How can I prevent a sale of my property?
3 September 2021
Property can be owned legally by up to four people. Where a property is owned by more than one person, a trust is created automatically. This means that the legal owners are trustees, who hold the equity (or beneficial interest) in the property on trust for the beneficiaries. Typically, beneficiaries are entitled to a share of the sale proceeds.
If you are the legal owner of a property (or, in other words, if you are on the title deeds), it will not be possible for the property to be sold without your cooperation and consent. This is because your signature will be required in order to complete the conveyancing paperwork. If someone wants to force the sale of the property (for example, another registered owner, or someone who believes that they have a beneficial interest in the property), they would have to make an application to the court in order to force the sale. You would be notified of this application, and you would be entitled to participate in the court proceedings.
If you have a beneficial interest in the property, but you are not the legal owner, there are several ways in which you can seek to prevent the property from being sold without your consent. These include the following:
- Putting your name on the title deeds. The consent of the legal owner(s) will be required in order to do this.
- Entering into a declaration of trust with the legal owner(s). A declaration of trust is a document in which a person declares that they hold (or two or more persons declare that they hold) assets on trust for the benefit of one or more beneficiaries. A declaration of trust may create a new trust or may confirm the terms of an existing trust. Typically, a declaration of trust will set out the rights and obligations of the parties in relation to the property (for instance, who has the right to occupy; who is responsible for outgoings and upkeep of the property; how and when the property can be sold; and how the sale proceeds are to be divided).
- Applying to the Land Registry for a restriction to be entered against the title register of the property. This will notify a potential purchaser that a third party (i.e. you) has an interest in the property. Also, depending on the nature of your interest, it may be possible to enter a restriction that requires the legal owner to obtain your signed written consent to a sale of the property before such a sale can proceed. For more information on possible Land Registry applications, please see this recent article.
- Occupying the property. If you occupy the property, you may have an overriding interest (namely, an interest that is binding on the legal owner and on any future owner).
If you think you have a beneficial interest in a property, and you are not on the title deeds, and you think the legal owner(s) may try to sell the property or dissipate the sale proceeds without reference to you, you can apply to the court for an injunction preventing them from doing so. The court will exercise its discretion to grant an injunction only where it considers it just and convenient to do so. Ultimately, the court will try to make an order which creates the least risk of injustice. For example:
- In Haque v Raja [2016] EWHC 1950 (Ch), the claimant (C) alleged that he had a beneficial interest in a property that had been purchased in the name of the first defendant (D1). D1 had sold the property to the second defendant (D2). C applied for an injunction to prevent D2 from disposing of, dealing with, or diminishing the value of the property or (if it had been sold) the sale proceeds. Initially the court granted the injunction. Two months later, the court decided to discharge (cancel) the injunction. The court’s reasons for discharging the injunction included the following:
- C had failed to protect his alleged beneficial interest by way of a restriction on the title register of the property.
- C had failed to provide any firm evidence that D2 had acted dishonestly or unconscionably (unjustly).
- In Malik v Kettle [2020] EWHC 2568 (Ch) the property in question was worth £1.24m. The claimant obtained an injunction preventing the defendants from dealing with or disposing of any monies remaining from the sale of the property or of any other property that represented the proceeds of sale. However, the court subsequently held that the injunction should not have been granted, and discharged it. Among other things, the claimant had not made full and frank disclosure when obtaining the injunction. Also, there was no evidence that there was a risk of dissipation or that the defendants were proposing to do anything with the monies in order to frustrate a legitimate claim.
If you require any further information on property disputes of this nature, please contact Stephanie Butler via [email protected]
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Stephanie Butler
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at September 2021.