What is TOLATA?
The Trusts of Land and Appointment of Trustees Act 1997 (commonly known as “TOLATA”) regulates the relationship between owners of land, and their occupiers.
How does TOLATA apply to cohabiting couples?
As the name suggests, TOLATA concerns itself with trusts of land. The principle behind a trust of land is that the legal owner of a property (the trustee) may be different from the person benefitting from it (the beneficiary). This means that one member of a cohabiting couple may own a share of the family home despite not being a legal owner. Alternatively, both partners may be legal owners, but the equity in the family home is not divided equally between them. If a separating couple cannot agree on these matters, they may apply to the Court under TOLATA to determine a range of issues, including whether they both own a share in the family home (and if so, the proportion each of them owns); who may occupy it; and whether (and if so when) it should be sold.
How does TOLATA work?
The starting point in any trust case is for the Court to ask what the parties intended when setting up the trust. In many cases there is no express agreement between the cohabitees describing who owns what, and the Court will have to try and infer the parties’ common intention from their actions. Each case is unique and turns on its own facts. The Court will look at the whole background of dealing between the parties, including any discussions the parties had before acquiring the property; the reason the couple bought the property; why it was acquired in sole (or joint) names; whether the couple had children; and how they arranged their finances.
What is the difference between how the Court treats the family home in a divorce case and how it does so for cohabitees under TOLATA?
The Court’s job in a TOLATA case is to determine how the parties intended to own their property. It is a backwards-focused exercise. By contrast, in divorce proceedings the Court (usually applying the Matrimonial Causes Act 1973) will carry out a forward-focused exercise, dividing the property based on what is “fair” having considered the parties’ present and future needs. These two exercises can result in very different outcomes.
Are there any other differences?
Divorce litigation and TOLATA claims are governed by different court rules. This may sound esoteric, but it is of critical importance. One important difference is on costs, where a successful party in a TOLATA claim might receive an award of 60-70% of their costs, whereas the general principle in family proceedings (with some important exceptions) is that each party bears their own costs. Hence a party wishing to bring a TOLATA claim must also factor in their potential costs liability to the other side before taking a case to trial.
Does TOLATA apply to married couples?
The family courts generally rely on matrimonial legislation when determining ownership of property held by divorcing couples, but there is scope for a party to a marriage to use the TOLATA regime to seek a share in the home that he or she might not otherwise be entitled to.
What should I do?
Obviously, the best time to think of these issues is before purchasing a property, as we can help you take steps to ensure that your intentions are clearly recorded. Otherwise, please contact us for a consultation. We can advise you what rights you have under TOLATA, and whether it makes tactical sense to issue a Court application.
