The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) sets out a framework for resolving disputes relating to ‘trusts of land’. In practice, this typically occurs when two or more people own a property. If a dispute occurs between these owners, either party can make a TOLATA claim and petition the court to make a ruling and resolve the matter.
It’s important to note that parties can be eligible to make a TOLATA claim if they have a legal or beneficial interest in the property. So, even if your name isn’t on the property deeds, you may still be able to take legal action under TOLATA.
Who Can Make a TOLATA Claim?
TOLATA applies when two or more people own a property, so there are many instances in which the Act is applicable, such as:
- Unmarried cohabiting couples
- Family members who have helped fund a property
- Joint tenants or tenants in common
- Non-legal owners with a beneficial interest
- People who have invested in a property together
While there are numerous people who are eligible to make a claim under the Act, cohabiting couples are particularly reliant on TOLATA. In just 10 years, the number of unmarried cohabiting couples in England and Wales rose from 20.6% to 24.3%, yet many people don’t realise they could be in a precarious legal situation. By understanding your rights under TOLATA, you can help to prevent future disputes and ensure that your contributions to the property are properly recognised.
If a relationship breaks down, these issues often overlap with wider property ownership disputes between separated couples, especially where contributions and intentions were never formally documented.
For a broader view, check out our dedicated legal guide to property ownership disputes.
Can You Make a TOLATA Claim If You’re Not a Legal Owner?
Yes. You don’t have to be named on the property deeds to make a claim under TOLATA. If you can show you have a beneficial interest in the property, this can be sufficient to proceed with a claim. There are various ways parties can show they have a beneficial interest, including:
Constructive Trust
A constructive trust isn’t expressly created by the parties, but a court can determine that a trust exists to achieve fairness when legal ownership doesn’t reflect the true beneficial interest. Consider an example where a couple share a property and contribute to it equally, yet only one party is named on the deeds. In this instance, the court may find that the parties had an intention to share a beneficial interest in the property and, therefore, find that a constructive trust exists.
Resulting Trust
A resulting trust is also a type of trust that can be imposed by the law. This happens when the person with the legal title wasn’t intended to hold the beneficial interest. If one party funds a property but the title is in another person’s name, for example, a resulting trust may be declared to reflect the contributor’s interest.
Proprietary Estoppel
This is an equitable principle that comes into play when a party reneges on a promise upon which the other person has reasonably relied and has suffered because of this. If the court considers it unjust or unconscionable for the individual to go back on their promise, they may find that the other party has a beneficial interest in the property.
Types of TOLATA Claims
Before you take legal action, it’s important to know what a successful TOLATA claim can achieve and what types of claim you can make under the Act. Although there is a wide range of general property disputes, Sections 14 and 15 set out the powers of the court under TOLATA:
- The right to occupy the property
- The sale of the property and/or the division of proceeds
- Declaration of beneficial interest (the percentage share that each party owns)
- Adjustments to the financial contributions each party has made towards the property
These main types of claims can cover a wide range of scenarios, which ensures the vast majority of issues between co-owners can be resolved via a TOLATA claim.
Making a TOLATA Claim
Bringing a TOLATA claim can result in a lengthy and complex litigation process, which is why it’s so important to seek professional legal advice at the outset. In addition to providing bespoke legal advice, your legal team will ensure you’re fully aware of the remedies available to you and the likelihood of success.
TOLATA claims must be brought in accordance with the Civil Procedure Rules (CPR), with Parts 7 and 8 determining how a claim should be initiated. If your TOLATA claim is based on significant factual disputes, it should be brought under Part 7 of the CPR. Alternatively, a claim can be brought under Part 8 of the CPR if the parties agree on the facts.
Notably, evidence must be provided along with your claim form if you’re making a TOLATA claim under Part 8 of the CPR. While evidence is also critical to Part 7 claims, this route involves examining evidence over time.
Part 7 TOLATA Claim Procedure
To issue a claim under Part 7, you’ll need to issue an N1 claim form and provide your particulars of claim within 14 days. Following this, the defendant has 14 days to serve their defence or to file an acknowledgement of service, giving them 14 days longer to submit a defence. Following this, disclosure of evidence, inspection and witness testimonies take place to enable the court to make an informed judgment.
Part 8 TOLATA Claim Procedure
When issuing a claim under Part 8, you are required to issue an N208 form, including or attaching written evidence. The defendant then has 14 days to submit an acknowledgement of service and to serve written evidence.
What Factors Does the Court Consider?
Section 14 of TOLATA highlights what factors the court may consider when deciding a case. These include:
- The intention of the person or people who created the trust
- The purposes for which the property is held
- The welfare of any minor who occupies or may reasonably occupy the land
- The interests of any secured creditor of a beneficiary
If a declaration of the trust has been made by the parties, the courts have determined it will be conclusive unless a subsequent agreement or proprietary estoppel applies.
Ultimately, you won’t necessarily be able to make any argument as part of a TOLATA claim. Instead, you’ll need to ensure that you present arguments and evidence that relate to the factors the court is permitted to consider and seek a remedy that the court can provide.
What Evidence Is Required?
When making a claim, the evidence you provide can vary depending on the exact nature of your claim and the situation you’re in. For example, relevant evidence may include:
- Evidence of payments made in relation to the property
- Messages between the parties
- Documents pertaining to the property
- Declaration(s) of trust
- Land Registry TR1 form
- Conveyancing file
Remember: the evidence you submit should pertain to the claim. If you’re unsure whether a document should be included, seek advice from your solicitor.
Are There Other Ways to Resolve a Property Dispute?
Yes. If two or more people own a property and a dispute arises, they can use ‘alternative dispute resolution’ (ADR) to avoid the lengthy court process. Mediation, arbitration and/or conciliation are all forms of ADR that can provide suitable remedies for these types of disputes.
While mediation won’t provide an enforceable ruling, it may help you to come to an agreement with the other party or parties. Often, this is a more amicable process and is typically far cheaper and faster than going to court.
How Much Does It Cost to Make a Claim?
Before you take legal action, it is essential to consider the risks and the costs involved. While there are often relatively low court fees for submitting the necessary forms, the cost of legal representation can be high, particularly if the case is lengthy or complex.
Furthermore, you may be required to pay the other side’s costs if you lose your claim. This can substantially increase the total cost of making a claim, which is why many people prefer to try ADR first. While the courts may use costs management in conjunction with Part 7 claims, you may find that your legal costs liability is relatively high if numerous hearings are required.
The associated costs, in conjunction with the stress and complexity of litigation and the lengthy timescales associated with court action, can make bringing a claim an unattractive option. If ADR has failed to provide a resolution, however, court proceedings may be your only path to achieving a satisfactory outcome.
Preventing Disputes and Claims
Seeking legal advice before you purchase a property or gain a beneficial interest enables you to protect your interests and can prevent TOLATA claims being made in the future. A solicitor can help you to draft a declaration of trust, for example, which will set out the interests of the beneficiaries.
Alternatively, a cohabitation agreement can help to avoid potential future disputes if you’re living with a friend or partner. Similarly, maintaining records of contributions to shared properties can be a helpful way to avoid future disputes and subsequent claims.
Early advice during the conveyancing process can be particularly effective in clarifying ownership and avoiding disputes later on.
Contact Heald Nickinson
If you’re planning to purchase property with someone other than a spouse, our experienced residential property solicitors can help to protect your interests and reduce the likelihood of TOLATA claims being made in the future.
Alternatively, if you’re already a co-owner or have a beneficial interest in a property, we can help to formalise the agreement, resolve ongoing disputes or help you respond to a TOLATA claim from your co-owner. To find out more, contact our team now on 01276 680000 or send us a message.