Read the forms properly
- AuthorPhilip Hoddell
In a recent High Court case, one partner lost more than £750,000 when he didn’t read the forms properly during the purchase of a large property with his ex.
Which case was this?
Christopher Rowland v Sharon Blades was heard in the High Court and Court of Appeal this year and ended with a lot of legal costs and a fair degree of disappointment to both parties, but most particularly to Dr Rowland.
What was the background to the case?
In 2008 the couple bought a lovely country house in Oxfordshire. It cost £1.5m and Dr Rowland paid the whole of the cost of it and all the legal costs and stamp duty associated with it. They used the property as a weekend retreat. Problems then arose in the relationship, Dr Rowland started seeing someone else and in fact was found with her at the property by Ms Blades who reacted angrily and assaulted the new partner.
What was the legal background?
The solicitors who acted for the couple on the purchase explained to them the different ways in which they could legally hold the property and asked them to indicate their preference which they did. Their preference was that they would equally own it despite the fact that Dr Rowland had contributed all of the money.
They could have owned the property:-
a. As joint tenants – each being entitled to share equally in the net proceeds of sale and there being an automatic right of survivorship between them; or
b. As tenants in common – when they could define each owner’s exact share of the equity in the property and this could be used to reflect a situation where contributions towards its purchase had been unequal.
They opted to own the property as joint tenants. They then met at their solicitor’s office for a lengthy meeting to discuss all sorts of aspects of the property but including how they wish to hold it. They confirmed they wanted to hold it as joint tenants.
After exchange of contracts, the solicitor wrote to them to report on progress and also noted that they wanted to own the property as joint tenants but that they were considering the point and that they should let him know of any change of plans before the purchase completed. No indication contrary to the original decision was given by either of the couple.
What does the law say?
Summarised, the law says that:-
a. The documents that a couple sign when they buy a property will be taken to be determinative in most cases;
b. However, if it is shown to the court’s satisfaction that they had a different common intention when they first bought the property or that they formed a different common intention at a later date, then provided one of them relied on that common intention to their detriment, the presumption contained in the purchase document could be displaced.
The common intention could be expressed or inferred. It could even be imputed by the court to make sure that having regard to the whole course of dealing between a couple, fairness was done.
What did the court rule here?
The judge found that there was no common intention to depart from what appeared on the purchase documents and therefore Ms Blades could have half the house. That meant that Dr Rowland lost more than £¾m. His evidence was that he thought it had been agreed between him and his partner that the property would one day pass to his daughter. The court didn’t accept that that was a common intention.
Were there other issues?
Yes, again what was common ground was that Ms Blades had effectively excluded Dr Rowland from the property both by her behaviour on discovering him at it with his new partner, but also in a series of emails effectively forbidding him from attending the property if his new partner was present.
Dr Rowland therefore asked for nearly £¾m occupation rent. The court found that he was due that and that Ms Blades had behaved unreasonably. He was awarded £60,000 (raised on appeal to £120,000) for effectively 6 years rent.
However, since the amount he got back in rent was only just more than the costs he was ordered to pay to Ms Blades (he having lost the argument about her interest in the property), it really wasn’t a happy outcome for him.
So what should people do?
When buying a property it is really important to read the forms carefully. If you have contributed unequally to the purchase then either record the fact and make sure that the ownership of the property reflects it or accept that if you fall out and the property is sold, it is likely that you will only get back half of it.
Obviously, the circumstances of this case relate to an unmarried couple. Very different considerations apply if the property is either brought into a marriage or bought within it.
We are always happy to discuss matters with you and offer a free 15 minute initial telephone call. If you would like to take advantage of that, why not give us a call? You can contact Phillip via firstname.lastname@example.org or call 01206 217320.