Considering that the average house price in the UK in May 2021 stood at £255,000 (Land Registry), it is fair to say that disputed sales can involve a significant amount of money. Whether acquired as a marital home, family home or an investment, property disputes between partners can often be acrimonious. A resolution is feasible in most cases, once the dust has settled, without involving third parties. However, when considering how to sell a house when one partner refuses UK, there can be challenges.
Joint tenants and tenants in common
Before we move on to the potential resolutions to a problematic situation, it is crucial to appreciate the terms used. These include, joint tenants and tenants in common. In reality, those with a joint tenancy/tenancy in common still have an array of rights when it comes to a potential sale:-
- Joint tenants
With a joint tenancy, the partners involved own the whole property between them with no predefined share.
- Tenants in common
The term tenants in common relates to a property where each partner has a different share of the property. For example, after an agreement, one partner may have provided the deposit in exchange for a larger share.
When looking at the subject of how to sell a house when one partner refuses UK, the issue of non-entitled spouses will often emerge. This is where married or civil partners decide to go their separate ways with one partner looking to sell the house. In this scenario, you will find the courts recognise the rights of the non-owner, non-entitled spouse, to continue living in the property. Children don’t need to be, contrary to popular belief, involved in this scenario.
There is a general misconception that the party on the title deed has complete control over the property. In reality, they cannot force the other party to move out, which can create difficulties. On occassion the courts will need to rubberstamp the rights of the non-entitled spouse. Any agreement to continue living in the house may also be time-barred, e.g., allowing a divorce settlement to be negotiated.
Taking court action
Court action, to force a sale of a jointly owned property, requires serious consideration. You will often find that the process can be expensive and lengthy, and there are no guarantees. Whether married, in a civil partnership or the property was acquired as an investment, it is crucial to define each party’s legal/beneficial share. Unfortunately, especially where personal relationships are involved, this is an uncomfortable subject that many people overlook as they enjoy blissful happiness.
As we touched on above, court action is, for many people, the last resort. It tends to be common where relationships have deteriorated to the point of no return. There are several stages which we will cover in more detail, which include:-
- Defining beneficial interests
- Pre-court action negotiations
- Application to court
- Preliminary hearing
- Attempted mediation
- Court case
A court case is the last resort, and you will notice that the standard process involves numerous attempts at mediation. Very often, you will find that by the time you reach the latter stages of the above process, reality kicks in, costs start to build up, and some form of agreement is reached.
Defining beneficial interests in a property
When looking at property, the term “beneficial interest” tends to relate to:-
- A financial interest in a property
- and/or the right to occupy a property
Even when an individual has no financial interest, but a right to occupy the property, this could result in a financial settlement to allow a smooth sale of the house. However, where there is a specific financial interest, all parties will receive the appropriate share of sale proceeds.
When defining the beneficial interest of both parties, this will often involve an agreement from the outset, which will determine the intentions of the property. This may include a family home, marital home, pre-marital house or investment property. You will generally find that such agreements will clearly define the share of each party and an agreed process, should they decide to go their separate ways.
It is safe to say that many of these agreements will be superseded by life itself. Marriages break down, families break up, and assets need to be realised. However, if, for example, the property was acquired as an investment, and one party decided to sell up relatively quickly, the court would fully appreciate the other party’s position. Nothing is ever straightforward when looking how to sell a house when one partner refuses UK!
Pre-court action negotiations to sell disputed property
Before all-out court action, which can be expensive and time-consuming, there are several potential options to consider. These include:-
Negotiate a buyout
We have two parties, one looking to sell and one looking to retain the property, so it may be sensible to negotiate a buyout. This option would depend on the non-selling party being able to arrange finance to buy out their partner. The ability to refinance the property in one person’s name would depend upon numerous financial issues. Predominantly, the outstanding mortgage, person’s income, equity in the house, and the property’s value.
On occasion, it may be possible to negotiate acceptable terms to both parties. Often a little more favourable to the party looking to retain the house, investing their own money. However, where a personal or commercial relationship has deteriorated and is irretrievable, the need to get out can be as critical as the sale terms.
Sell your share privately
There is a general misconception that a 50% share in a house in this scenario is worth 50% of the market value. In reality, few, if any, investors would look to acquire a 50% share in a house with an unknown party. Consequently, where there is no ultimate control over the property, and other partners are involved, the seller may need to consider a reduced offer. This could cause yet more issues with one party feeling forced into a sub-market value sale.
You will often see arrangements in place upon purchasing a house that gives the other party the right to acquire the outstanding share. There may be restrictions such as who can acquire a stake in the property or whether pre-agreement from the other party is required. Where a legal agreement is deemed “overly onerous”, the courts can be asked to intervene and review unfair restrictions. While an option, selling a part share in a house to a connected or unconnected third party can be challenging.
It is important to take financial advice when selling your share in a house as there can be further complications. For example, on occasion, one party may be jointly liable for the mortgage but not on the property deeds; some may be on the property deeds but not jointly liable for the mortgage. Consequently, it is crucial to appreciate the potential financial repercussions of the part sale of a house. Before signing any agreement!
For example, after a sale, it is essential to remove your name from the mortgage. While rare, some sellers have overlooked this critical issue and remained liable for a percentage of the mortgage while not owning any of the property. Crazy!
Application to court to sell a house UK
Where the beneficial ownership of the house has been agreed upon but pre-court negotiations have been unsuccessful, an application will be made to the courts. By no means guaranteed, the strength of each parties case depends on the specific situation. When applying to the courts, there are four primary outcomes.
Application for house sale refused
Blocking a sale of property acquired as a marital/family home is not uncommon. Where would the other party live? Is the property home to children? When looking at how to sell a house when one partner refuses UK, it is vital to appreciate the rights and obligations of each party. Rejection is also perfectly plausible for sale applications involving commercial investments. The case of Curtis v Buchan-Wollaston 1939 was a prime example of such a commercial arrangement.
This court case involved four individual owners who decided to acquire land in front of their homes jointly. They agreed that no single party could sell their share of the land without the consent of the other parties. One party attempted to sell their share of the land, going to court to try and force the other owners to allow the part sale. The application was denied because of the original agreement in place, blocking the sale.
Sale application refused, occupying party pays rent
There are many misconceptions regarding ownership of homes, right of sale and occasions where part-owners leave their family home. On occasion, a refusal of the sale applications is possible, but the court may establish a formal arrangement charging the occupying partner an element of rent. There may also be a time limit on occupation to allow the two parties to make long term arrangements for the sale of the property.
When one party remains living at the house, it is not uncommon to pay half of the commercial rental value to the other party. The court set the rate of rent, taking into account commercial rates and a binding arrangement put in place. While there is no formal obligation to sell the property, in many cases, this can give both parties time to think and do what’s best for them in the long term.
Order a formal sale
There are three main reasons why the courts would order a formal sale of a home (referred to as an Order for Sale) even if one party disagreed. Firstly, the courts consider the original reason for the property purchase and whether or not this has failed. The three reasons are as follows:-
- Property investment
- Majority ownership in favour of a sale
- Failure of marriage/civil partnership
A house acquired as part of a marriage/civil partnership is a simple example, somewhere to live long-term. Failure to realise the original reason for the purchase, e.g. a failed marriage, can see the courts consider an Order for Sale.
This sounds cold, but it is often helpful to remove any emotion and look at such issues in the cold light of day. To focus all parties on a sale, it is common for the courts to include a timescale in their ruling.
Where one party fails to recognise and act upon the Order for Sale, the party looking to sell the property will need to return to court. After considering the evidence, the judge has the power to sign contracts of sale and completion documents on behalf of the other party. Using this method the sale can be delayed but will eventually be completed. While this path can slow down the sale process, it does ensure that a sale is completed in the end.
Sale order, suspended for a short period
The fourth option the courts have is to issue a formal sale notice suspended for a short period. This is one of the more common rulings. It not only clearly defines a legal sale process but gives both parties time to enter further negotiations. Faced with the potential of losing their home can sometimes focus the mind. Each party may even look to acquire the other party’s share or soften previous price demands.
In this scenario, the buyer may need time to arrange finance, property valuations and put in place formal agreements for purchase. This court ruling ensures that the house is not sold under a restrictive time scale. A scenario which could potentially impact the price achieved.
Stamp Duty Land Tax (SDLT) and house sales
The buyer pays SDLT on a sliding scale which relates to the value of a property – known as a chargeable event, the transfer of part or full ownership from one party to another. However, there are scenarios where SDLT may not be applicable due to an exemption.
The most common exemption is where spouses/civil partners break up, and a property sale is included in the divorce settlement. This typically takes the form of an informal written arrangement between the parties or formal court notice. Irrelevant of the sale timing, if ownership changes hands as part of a divorce settlement, it will be exempt from SDLT.
The situation can become a little more complicated with investment property – normally held in joint names or as part of a limited company. If ownership of the property changes name, this could trigger an SDLT payment. However, if ownership of the company changes, with the company still owning the property, this may not trigger an SDLT payment. As you can see, this has the potential to become very complicated. Take advice!
Other issues to consider
In the above examples, we have considered scenarios where both parties have the option of selling the property and are of sound mind. There are other scenarios to take into consideration which include:-
Lack of mental capacity
Where one of the partners is reluctant to sell their share but lacks the mental capacity to decide, the courts may well intervene.
Unfortunately, faced with financial difficulties, spouses/civil partners are often unable to pay their mortgage. Time is often of the essence in this scenario. The courts may again be asked to make a ruling on one party’s reluctance to face reality.
While not overly common, on occasion, you may find that one of the homeowners disappears or loses contact. This is another situation where the courts can intervene and issue a formal sale notice.
Conclusion – How to sell a house when one partner refuses UK
There are many issues to consider when looking at how to sell a house when one partner refuses UK. There are both formal and informal legal rights and obligations to respect. Even where both parties are at loggerheads, and no agreement seems likely, the court application process still leaves time and space for further negotiations. Court action is a last resort, often resulting from relationship breakdowns, but it can be costly and time-consuming.
Unfortunately, many people acting in both a personal and commercial sense fail to put even the most basic of legal agreements in place. While agreements addressing a potential breakdown of a relationship can be uncomfortable discussions, they are nonetheless essential. In reality, these arrangements are there to protect all parties in the event of a total breakdown in communication. Perhaps best described as a safety net?
Have you experienced difficulties selling a property in the past? Perhaps you have been a reluctant seller, forced to seek legal assistance to protect your rights? Maybe you are currently going through this challenging scenario? Please feel free to post any comments about your experiences or any observations on this topic.