What is a TOLATA claim?
In the context of purchasing residential land, it is not commonly understood by the wider populace that typically, when one purchases a property, you not only become a legal owner, which is documented at Land Registry, but also the beneficial owner (i.e. the owner of the economic benefit derived from the property). Therefore, in the instance of two individuals purchasing a residential home, both individuals are legal owners and beneficial owners of the property.
It follows that legal ownership is separate from beneficial ownership. The legal owner is said to hold the beneficial interest in the property on trust for the beneficial owner. The beneficial owner of the land will have a right to the income from the property or a share in it, and a right to the proceeds of sale of the property or part of the proceeds.
In essence, TOLATA is used by the court to determine ownership of a property where there are multiple interested parties with an acknowledged or potential beneficial ownership in the land.
How does a TOLATA claim arise?
Most commonly, TOLATA is enacted when disputes arise between unmarried cohabitees who live in a property that is either solely owned or owned as joint tenants/tenants in common. At a time where more couples are choosing not to get married and no written agreement as to beneficial entitlement, disputes between non-married co-habitees have become more frequent.
However, TOLATA disputes can and often arise in circumstances involving married couples, parents and children, siblings, other relatives and even friends, as property is held in numerous different ways.
TOLATA disputes primarily relate to questions in relation to ownership of the property, attempts by a party to obtain an order for sale of the property, or to determine who will remain in the property upon separation.
What is the process for making a TOLATA claim?
- Letter before action: This letter is sent to your opponent(s) setting out your case with evidence to support your claim.
- Response: The other party then has a period of time to respond to your letter.
- Negotiations & Settlement: If the matter cannot be settled at a very early stage, the parties will seek to negotiate and settle the case outside of court, so as to avoid time costs and stress associated with litigation.
- Court: If a settlement cannot be reached at the negotiation stage, the next step is to issue a formal TOLATA claim, usually in the nearest County Court.
What applications can be made to the court?
The following applications may be made to the court under s.14 of TOLATA:
- To determine whether jointly-owned property should be sold;
- To quantify the respective beneficial shares that each co-owner or co-habitee is entitled to;
- To determine whether a party has a beneficial interest in the property, usually where that party’s name is not on the legal title and the legal owner is disputing the claim; and
- To determine whether property subject to a trust of land should be sold on the application of a creditor of a beneficiary.
- To remove a party from a property’s title or mortgage.
- To recover a specific sum, such as a contribution that may have been made towards a deposit for the purchase of the property.
- To enact a habitation order on a property; entitling a trustee to live at the property either solely or in cohabitation.
Under section 14 of TOLATA, either a person who is a trustee of land or a person who has an interest in property subject to a trust of land can make a court application. Therefore, a Mortgagee or a Chargee, such as a bank, may also make an application to the court under this provision.
Do note that the court does not have the authority to make an order as to the appointment or removal of trustees, or that one beneficiary under a trust of land sells or transfers its beneficial interest to another beneficiary. The court also does not have authority to order that the trustees compulsorily purchase the interest of a beneficial owner.
How can our property lawyers help?
Nobody wants to be involved in a TOLATA dispute. However, if you do find yourself in that situation, you are in good hands with our Property Litigation and Dispute Resolution Department. Our department has extensive experience of handling TOLATA claims and can be trusted to advise in your best interests.
Should you require advice on any of the matters raised above, please do get in touch with our Property Litigation and Dispute Resolution Department and we will be happy to assist.
