Keep records of co-owned property to avoid disputes

Property co-owners should record in a declaration of trust the shares each person holds to avoid possible future disputes. A recent appeal case has reaffirmed the importance of ensuring that the ownership of a property by co-owners is appropriate and wherever possible, documented. Such documentation will reduce the likelihood of issues arising either on separation of the joint owners or the death of a joint owner.

The case concerned the prolonged separation of a married couple in 1973 in which financial proceedings were not resolved and were left in limbo until the death of one the joint owners in 2015. During this period, one of the owners remained in occupation of the property and maintained the financial obligations in respect of the property.

Following the death, the legal ownership of the property passed automatically to the surviving joint owner as the two owned the property as joint tenants. A claim was made by the personal representative of the deceased’s estate to determine the estate’s beneficial interest in the property.

The original trial judge found that the parties’ actions in separating and in one of them moving out of the property was sufficient to sever the tenancy. They then owned the property as tenants in common and each as a result owned 50% of the beneficial interest in the property. The judge found that the conduct of the parties had not been sufficient to demonstrate an intention to vary their respective shares.

This point was then the subject of the appeal and the appeal court found that the original trial judge’s decision was correct. The judge was right to draw an inference from the conduct of the parties but such conduct must have been observable by the other party and ideally communicated to the other. Crucially there was no agreement in place between the parties that indicated their common intention to vary their shares and the lack of any attempt to resolve the ownership was further evidence of a lack of mutual conduct to change their shares.

What can be drawn from this case is the importance of resolving issues at an early stage and ensuring that there is a well-documented history of how a property is owned by co-owners is addressed. Ultimately this may reduce the need for lengthy and costly legal proceedings at a later date by simply making a declaration of trust or in the case or matrimonial proceedings, concluding financial matters.