When a couple divorces, disputes can sometimes arise involving third parties who have a financial interest in one of the matrimonial assets – most commonly a property. These situations are known as intervenor cases.
They often involve parents or other family members who have contributed to a property owned by the separating couple, who now need to protect or recover their investment. This is often achieved by the third-party intervening in the divorce proceedings and claiming a beneficial interest in the matrimonial property under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
Our TOLATA specialists regularly act for third parties in divorce proceedings to ring-fence, safeguard or recover funds invested into family property.
Common situations
Intervenor cases frequently arise where parents have assisted an adult child with the purchase, renovation or extension of a home.
This has become increasingly common in multi-generational living arrangements, where families pool resources to create shared or adjoining accommodation – for example, by building a “granny annexe” or funding an extension for the parent to live in.
Typical examples include:
- a parent contributes a significant sum towards the purchase of a property owned by their child and/or the child’s spouse / partner
- a family member pays for an extension or annexe to be built on the couple’s property
- a parent transfers proceeds from a previous home to help the couple buy or improve their property, without formal documentation setting out the terms.
When the couple later separate, the parent’s contribution may be treated as part of the matrimonial assets unless steps are taken to establish their independent interest.
Why these cases require careful handling
In financial remedy proceedings on divorce, the court’s focus is usually on dividing assets between the spouses. However, if a third-party – such as a parent – claims a share in their property, their rights must also be determined, and this must happen before any division between husband and wife.
The third-party (the intervenor) may need to intervene formally in the divorce proceedings or bring a separate claim under TOLATA to establish their share.
If intervening in existing divorce proceedings, the third-party’s TOLATA claim will generally be heard as a preliminary issue before the Family Court. Such claims need careful handling, as they involve a blend of family and civil court procedure and rules, and judges potentially less familiar with the strict property and trust law principles that govern these types of cases.
Establishing an interest
The court will consider the circumstances in which the contribution was made, including:
- whether the funds were intended as a gift, loan or investment
- whether there was any agreement or understanding about ownership
- what was understood in respect of any occupation rights
- whether the contributor can show a beneficial interest arising under a resulting or constructive trust or proprietary estoppel.
Even where no formal documentation exists, the court can infer an intention that the contributor should have an interest in the property based on the evidence of what was said and done at the time.
How Birketts can help
Our TOLATA and family specialists work together to provide joined-up advice in these complex, sensitive cases. We can:
- advise on the strength of your claim and the best procedural route to protect your interest
- prepare detailed evidence to establish that your contribution was not a gift
- liaise with the divorce lawyers to ensure your rights are properly recognised within the proceedings
- represent you in negotiations, mediation or court proceedings where necessary
- guide you through the process of recovering a proportion of your legal costs.
We understand that these disputes can involve both financial and emotional considerations, particularly where parents are seeking to preserve their relationship with their child as well as secure their own long-term security.
This is not standard practice in divorce proceedings (with spouses generally being responsible for only their own costs), and as civil practitioners we are better equipped to deal with this.
Our experience
- Acting for a third-party intervenor in divorce proceedings, successfully securing recognition of substantial financial contributions made to the client’s daughter and son-in-law’s property – despite a lack of formal documentation. We achieved a full equity repayment for the client as well as a costs award in the client’s favour.
- Acting for a third-party in divorce proceedings where one parent had contributed towards the purchase of the family home, as well as paying for a ‘granny annexe’ where they resided with the family. We established a beneficial interest on behalf of the client and secured a lump sum sufficient to fund her independent living.
- Acting for a third-party in divorce proceedings where there was an issue as to whether a loan provided by a parent to their adult child should be repaid prior to any sharing of assets. We successfully argued that the loan was a ‘hard loan’, requiring repayment, defeating the opposing argument that the money should be treated as a ‘soft loan’ not requiring repayment in the divorce.
