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Beneficial Interest

  • farouk.lalljee
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19 Sep 12 #356768 by farouk.lalljee
Topic started by farouk.lalljee
In October 2005, I remortgaged my home to invest with my son on a BUY TO LET Property. I put in a 76K towards the purchase price whilst my son paid the stamp duty. The property was totally renovated, building a large fully fitted kitchen, landscaping and paving the garden. Buying of only building material cost 37K. I project managed and did a lot of the work with casual worker. I must have paid around 65K to the casual worker. Unfortunately I do not have receipt. I have a work schedule and evidence of withdrawal in my bank. It took almost 2 yrs to complete the work. When all the work was done, my son gave me 18K toward the purchase and renovation of the house. The property is registered under my name and my son’s as joint owners. All the money my son put into the investment was from gifts and savings since he was a child.

My son got married in Feb 2005. He and his wife lived in the parental home for 27 months and did not contribute to any bills as my son paid the interest on the mortgage (250K) on the Buy to let property, whilst I paid interest on the mortgage on my own home. His wife is well educated with good earning potential, only worked sporadically. In 2009 she chose to resign from work and stay at home whilst continuing to spend without consideration. She did not bring anything into the marriage, made no contribution towards the purchase or renovation of the property and was not working at the time the property.
Including interest paid on mortgage of my home, I have invested over 200K whilst my son put in 27k and paid the interest on the loan on the BUY TO LET property in which she has lived with my son for 4 yrs.

My son and his wife moved into the property in 2007 and split up in 2011. I have taken over possession of the property and rented it out. Now my son’s wife is now claiming that she has made equal contributions towards the purchase and renovation of the house whilst acknowledging that I have an interest in the property which is now worth around 500k. And is claiming that my son has 50% equity on the property, she is entitled to half of his share and a share of his pension, is suffering from depression and anxiety as a result of which she cannot work and is claiming maintenance.
Any advice/information welcomed and appreciated on (1) dealing with share of interest in the property, (2) case law relevant the situation described (3) pension sharing and (4) maintenance on a short (under 7 yrs) childless marriage. Thank you
S

  • LittleMrMike
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19 Sep 12 #356798 by LittleMrMike
Reply from LittleMrMike
I will try and deal with the question of beneficial interest.
The first thing a solicitor would do is to have a look at the title deeds.
You say you are joint owners, but ideally your respective interests in the property should be spelled out. Not to do so could give rise to disputes later.
You need to understand that any claim by your daughter in law can only relate to his share, not yours.
Over time, the Courts have used a number of principles with strange sounding names like proprietary estoppel, constructive trusts and resulting trusts. If you think that sounds like a mouthful, you’re right. But the general idea is that it can be possible ( for example ) for someone who is not a legal owner of the FMH to establish an interest in it by making a contribution towards the deposit, helping out with the mortgage payments, financing improvements to the property and so on ad infinitum. Or, alternatively, if the parties have shares in the FMH of 50%, it could perhaps be altered to 60/40 or some other figure.
As a general rule of thumb :
· Where one party is the sole owner of the property, the starting point is exactly that – the owner has 100% rights;
· Where the property is jointly owned the starting point is that the parties own in equal shares.
· If the deeds say that one party owns, say 75% and the other 25% then that is what their shares will be.
· If either party wishes to displace these basic rules the onus is on him/her to demonstrate why.
This is usually achieved by establishing contributions, for example, providing part of the initial deposit, helping with the mortgage, improving the property and so on – but not contributing to household expenses.
So, for example, in Kernott v Jones, the property that was the subject of the dispute started out by being owned jointly. But the Supreme Court decided that Ms Jones was entitled to 90%. The facts of this case were, almost certainly, not typical. But it demonstrates that it can be done.
So you need to approach this in stages, I think.
As a first step you need to ascertain what the deeds say about your respective interest. As I said, your share, whatever it may be, is beyond her reach.
I''m a bit concerned about what you say about your daughter in law suffering from depression, but the fact remains depression can be treated. Normally she should not expect to get much out of a short childless marriage. Case law is almost useless because no two cases are the same.
You do need legal advice, I''m afraid.
LMM

  • soulruler
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20 Sep 12 #356847 by soulruler
Reply from soulruler
I also think that a hearing for a declaration of equity might be helpful.

That is to establish that the father put in ex amount of money in a joint venture with his own son as he trusted his own son.

I believe that the hearing is called a preliminary hearing in family proceedings.

The father produces the information to show just how much he actually invested in the property and same for the son by way of capital and also by way of labour.

I think the earlier that is done the better, it did come up during my divorce (when advised by a head of chambers in a family practice).

The solcitors for the other side critisied me for not doing so earlier but I didn''t know about it earlier and neither did my mother.

  • farouk.lalljee
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21 Sep 12 #357254 by farouk.lalljee
Reply from farouk.lalljee
Thank you for the information and explanation

  • soulruler
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22 Sep 12 #357287 by soulruler
Reply from soulruler
I would also say that when I was advised to go for a hearing for a declaration of trust the example that my barrister at the time gave me was one of asian families who often had small businesses and transferred them to their children and invested money into them.

Often when there is a divorce apparently in those communities a hearing is held to establish that the divorcing spouses family are the real owners of the assets involved which will in time form part of an inheritance.

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23 Sep 12 #357472 by farouk.lalljee
Reply from farouk.lalljee
Thank you for the helpful information. Are there any case laws to the situation you have described. This would be very helpful.

  • soulruler
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23 Sep 12 #357474 by soulruler
Reply from soulruler
Personally I do not know of the case law but I do understand the principle of equity and trust. I also believe that what my family barrister said was correct as that specific barrister had been involved with similar cases.

Hopefully there will be someone on here that can shed light on case law but I can confirm that in the past their have been many discussions on applying for declarations of equity and a good place for you to start would be an intitial consultation either with a good trust lawyer or a good family lawyer.

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