Multi-generational living has become increasingly common in recent years, as families choose to share property or combine resources across generations. Parents may sell their own home and invest in a child’s property or help fund an extension or “granny annexe” so they can live nearby while maintaining independence.
While these arrangements start with the best of intentions, problems can arise if relationships break down – for example, where the parent and child fall out; the parent is threatened with eviction; or the parent wishes to recover their financial contribution and live elsewhere.
Our TOLATA specialists help families to resolve disputes over financial investments made in the context multi-generational living.
Common situations
Typical examples include:
- parents contributing to the purchase of property owned by their adult child and/or their child’s partner
- funding or building an annexe or extension on the child’s property for the parent to live in
- pooling funds to purchase a larger shared home with separate living spaces
- selling a parent’s former home and reinvesting the proceeds into a joint property.
Often, these contributions are made informally, without written documentation or legal advice being obtained. While this may seem unnecessary within a family context, it can create real difficulties later if the relationship changes or expectations differ.
When things go wrong
Disputes can arise in several ways:
- breakdown in family relationships: the parent may be asked to leave the property, or be excluded from part of it
- change in circumstances: the parent may need to move elsewhere, perhaps for health or financial reasons, and wish to recover their investment
- disagreement over ownership: the parties may not agree whether the parent’s contribution was a gift, a loan, or an investment intended to create an ownership share
- a divorce within the family may mean that the home has to be sold as part of dividing up the matrimonial pot. That may put the parent’s home or investment into jeopardy.
Establishing or recovering an interest
Where there is no formal documentation, the parent may still have a beneficial interest in the property under a resulting or constructive trust. They might also or alternatively have a right to remain living in the property if they understood that they could live there for the rest of their lives (such cases typically involve the legal principle of ‘proprietary estoppel’).
The court will look at:
- the intention behind the contribution: whether it was meant as a gift or a loan or to secure an ownership share
- the existence of any agreement or understanding about repayment or occupation rights
- any reliance or detriment suffered by the parent, such as selling their home or funding the build works.
If necessary, a claim can be brought under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) to establish the parent’s interest or right to occupy, recover their contribution, or seek an Order for Sale to release funds.
How Birketts can help
Our TOLATA specialists have extensive experience advising families in the resolution of multi-generational property disputes. We can:
- provide clear, jargon-free advice on the law as it applies to your situation
- respect the difficult and emotionally charged nature of family conflict
- negotiate or mediate solutions where relationships have broken down
- bring or defend a TOLATA claim to establish or recover a financial interest, or secure alternative accommodation.
We act sensitively but firmly, recognising the importance of preserving family relationships wherever possible while protecting our client’s financial position.
Our experience
- Acting for a third-party in divorce proceedings, successfully securing recognition of substantial financial contributions made to our client’s daughter and son-in-law’s property – despite a lack of formal documentation. We achieved a full equity repayment as well as a costs award in our 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 married couple who owned a property with a garage. The husband’s parents had contributed one third of the purchase price of the property, on the understanding that they would convert the garage into an annexe and move into it. The parties entered a declaration of trust, stating that upon a sale of the property the husband’s parents would get a third of the sale proceeds. The husband’s parents subsequently sought more than 40% of the equity due to the alleged expense of the garage conversion. We achieved a favourable settlement of the case, avoiding the costs of court proceedings.
