Shares and Unequal Contributions into Property – Equitable Accounting
When a property is owned jointly, disputes can arise as to who owns how much. Even if the shares are clear at the outset, there can be a dispute as to how the beneficial interest in the property should be divided on sale, and what should be taken into account. A co-owner can in addition ask the court to conduct an equitable account as to contributions where someone has paid in more since the purchase.
The concept of equitable accounting is about fairness – it usually arises when one party leaves the property, and the other remains there. The applicant can ask the court to make a decision as to whether one owner is owed additional money to their share of the sale monies, taking into account various factors. There are three areas which generally the court may consider:
- Occupational rent;
- Uneven Mortgage payments; and
- Improvements to the property.
If one party continues to live in the property, and the other has moved out, then the absent party can ask the court to order that the occupant pay some rent for their occupation of the other’s share of the property. On the other hand, if the person who continues to live there begins to pay the mortgage payments in full, then the court may compensate them for the additional payments they have had to make.
If significant improvements have been made to the Property which substantially increase the value of the property but were funded solely by one co-owner, then the applicant can ask the court to take into account
- the costs of doing the work and;
- the increase in value of the property as a result of those works.
Equitable accounting gives the court broad discretion to consider additional factors, to achieve fairness between the co-owners in the division of a property. However, an equitable accounting claim can be complex and is fact specific. It is beneficial to seek legal advice at an early stage. If you think you would benefit from some legal advice on equitable accounting, please feel free to contact us.
How to get your equity out of a property?
Legal ownership of a property is recorded at the Land Registry. A sale cannot take place without both legal owners’ signature or a court order. Where a joint owner is blocking as sale, it is possible to ask the Court to order a sale. In the previous blog from this series, Chris Hatton set out the procedure and factors that apply while releasing your equity from a property.
* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*