UK - Can one person owning 50% of a house force a sale?

Question

Is it possible for a single owner to force a sale assuming it's 50-50. Are there any exceptions to the rule?

Answer 1

Short Answer

Is it possible for a single owner to force a sale assuming it's 50-50. Are there any exceptions to the rule?

A single owner can request that a court order either a sale, or a buyout, or a limitation on the occupancy of a co-owner, in the form of an order directed at the "trustees" who are the legal owners of the land for the benefit of the equitable owners (who, by default, in this case, would be the same people). But this is not an absolute right and is subject to considerable equitable discretion on the part of the Court in most cases.

Other options are mostly undesirable or unavailable in this situation where you have two co-owners/trustees who are in deadlock with each other.

Long Answer

This answer isn't the most practical or step by step analysis, but it does provide some light on the basic overarching considerations and legal framework that applies to this situation.

England effectively abolished the tenancy in common form of ownership in its classic form in 1925 by passing the Law of Property Act 1925 that bifurcated concurrent ownership into two classes of owners: a small class of owners who hold the legal ownership with certain rights pertaining to the management and disposition of the property and a second group of beneficial owners who may continue to own their equitable interest under a tenancy in common.

In England . . . further changes were made to law of concurrent ownership under the Trusts of Land and Appointment of Trustees Act 1996 (TOLOTA).

Under the Law of Property Act 1925, property that is concurrently owned was required to be owned under a trust for sale that bifurcated legal ownership from equitable ownership. Legal ownership was restricted to four people who were only permitted to own the legal interest under a joint tenancy that cannot be converted into a tenancy in common. Under the 1925 land act which was applied retroactively, it was presumed that the legal owners who held the property under a trust for sale were to sell the property because property was considered mostly to be held as an investment. The proceeds of the sale were to be distributed to the equitable owners who were still permitted to own their equitable interest under a tenancy in common.

In 1996, England and Wales adopted the Trust of Land and Appointment of Trustees Act (TOLATA). TLATA replaced the trust for sale under which there was a presumption that the trustees should sell the land with a trust for land. In addition, TOLATA democratized common ownership by requiring the legal trustees to consult actively with the equitable owners before making a decision about the disposition of the commonly owned property. Courts now are required to consider cases brought under TOLATA on a case by case basis and should only order a sale if it is justified in a particular case taking into account a number of economic and non-economic factors.

(Source) See also Wikipedia here and here. As the second Wikipedia link explains (references omitted):

Severance in equity can be achieved in five main ways.

Firstly, the most certain way to sever is to serve a statutory notice under Law of Property Act 1925 section 36 on the other joint tenants "a notice in writing of such desire" to sever one's share. Some courts have construed this provision restrictively, so in Harris v Goddard the Court of Appeal held that because Mrs Harris in her divorce petition requested merely that "such order be made... in respect of the former matrimonial home", and did not request that an order be made immediately, she had not yet severed her share. This meant that when Mr Harris unexpectedly died after a car crash, she was able to remain a joint tenant and inherit the whole home, and the children of Mr Harris' first marriage did not. A notice will be considered effective, or "served" under Law of Property Act 1925 section 196 when it is left at a person's home or office, or if posted and so long as it does not go undelivered (in contrast to the postal rule) when it would ordinarily arrive. In Kinch v Bullard Mrs Johnson was terminally ill, and wished to sever her share of the home and sent a letter, but when she realised that Mr Johnson was ill too and would die first, she wanted to cancel her severance notice. Neuberger J held that because the letter was already delivered to Mr Johnson's house, it could not be withdrawn, even though Mr Johnson had not yet read it.

Second, and in contrast to the formalistic approach for section 36, it was held in Burgess v Rawnsley that a course of dealings between two people can manifest the intention to sever. Mr Burgess had discussed with Ms Rawnsley selling her share in a property for £750 but negotiations stalled when she asked for more, and then he unexpectedly died. "'Even if there was not any firm agreement but only a course of dealing", said Lord Denning MR, "it clearly evinced an intention by both parties that the property should henceforth be held in common and not jointly."

Third, simply making an agreement to sell one's share will be counted by the courts as severing.

Fourth, the declaration of bankruptcy effects severance, as under the Insolvency Act 1986 section 306, a bankrupt's estate will vest immediately in the trustee in bankruptcy.

Fifth, killing a joint tenant will sever a share, because the Forfeiture Act 1982 generally prevents a killer to benefit from his wrong. However, in Re K the Court of Appeal upheld a claim by a lady to be relieved from forfeiture using a discretion in section 2. Mrs K had shot and killed her husband, but only after prolonged domestic violence, and she had been cleared of murder because it did not count as intentional.

Lastly, if practical, beneficial owners may request trustees to physically partition property under Trusts of Land and Appointment of Trustees Act 1996 section 7, and compensate the different owners in money as is appropriate.

The fourth and fifth methods are not recommended and the last is also generally not practicable for a single residence. Under the facts of this case, only the first option may be viable. The linked article continues:

When co-owners fall into disagreement over how land is to be used, the Trusts of Land and Appointment of Trustees Act 1996 guides who can live in the property or when it can be sold. One of the primary purposes of TLATA 1996, given the massive growth of co-ownership and people acquiring interests in land through trusts, was to reduce the occasions on which land would be sold if that meant people would lose their homes. At the highest level of generality, TLATA 1996 section 6 says the legal trustees of a property (i.e. the legal owners on the title, rather than the owners in equity) generally have all the powers of an absolute owner, but should pay regard to beneficiaries and owe them a duty of care. More importantly, sections 11 to 13 give beneficiaries a limited right to occupy a property if this accords with the interest and purpose of the trust, if land is suitable for occupation, although trustees may restrict this right if reasonable.

If disagreements are insoluble, section 14 allows a beneficial owner to apply to court for sale. Section 15 requires that the court pays regard (i) to the intentions of the settlor (ii) to the purpose of the trust (iii) the interests of any children living there, and (iv) the interests of secured creditors.

This means that in a common case where a bank is pressing for sale of a family home, its interests do not override all others. So in Mortgage Corporation v Shaire where Mr Shaire had forged his wife's signature to get a mortgage on their home and died, and the bank sought possession and a sale under TLATA 1996 section 15, Neuberger J held that he would postpone the sale, because it was still her home. However TLATA 1996 went further when a creditor has become insolvent. It inserted in the Insolvency Act 1986 new sections 283A and 335A, which say that at the point of bankruptcy, the decision to order a sale should be guided by (a) the interests of the bankrupt's creditors, (b) the spouse's conduct, their resources, the children's needs, and any other need, except for the bankrupt's own. However under section 335A(3) after one year expires, a court must order sale of property to realise its value for creditors "unless the circumstances of the case are exceptional". So only in extreme situations, as where losing a home might worsen the occupant's schizophrenia, have courts postponed sales. Because the legislation is so heavily pro-bank, the suggestion was made in Nicholls v Lan that it may well violate the right to a family life in ECHR article 8.

An application to a court under Section 14 of TOLATA may be another viable option, and realistically, is the most likely approach to resolving the situation.