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Just found this about Benificial Interst if Cohabitating and partner owns the house
VespaPX125
Posts: 74 Forumite
Sorry if this has been posted elsewhere but it makes for intersting reading - I've posted the link to the actual page.......
http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/part_2.htm#$#33.52#$#33.52
33.47 Calculation of bankrupt’s interest
In calculating the bankrupt’s interest in a property, consideration should be given to the amount due in respect of mortgages or charges secured on the bankrupt’s interest in the property. Any interest in an endowment policy must also be taken into account when calculating the interest (see paragraphs 33.81 to 33.82, 33.85 and 33.144). For information on dealing with shared ownership agreements, refer to paragraph 33.170. Once the official receiver is satisfied that the bankrupt may have a beneficial interest (see paragraph 33.44) in the property, steps should be taken to protect it (see Part 5).
33.48 Property in the sole name of spouse, civil partner or cohabitant
Where the property is in the sole name of a spouse, civil partner or cohabitant of the bankrupt, the official receiver should consider the possibility that the property has been transferred into the spouse’s, civil partner’s or cohabitant’s sole name or was purchased with funds provided by the bankrupt with a view to defeating his/her creditors. Such transactions may be set aside (see paragraphs 33.119 to 33.125). Where the official receiver is satisfied that the bankrupt did not provide purchase monies, he/she should make enquiries to ascertain whether the bankrupt has acquired a beneficial interest in the property, for example, by making mortgage repayments, contributing to household expenses etc. The guidance in paragraph 33.52 should be considered in this respect.
33.49 Bankrupt’s interest in property - disputed
Where the bankrupt occupies a property with a partner (whether or not they are married or civil partners), the official receiver may have to consider a claim from the ‘solvent’ partner that they are entitled to a (greater) share of the property. For example, disputes can arise in respect of jointly owned properties where the partner believes that they are entitled to more than 50% of the beneficial interest or, in a solely owned property, where the partner believes that they have a financial interest in the property.
Where the official receiver as trustee is dealing with a jointly owned property, he/she should also consider whether the bankrupt is entitled to more than 50% of the net equity.
The conveyance of a property into joint names may be considered conclusive evidence of an intention to hold the property in equal shares. The exceptions to this are where one of the parties can demonstrate to the court proof of fraud or mistake in the conveyance or where there exists a declaration of trust of the beneficial interests. A declaration of trust should usually be made at the time of the conveyance, but may occur on the happening of a specific event which would disturb the shares in which the property was held. There is no requirement to lodge a declaration of trust between the legal owners of the property in respect of their beneficial interests with HM Land Registry as the Register is only concerned with the legal title and not the division of the beneficial interest by the legal owner(s). The official receiver should request documentary evidence in support of any disputed claim concerning the beneficial interest in the property whether it relates to the bankrupt, or solvent partner’s share.
33.50 Bankrupt’s interest disputed – case law
In the case of Re Lorraine Share [2002] BPIR 194 the bankrupt (now Mrs Fisher) was the sole owner of a property. The mortgage application form contained clear statements by Mrs Fisher that she was to pay the deposit personally and meet the instalments out of her own income. In 1996 she was adjudged bankrupt but gave no indication that she was not the legal and beneficial owner of the property. A trustee was appointed following which Mr and Mrs Fisher (who were unmarried but cohabiting at the time the flat was purchased) contended that Mrs Fisher had never been anything more than a nominee for Mr Fisher, who had in fact paid the deposit and maintained all the mortgage instalments. Witness statements and documentary evidence produced at trial supported this view. The court held Mr Fisher to be the sole beneficial owner of the flat but did so with specific mention that it was on the basis of evidence presented, but untested by cross-examination.
Where there is an express declaration of trust that declaration is conclusive evidence of the shares in which the joint owners hold the property, unless that declaration is set aside URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#6#$33347#6"][U][COLOR=#0000ff]note 6[/COLOR][/U][/URL.
When considering the respective beneficial interest of the parties the official receiver should also have regard to representations made by the parties of any intention to hold the shares in the property to reflect their contributions to the initial purchase of the property. In the absence of any specific declaration of trust the official receiver can consider that the shares are held equally but representations that this was a mistake may be successful if one party can demonstrate a significantly higher contribution to the purchase price.
In the case of Springette v Defoe [1992] 2 FCR 561 the Court of Appeal held that, in the absence of evidence to the contrary (in particular a communicated intention to hold the property in equal shares), the property was held on a resulting trust for the persons who provided the purchase money in the proportions in which they provided it.
See also Part 3, paragraphs 33.117 and 33.118 on equitable accounting.
33.51 Protection of beneficial interest in solely owned property
Where a property is owned solely by the bankrupt, the official receiver should proceed as follows depending upon the position with regard to the beneficial interest:
(a) The bankrupt is entitled to the whole of the beneficial interest - the official receiver should assume that the legal estate vests in the trustee URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#7#$33347#7"][U][COLOR=#0000ff]note 7[/COLOR][/U][/URL and protect his/her interest by lodging a bankruptcy restriction (see paragraph 33.137).
(b) The beneficial interest is held by the bankrupt and/or another or others - the official receiver should register a Form J restriction as if it were jointly owned (see paragraph 33.139) HM Land Registry will not register a bankruptcy inhibition where the beneficial interest differs from the legal ownership. There are conflicting views as to whether the legal estate vests in the trustee in these circumstances. The property could vest in the trustee due to the property being solely owned by the bankrupt but subject to a third party claim, or the property could not vest in the trustee as the property is held by the bankrupt, wholly or partly on trust for another or others URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#8#$33347#8"][U][COLOR=#0000ff]note 8[/COLOR][/U][/URL.
(c) The entitlement to the beneficial interest is in doubt - the official receiver should register a bankruptcy restriction or if unable to do so, a Form J URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#9#$33347#9"][U][COLOR=#0000ff]note 9[/COLOR][/U][/URL restriction should be registered. Each party’s entitlement to a share, if any, of the beneficial interest should be established and where a bankruptcy restriction has been registered this should be removed and replaced by a Form J restriction if the official receiver becomes satisfied that the beneficial interest is held as in (b) above.
33.52 Calculating an interest in solely owned property - with agreement
Reference should be made to any agreement made at the time of the acquisition of the property to establish that a third party has a beneficial interest in the property. This agreement is binding upon the trustee (Gissing v Gissing [1971] AC 886). Any agreement to share the interest in the property without stating the specific proportions in which that interest is to be divided, will give rise to interests in equal shares in the proceeds of sale. These interests may be adjusted by later agreement of the parties, which may or may not be in writing.
33.53 Dispute over ownership – solely owned property
In the event of any dispute, the onus of proof of the existence of an agreement falls upon the person claiming that there is an agreement. Where no agreement is found to exist, reference should be made to the guidance in paragraph 33.56 to establish the beneficial interests. See also paragraph 33.49.
33.54 Verbal agreement – solely owned property
In Re Densham, ex parte trustee of the bankrupt v Densham ([1975] 3 All ER 726), the property was purchased with a one-ninth contribution from the spouse towards the deposit. The contract was in the bankrupt’s sole name due to a misunderstanding as it had been verbally agreed that the spouse would have a half share of the property. It was held that the verbal agreement was valid. Without that agreement, the spouse would only have been entitled to a one-ninth share in the property.
33.55 Inferred agreement – solely owned property
In Midland Bank plc v Cooke and another (1995 4 All ER 562) there was no agreement between the spouses as to the exact proportions of their beneficial interest. It was held that the wife had made indirect contributions to the value of the matrimonial home by bringing up the children and maintaining and improving the property. From this it could be inferred that the couple’s presumed intention was to hold the beneficial interest in the property in equal shares.
33.56 Calculating interest - without agreement – solely owned property
Where no agreement is present (express or implied - see paragraphs 33.53 to 33.55) the beneficial interest in a property should be calculated after taking paragraphs 33.57 to 33.61 into consideration.
33.57 Contribution to the purchase price, where property is purchased outright - solely owned property
The amount of the contribution to the purchase of the property, if it was purchased outright, must be considered to establish the parties’ interests in the property. The expected proceeds of sale should be divided in the same proportions as the sums paid for the purchase to arrive at the bankrupt’s interest. Other forms of contribution, as described in paragraphs 33.58 to 33.62, may affect the bankrupt’s interest. The intentions of the parties should also be considered so that if it can be shown that the intention was, for example, that the contribution from the other party was to be a gift or a loan to the bankrupt, no interest in the property will normally accrue to that party - but see also paragraph 33.58. The conduct of the parties may also indicate intentions or presumed intentions regarding whether the interests of the parties in the property should be in different proportions to the funds provided /COLOR][URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#10#$33347#10"][U][COLOR=red]note 10[/COLOR][/U][/URL][COLOR=red.
33.58 Types of contributions – solely owned property
Any contributions to the deposit and/or the mortgage should be considered in the calculation. Where the property was purchased with the assistance of a mortgage, the common intention of the interests of the parties in the property may be inferred by the source of the deposit and the arrangements for repaying the mortgage as explained below in (a) to (e):
(a) Contribution to deposit - If the bankrupt received assistance from another (“A”) in payment of the deposit, it may be inferred that it was the intention of the parties that “A” would share in the beneficial interest. It is likely that “A” will gain some interest in the property, unless the assistance was given in the form of a gift or a loan.
(b) Contribution to deposit and mortgage payments - If “A” made direct contributions to the mortgage repayments from his/her own funds and had provided some or all of the deposit for the purchase, it may be inferred that his/her interest in the property will be increased.
(c) Contribution to deposit and household expenses - If “A” provided some or all of the deposit for the purchase, did not make direct contributions to the mortgage instalments but paid other joint household expenses from his/her own monies, it could be inferred that these payments were intended by both parties to be a contribution to the price of the property. Accordingly “A’s” interest in the property will be enhanced by that contribution.
(d) Contribution to mortgage only - If there was no contribution by “A” to the deposit, but the bankrupt received assistance from “A” in payment of the mortgage repayments, “A” will accrue an interest in the property provided that the contributions were direct, regular and substantial.
(e) Contribution to household expenses only - Similarly, where the payment of the household expenses by “A” was substantial, an interest may accrue to “A”. The extent of the interest will depend upon the amount of the contributions and what can be inferred from the conduct of the bankrupt and “A” on how the beneficial interest would be shared.
33.59 Equal shares – solely owned property
In the situations (a) to (e) in paragraph 33.58 above it should not be assumed that the interests in the property will automatically be equal. If no inferences can be drawn, the rule of law that ‘equality is equity’ will be applied with the result that the parties will hold the beneficial interest in equal shares (Gissing v Gissing - see paragraph 33.52). The purchase of items for the property by “A” will not imply an intention that he/she would acquire an interest in the property. Similarly, the fact that the parties live together and “A” shares ordinary domestic duties, e.g. looking after children or undertaking repairs to the property, will not give rise to an interest or an enlarged interest in the property URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#11#$33347#11"][U][COLOR=#0000ff]note 11[/COLOR][/U][/URL.
33.60 Improvements to a property – solely owned property
The Matrimonial Proceedings and Property Act 1970, section 37 provides that where a spouse contributes in money or money’s worth to the cost of any improvements to a property (in which either or both of them has or have a beneficial interest), this would give the spouse a share or enlarged share in the beneficial interest. This provision is subject to any contrary agreement (express or implied) between the spouses. It only applies if the contribution, monetary or otherwise, was of a substantial nature and can be identified with the relevant improvement so that contributions should be for a separate physical feature; for example, a garage or a central heating system: general contributions are not sufficient URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#12#$33347#12"][U][COLOR=#0000ff]note 12[/COLOR][/U][/URL. The amount of the spouse’s interest should be based upon the financial value of the improvement URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#13#$33347#13"][U][COLOR=#0000ff]note 13[/COLOR][/U][/URL. There is a similar provision in the Civil Partnership Act 2004 applying to civil partners URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#14#$33347#14"][U][COLOR=#0000ff]note 14[/COLOR][/U][/URL.
33.61 Cohabitant’s interest – solely owned property
Although the Matrimonial Proceedings and Property Act 1970, section 37 applies only to married couples, (and civil partners are covered by virtue of the Civil Partnership Act 2004) a cohabitant may accrue an interest, or a greater interest, in the property, provided that:
(a) The contribution to the improvement (of money or in terms of labour) was substantial;
(b) There were joint efforts to acquire the property (i.e. contributions to either the deposit or the mortgage or both); and
(c) The property was used for the joint benefit of the bankrupt and the cohabitant /COLOR][URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#15#$33347#15"][U][COLOR=red]note 15[/COLOR][/U][/URL][COLOR=red.
The principles which relate to a cohabitant may also be applied to any other party who pays for such improvements; for example, in Hussey v Palmer ([1972] 1 WLR 1286) they were applied to a mother-in-law who paid for an extension to be built to a house.
http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/part_2.htm#$#33.52#$#33.52
33.47 Calculation of bankrupt’s interest
In calculating the bankrupt’s interest in a property, consideration should be given to the amount due in respect of mortgages or charges secured on the bankrupt’s interest in the property. Any interest in an endowment policy must also be taken into account when calculating the interest (see paragraphs 33.81 to 33.82, 33.85 and 33.144). For information on dealing with shared ownership agreements, refer to paragraph 33.170. Once the official receiver is satisfied that the bankrupt may have a beneficial interest (see paragraph 33.44) in the property, steps should be taken to protect it (see Part 5).
33.48 Property in the sole name of spouse, civil partner or cohabitant
Where the property is in the sole name of a spouse, civil partner or cohabitant of the bankrupt, the official receiver should consider the possibility that the property has been transferred into the spouse’s, civil partner’s or cohabitant’s sole name or was purchased with funds provided by the bankrupt with a view to defeating his/her creditors. Such transactions may be set aside (see paragraphs 33.119 to 33.125). Where the official receiver is satisfied that the bankrupt did not provide purchase monies, he/she should make enquiries to ascertain whether the bankrupt has acquired a beneficial interest in the property, for example, by making mortgage repayments, contributing to household expenses etc. The guidance in paragraph 33.52 should be considered in this respect.
33.49 Bankrupt’s interest in property - disputed
Where the bankrupt occupies a property with a partner (whether or not they are married or civil partners), the official receiver may have to consider a claim from the ‘solvent’ partner that they are entitled to a (greater) share of the property. For example, disputes can arise in respect of jointly owned properties where the partner believes that they are entitled to more than 50% of the beneficial interest or, in a solely owned property, where the partner believes that they have a financial interest in the property.
Where the official receiver as trustee is dealing with a jointly owned property, he/she should also consider whether the bankrupt is entitled to more than 50% of the net equity.
The conveyance of a property into joint names may be considered conclusive evidence of an intention to hold the property in equal shares. The exceptions to this are where one of the parties can demonstrate to the court proof of fraud or mistake in the conveyance or where there exists a declaration of trust of the beneficial interests. A declaration of trust should usually be made at the time of the conveyance, but may occur on the happening of a specific event which would disturb the shares in which the property was held. There is no requirement to lodge a declaration of trust between the legal owners of the property in respect of their beneficial interests with HM Land Registry as the Register is only concerned with the legal title and not the division of the beneficial interest by the legal owner(s). The official receiver should request documentary evidence in support of any disputed claim concerning the beneficial interest in the property whether it relates to the bankrupt, or solvent partner’s share.
33.50 Bankrupt’s interest disputed – case law
In the case of Re Lorraine Share [2002] BPIR 194 the bankrupt (now Mrs Fisher) was the sole owner of a property. The mortgage application form contained clear statements by Mrs Fisher that she was to pay the deposit personally and meet the instalments out of her own income. In 1996 she was adjudged bankrupt but gave no indication that she was not the legal and beneficial owner of the property. A trustee was appointed following which Mr and Mrs Fisher (who were unmarried but cohabiting at the time the flat was purchased) contended that Mrs Fisher had never been anything more than a nominee for Mr Fisher, who had in fact paid the deposit and maintained all the mortgage instalments. Witness statements and documentary evidence produced at trial supported this view. The court held Mr Fisher to be the sole beneficial owner of the flat but did so with specific mention that it was on the basis of evidence presented, but untested by cross-examination.
Where there is an express declaration of trust that declaration is conclusive evidence of the shares in which the joint owners hold the property, unless that declaration is set aside URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#6#$33347#6"][U][COLOR=#0000ff]note 6[/COLOR][/U][/URL.
When considering the respective beneficial interest of the parties the official receiver should also have regard to representations made by the parties of any intention to hold the shares in the property to reflect their contributions to the initial purchase of the property. In the absence of any specific declaration of trust the official receiver can consider that the shares are held equally but representations that this was a mistake may be successful if one party can demonstrate a significantly higher contribution to the purchase price.
In the case of Springette v Defoe [1992] 2 FCR 561 the Court of Appeal held that, in the absence of evidence to the contrary (in particular a communicated intention to hold the property in equal shares), the property was held on a resulting trust for the persons who provided the purchase money in the proportions in which they provided it.
See also Part 3, paragraphs 33.117 and 33.118 on equitable accounting.
33.51 Protection of beneficial interest in solely owned property
Where a property is owned solely by the bankrupt, the official receiver should proceed as follows depending upon the position with regard to the beneficial interest:
(a) The bankrupt is entitled to the whole of the beneficial interest - the official receiver should assume that the legal estate vests in the trustee URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#7#$33347#7"][U][COLOR=#0000ff]note 7[/COLOR][/U][/URL and protect his/her interest by lodging a bankruptcy restriction (see paragraph 33.137).
(b) The beneficial interest is held by the bankrupt and/or another or others - the official receiver should register a Form J restriction as if it were jointly owned (see paragraph 33.139) HM Land Registry will not register a bankruptcy inhibition where the beneficial interest differs from the legal ownership. There are conflicting views as to whether the legal estate vests in the trustee in these circumstances. The property could vest in the trustee due to the property being solely owned by the bankrupt but subject to a third party claim, or the property could not vest in the trustee as the property is held by the bankrupt, wholly or partly on trust for another or others URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#8#$33347#8"][U][COLOR=#0000ff]note 8[/COLOR][/U][/URL.
(c) The entitlement to the beneficial interest is in doubt - the official receiver should register a bankruptcy restriction or if unable to do so, a Form J URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#9#$33347#9"][U][COLOR=#0000ff]note 9[/COLOR][/U][/URL restriction should be registered. Each party’s entitlement to a share, if any, of the beneficial interest should be established and where a bankruptcy restriction has been registered this should be removed and replaced by a Form J restriction if the official receiver becomes satisfied that the beneficial interest is held as in (b) above.
33.52 Calculating an interest in solely owned property - with agreement
Reference should be made to any agreement made at the time of the acquisition of the property to establish that a third party has a beneficial interest in the property. This agreement is binding upon the trustee (Gissing v Gissing [1971] AC 886). Any agreement to share the interest in the property without stating the specific proportions in which that interest is to be divided, will give rise to interests in equal shares in the proceeds of sale. These interests may be adjusted by later agreement of the parties, which may or may not be in writing.
33.53 Dispute over ownership – solely owned property
In the event of any dispute, the onus of proof of the existence of an agreement falls upon the person claiming that there is an agreement. Where no agreement is found to exist, reference should be made to the guidance in paragraph 33.56 to establish the beneficial interests. See also paragraph 33.49.
33.54 Verbal agreement – solely owned property
In Re Densham, ex parte trustee of the bankrupt v Densham ([1975] 3 All ER 726), the property was purchased with a one-ninth contribution from the spouse towards the deposit. The contract was in the bankrupt’s sole name due to a misunderstanding as it had been verbally agreed that the spouse would have a half share of the property. It was held that the verbal agreement was valid. Without that agreement, the spouse would only have been entitled to a one-ninth share in the property.
33.55 Inferred agreement – solely owned property
In Midland Bank plc v Cooke and another (1995 4 All ER 562) there was no agreement between the spouses as to the exact proportions of their beneficial interest. It was held that the wife had made indirect contributions to the value of the matrimonial home by bringing up the children and maintaining and improving the property. From this it could be inferred that the couple’s presumed intention was to hold the beneficial interest in the property in equal shares.
33.56 Calculating interest - without agreement – solely owned property
Where no agreement is present (express or implied - see paragraphs 33.53 to 33.55) the beneficial interest in a property should be calculated after taking paragraphs 33.57 to 33.61 into consideration.
33.57 Contribution to the purchase price, where property is purchased outright - solely owned property
The amount of the contribution to the purchase of the property, if it was purchased outright, must be considered to establish the parties’ interests in the property. The expected proceeds of sale should be divided in the same proportions as the sums paid for the purchase to arrive at the bankrupt’s interest. Other forms of contribution, as described in paragraphs 33.58 to 33.62, may affect the bankrupt’s interest. The intentions of the parties should also be considered so that if it can be shown that the intention was, for example, that the contribution from the other party was to be a gift or a loan to the bankrupt, no interest in the property will normally accrue to that party - but see also paragraph 33.58. The conduct of the parties may also indicate intentions or presumed intentions regarding whether the interests of the parties in the property should be in different proportions to the funds provided /COLOR][URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#10#$33347#10"][U][COLOR=red]note 10[/COLOR][/U][/URL][COLOR=red.
33.58 Types of contributions – solely owned property
Any contributions to the deposit and/or the mortgage should be considered in the calculation. Where the property was purchased with the assistance of a mortgage, the common intention of the interests of the parties in the property may be inferred by the source of the deposit and the arrangements for repaying the mortgage as explained below in (a) to (e):
(a) Contribution to deposit - If the bankrupt received assistance from another (“A”) in payment of the deposit, it may be inferred that it was the intention of the parties that “A” would share in the beneficial interest. It is likely that “A” will gain some interest in the property, unless the assistance was given in the form of a gift or a loan.
(b) Contribution to deposit and mortgage payments - If “A” made direct contributions to the mortgage repayments from his/her own funds and had provided some or all of the deposit for the purchase, it may be inferred that his/her interest in the property will be increased.
(c) Contribution to deposit and household expenses - If “A” provided some or all of the deposit for the purchase, did not make direct contributions to the mortgage instalments but paid other joint household expenses from his/her own monies, it could be inferred that these payments were intended by both parties to be a contribution to the price of the property. Accordingly “A’s” interest in the property will be enhanced by that contribution.
(d) Contribution to mortgage only - If there was no contribution by “A” to the deposit, but the bankrupt received assistance from “A” in payment of the mortgage repayments, “A” will accrue an interest in the property provided that the contributions were direct, regular and substantial.
(e) Contribution to household expenses only - Similarly, where the payment of the household expenses by “A” was substantial, an interest may accrue to “A”. The extent of the interest will depend upon the amount of the contributions and what can be inferred from the conduct of the bankrupt and “A” on how the beneficial interest would be shared.
33.59 Equal shares – solely owned property
In the situations (a) to (e) in paragraph 33.58 above it should not be assumed that the interests in the property will automatically be equal. If no inferences can be drawn, the rule of law that ‘equality is equity’ will be applied with the result that the parties will hold the beneficial interest in equal shares (Gissing v Gissing - see paragraph 33.52). The purchase of items for the property by “A” will not imply an intention that he/she would acquire an interest in the property. Similarly, the fact that the parties live together and “A” shares ordinary domestic duties, e.g. looking after children or undertaking repairs to the property, will not give rise to an interest or an enlarged interest in the property URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#11#$33347#11"][U][COLOR=#0000ff]note 11[/COLOR][/U][/URL.
33.60 Improvements to a property – solely owned property
The Matrimonial Proceedings and Property Act 1970, section 37 provides that where a spouse contributes in money or money’s worth to the cost of any improvements to a property (in which either or both of them has or have a beneficial interest), this would give the spouse a share or enlarged share in the beneficial interest. This provision is subject to any contrary agreement (express or implied) between the spouses. It only applies if the contribution, monetary or otherwise, was of a substantial nature and can be identified with the relevant improvement so that contributions should be for a separate physical feature; for example, a garage or a central heating system: general contributions are not sufficient URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#12#$33347#12"][U][COLOR=#0000ff]note 12[/COLOR][/U][/URL. The amount of the spouse’s interest should be based upon the financial value of the improvement URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#13#$33347#13"][U][COLOR=#0000ff]note 13[/COLOR][/U][/URL. There is a similar provision in the Civil Partnership Act 2004 applying to civil partners URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#14#$33347#14"][U][COLOR=#0000ff]note 14[/COLOR][/U][/URL.
33.61 Cohabitant’s interest – solely owned property
Although the Matrimonial Proceedings and Property Act 1970, section 37 applies only to married couples, (and civil partners are covered by virtue of the Civil Partnership Act 2004) a cohabitant may accrue an interest, or a greater interest, in the property, provided that:
(a) The contribution to the improvement (of money or in terms of labour) was substantial;
(b) There were joint efforts to acquire the property (i.e. contributions to either the deposit or the mortgage or both); and
(c) The property was used for the joint benefit of the bankrupt and the cohabitant /COLOR][URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter33/part2/Part%202%20notes.htm#15#$33347#15"][U][COLOR=red]note 15[/COLOR][/U][/URL][COLOR=red.
The principles which relate to a cohabitant may also be applied to any other party who pays for such improvements; for example, in Hussey v Palmer ([1972] 1 WLR 1286) they were applied to a mother-in-law who paid for an extension to be built to a house.
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Comments
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Hi Vespa . Have they really got time and resources for all this?
If you read all the stuff on there you will end up like your patients:mad:Better to be poor than a slave to wealth
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Mate - I'm still trying to figure out if paying half the gas, electric and my contribution to the council tax gives me BI in my misses house - the Insovency Advice Line reckon so - The guy from PayPlan reckons not - though he did spens an hour asking questions and talking it through where as the Insolvency bloke just said yes without asking any questions... So I'm still worried about £400 a month0
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