TOLATA Dispute Over Jointly Owned Investment Property

Background

The parties had purchased a buy-to-let flat together as unmarried partners. The property was registered in joint names with no express declaration of trust. After their relationship ended, they continued to jointly own the property for several years, with one party managing the tenancy and the other contributing to the mortgage from time to time.

When the managing party proposed selling the property, the other refused — arguing that they had contributed more to the purchase price and were entitled to a larger share of the equity. The managing party countered that their years of property management, tenant-finding, and maintenance justified a greater share.

The Challenge

TOLATA disputes are inherently complex because they require the court to consider the parties’ common intentions, any express or implied agreements, and the conduct of each party over the lifetime of the property ownership. Without a declaration of trust, there was no clear document setting out the split.

Both parties had instructed solicitors, and the estimated cost of a TOLATA application to the county court — including barrister’s fees, expert evidence, and a contested hearing — was in the region of £25,000 to £35,000 per side. The equity in the property was approximately £180,000.

The Mediation

The mediator’s property law background was particularly valuable in this mediation. The legal framework under sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996, the case law on common intention constructive trusts, and the practical realities of a forced sale were all central to the negotiations.

In private sessions, each party was helped to understand the strengths and weaknesses of their legal position. The tax implications of different sale timings and the practical consequences of a court-ordered sale versus a consensual one were also explored.

The breakthrough came when a structured approach was adopted: first agree whether to sell, then address the equity split, and finally deal with the costs of sale and any compensatory payments for past management.

The Outcome

The parties agreed to sell the property within six months, with a negotiated equity split of 55/45 in favour of the party who had made the larger initial deposit. The managing party received a modest management credit for their years of hands-on work. Both parties saved tens of thousands in legal fees, and the property was sold promptly at a good price — something that would have been unlikely in the context of ongoing litigation.