiff’s warrant, before they can forcibly remove you against your will.
What are my rights where I am not an owner, lodger or tenant?
Scenario C: You share a property with a friend. While legal ownership belongs to them, there has long been an understanding that any money tied up in the property belongs to you both given that you pay the majority of the outgoings and all maintenance costs. You have fallen out recently and they now deny any such agreement exists.
If you are not a legal owner, but neither do you consider yourself to be just a lodger or tenant, then it may be possible for you to try to claim a stake in the property by establishing that you have acquired a beneficial interest.
It may be possible for you to do this where you can show that prior to the dispute arising:
- you had an agreement or understanding with the legal owner that you would be entitled to share in any equity built up in the property; and
- you have acted to your detriment in reliance on this, for example by contributing towards the purchase price when the property was bought, by covering the cost of the mortgage or by funding improvement works or major renovations.
Where a beneficial interest is proved to exist, you will have the right to ask the court to recognise this and ensure you are adequately compensated if you are forced to leave or that you receive a portion of the sale proceeds if the property is sold.
How can a solicitor can help?
Falling out with the people you live with is never desirable and can make for a difficult situation if not handled carefully. This is where a solicitor can assist by explaining your options and suggesting strategies to avoid things getting out of hand.
In the majority of cases, a good outcome can be achieved through an exchange of correspondence in which your position is confirmed and suggestions are made for a mutually acceptable way forward. Alternatively, it may be beneficial to meet in order to enable the terms of a deal to be reached.
In a protracted dispute, where informal attempts to reach settlement have failed, it may be helpful to suggest the appointment of a mediator who can look at things with a fresh pair of eyes and work alongside you to explore possible ways to move things forward that no one has yet suggested.
Where this approach is unsuccessful, you have the option of referring the matter to a judge who will make a binding determination as to how the dispute between you ought to be resolved. However, this is very much an option of last resort and one that should only be considered where all other avenues have been explored.
Whatever route you decide to take, your solicitor will be there to guide you through the process and to make sure that you emerge with the best deal possible, bearing in mind the strength of your position and what you would like to achieve.
For more information, please contact Selwan on 01474 351199 or via email at selwan.yousif@hatten-wyatt.com.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.