Land Law

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Land Law

Land Law

Part A

Beneficial interest is a value that you or any other person is entitled to receive from a sale of a property. If someone can provide evidence that they contributed to the value of the property they may be viewed as beneficial owners.

A person's interest in a property is her/his entitlement to the proceeds of the sale and is known as beneficial interest. It is different from the legal title to the property which is held by the owner(s). The size of the bankrupt's interest in the home will depend on who provided the deposit, who paid mortgage repayments and/or for home improvements, and what income the bankrupt person brought into the home.

The home may be owned wholly by the bankrupt's spouse, civil partner or partner. Even in these cases, the trustee will usually contact the partner and investigate, for example, whether or not the bankrupt has any interest in the home and whether the spouse, civil partner or partner's title to the home is genuine (for example, that it was not obtained with money provided by the bankrupt). The trustee has no right to sell the property if it is established that the bankrupt has no interest in the home.

A person who is not a legal owner may still have a beneficial interest and a beneficial interest may give him a rights to the property. If the bankrupt's spouse, civil partner or children are living in the home it may be possible to postpone the sale for up to a year, or, in exceptional circumstances, to oppose the order for sale.

Understanding and establishing beneficial interest when someone is not a legal owner is complex These paragraphs do not go into detail and cannot cover every situation and development in case law. They are intended merely to highlight the main issues. A person may have a beneficial interest arising from:-

an agreement with the legal owner which has been confirmed in writing, normally in a trust deed - see next paragraph

contributions to the cost of the property which the law recognises as creating a trust even if there is no written agreement.

Has the person who is not the legal owner made a financial contribution. Direct financial contributions which could count include:-

payment towards a deposit

paying some of the capital due on the outstanding mortgage

regular and substantial contributions towards the regular monthly mortgage payments.

Indirect financial contributions which are not paid directly towards the purchase of the property are less likely to create a beneficial interest, for example, payments towards household bills and other expenses. Was there discussion and agreement about beneficial interest If there was no direct financial contribution towards the purchase price, the person who is not the legal owner may be able to establish a beneficial interest if s/he can show that:-

it was intended by both her/him and the legal owner that s/he should have a financial stake. This intention can sometimes be assumed from the actions of both people, for example, making contributions to ...
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