The law relating to property in the UK is ancient. However, we live in a modern era where Maggie’s children grew up and bought their homes, often with a partner rather than with a husband or wife. We are now in the era of Maggie’s grandchildren and marriage occurs less frequently than it did in the 1980s. These people have dreams of living together for the rest of their lives. The euphoria of buying your first home together really can be an exotic and potent drug.
At the meeting with their lawyers to draw up the papers for their new homes, they often just say “yes” to whatever is offered to them. Their only worry is the huge debt the mortgage is, rather than the very important aspect of how they are owning the property, and what ramifications this has.
Property can be held in numerous ways. It can be held as joint tenants. That means they both own 100% of the property and 100% of the debt. If one dies the property automatically becomes the property of the survivor. Alternatively, the property can be held as tenants in common. That ought to set out in what proportions they hold the property (such as 50/50, 40/60 etc) and if one dies his/her portion of the property is dealt with in accordance with their will (if they were intelligent and had a will drawn up) or the rules for people who have no wills (known as the intestacy rules). It is also possible to own property on trust for someone else such as children or grandchildren.
What quite often comes across the desk of litigators such as me, are cases where a couple own the property as joint tenants and one has left. This happened a lot when the markets crashed in 2007/08 and properties were left in negative equity. People split up, but their negative equity property could not be sold and the remains split. Such people have had to wait a long time for property prices to go back up so that there is equity in the property. The problem is, in the worry & strife of negative equity or the acrimony of splitting up, questions are not put to lawyers about what will happen to the property or what the ramifications are of someone staying on the mortgage documents and the Land Registry entry despite having nothing to do with the property. The 2015 new mortgage rules on giving residential mortgages mean that many people who would have been eligible for a mortgage in 2010 may find that they no longer can achieve the necessary points to prove they can take on the risk of a new mortgage.
Muldoon Britton was recently instructed by a US citizen. He had split from his partner in 2011. His partner paid him some money, but because her income could not cover the mortgage, she was unable to re-mortgage the property and convey it into her sole name. Our client has had the liability of up to 100% of the mortgage in the event that his former partner died, became insolvent or just stopped paying the mortgage. He also continued to hold the liability of anything related to the property. The property was let out to tenants. If they had burnt the property to the ground, our client had up to 100% of any liability flowing from this.
He therefore approached Muldoon Britton to discuss his removal from the property and mortgage. His former partner is now married and living in suburbia, collecting an income from the property, which paid the mortgage. The property has c. £400,000 of equity in it, up from £200,000 equity in 2011 when he left.
Muldoon Britton identified to this young lady that she kept our client on the title documents at the Land Registry, together with keeping his name on the mortgage and she benefited financially from this. As she is now married and living away from the property he requires payment for the liabilities he has been exposed to for the last five years. We successfully agreed a negotiated settlement where our client is happy, and this lady can re-mortgage the property and release the equity to allow her to continue to keep the property and the income from it.
If you have any questions regarding property holdings and any legal or beneficial ownership you may have, including any rights relating to your holding (including, but not limited to Order for Sale actions) please contact Muldoon Britton in Manchester on 0161 826 6922 or New York on +1 212 653 0677