Where people jointly-own houses and other real estate, it is common for those people to fall out, and for disputes to arise. The law surrounding these types of disputes is relatively clear, and therefore the method of resolving the disputes is (usually) straightforward.
Of course, people sometimes jointly-own property other than land and buildings. This type of property is sometimes known in law as a ‘chattel’. Unfortunately, the law surrounding how to deal with disputes over jointly-owned chattels is much less well known than its land law counterpart. This article looks at situations where people have disputes over jointly-owned chattels; and what joint owners can do to resolve these disputes.
Chattels are essentially items that are not land or buildings. They can range from jewellery or items of furniture, to larger items such as horse boxes or trucks.
People rarely co-own chattels; it is much more common for a chattel to be owned outright by an individual. If they are co-owned, this tends to be within the structure of a business entity, such as a partnership or limited company.
Disputes about chattels co-owned within a partnership or a company will be determined in accordance with the rules applying to the business (e.g. the partnership agreement or shareholder agreement). But what happens in situations where chattels are jointly-owned outside of a business and a dispute arises as to what to do with them?
Option one – negotiate
As with most types of dispute, the first step to consider where a dispute arises over the joint ownership of chattels is to try to negotiate a resolution. Nine times out of ten this will resolve the dispute. For example, one party may agree to buy the other’s share; or the two parties might agree to sell the chattel and split the money. However, where this is not possible, the offended party will need to consider what other remedies are available to them.
Option two – dividing the assets
In some cases, a party can apply to the court for an order that the chattels be divided between the owners (s188 Law of Property Act 1925). However, there is no definition in the legislation of what ‘divided’ means. While in some cases, it will be quite clear how chattels can be divided, others are much less clear cut.
Liam and Noel jointly inherit two antique vases, both of the same value. In this case, the court will likely give them a vase each. However, what happens where they inherit three vases, valued at £4,000, £8,000 and £10,000?
The Court can make ‘any consequential directions’. This could include, in Liam and Noel’s case: giving Liam the £10,000 vase; Noel the £8,000 vase; and an order that the final vase be sold, with Liam to receive £3,000 and Noel to get £1,000.
Who can make an application?
Unfortunately, these applications are not available to all co-owners. An applicant must be the owner of a 50% interest in the item. Therefore, if there are four co-owners of a chattel (each holding equal shares), then just one of them would not be able to make an application. However, two of the four co-owners could join together in an application. Unfortunately, this makes this type of application unsuitable for disputes where a minority owner seeks a remedy.
Power of sale?
It is not clear whether the court has the power to order that disputed chattels are sold. However, an Australian case suggests that the power of the court to order a division of chattels does extend to a power to authorise the sale of a single chattel.
Further, there was a recent High Court case where the judge commented that it would be logical to interpret that Parliament had intended to include the power to order the sale in the legislation.
Option three – sell your share
A co-owner may sell his own share of a disputed chattel. This could either be to the co-owner (as noted at option one above), or to a third party. In the second case, the third party would then jointly-own the item with other co-owner.
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