Purchasing property is an area which generates a lot of litigation and court disputes, simply because property assets tend to have bound up in them a high percentage, or in some cases, all of an individual’s wealth, which means purchasers approach such purchases and investments with a high degree of caution. It is not surprising therefore, that purchasing property with others, such as friends, family or neighbours, is a common cause of many property disputes.
When we agree to purchase property jointly and make an express agreement with the other party or parties about the ownership and percentages, we are forming a legally enforceable agreement to purchase. When something goes wrong with the agreement purchasers have to look to the courts to remedy any actions or default of the other parties. One way the courts can intervene to enforce such agreements is through the use of equitable remedies and by following equitable doctrines.
One such equitable doctrine is the Pallant v Morgan equity which followed the case of the same name (Pallant v Morgan ( Ch. 43). The case itself concerned two neighbours who were both interested in the same parcel of land which was to be auctioned. Morgan thought they would get the land at a lower price if only one of them were to bid on it and they were to then share the land between them. By the date of the auction no specific percentages of division or valuation had been agreed. Pallant didn’t bid on the property relying on the agreement with Morgan. Morgan successfully purchased the property and then refused to share with Pallant. Pallant sued Morgan and Morgan was ordered to try to agree a fair division, and in the absence of agreement, Morgan was to sell the land and share the net proceeds equally with Pallant.
What follows from the case is an equitable doctrine for the courts to follow in similar situations. Practically it the Pallant v Morgan equity would arise in circumstances where A agrees with B that the land will be purchased in A’s name for the benefit of both A and B. If in the operation of the agreement A gets some advantage over B or B somehow suffers some loss or other detriment, then the equity would intervene to give B some remedy.
Practical examples of what A might have done include pulling out of the purchase, without giving B sufficient notice, or time to make plans to purchase, or proceeding with the purchase and refusing to share the property, or refusing to share it on the terms initially agreed.
In circumstances where A refuses to share the property or to share it on the terms agreed then A would most likely be ordered to sell the property and account to B for his share. B could also ask for the court to declare that A was holding the property for A and B’s benefit in the shares agreed. If A refused to participate without giving B sufficient notice, B could also request compensation for losses if appropriate.
If you have a property dispute relating to a joint purchase, at Benchmark Solicitors LLP we can advise you as to the best way ahead.