JSA overpayment and possiblity of capital disregards

Client has JSA OP due to allegedly not reporting shared ownership of a property not lived in and has appealed. Client has focused his reasons for disagreeing with the decision as being that at the time of application he did report that his name is on the deeds of a house that his parents own, but that because the agreement is that he is not allowed to sell the house/his share of the house whilst his parents are alive he doesn’t consider himself an ‘owner’. He signed and returned the summery of the telephone interview which had record of the answer no to ‘do you own any property other than that you live in’, which again I guess would support the way he understands his interest in the property.

So the first dispute could possibly be that the client did not fail to disclose a material fact because gave the full picture of the situation to the JC adviser who then drew the wrong conclusion from this? In addition, I am wondering whether there are any grounds to challenge whether the property should be disregarded for means tested benefit purposes anyway as he only has a future interest in it and cannot access the income or capital from it at the current time? I can see in the submission that the DWP did look into possible disregards - taking reasonable steps to dispose of property (obviosuly doesn’t meet because cannot dispose of), awaiting on repairs/disability adaptations before moving in, marriage breakdown 26 week disregard etc etc, doesn’t meet any of these, but the future interest aspect hasn’t been covered.

The DWP routinely assume that because a person has legal title to a property that they have a beneficial interest in it in equal shares with any other legal owner and that is not always so. 

Generally (although it can often be more complex than this) a person with legal title owns the property in the ordinary sense of the term in that he is the one who is entitled to control or dispose of it.  However, once sold the proceeds of sale generally go to those who put up the initial purchase price and made payments on the mortgage and that is not always the person who has legal title.

However, that is not always the case.  Agreements between legal owners at the time of purchase as to the beneficial interest and the law concerning married couples who are joint legal owners can create beneficial interests for those who did not put up any of the money or can create beneficial interests disproportionate to a person’s money contribution.  Furthermore, the costs of substantial renovations to property can create beneficial interests and (following recent case law) possibly other financial contributions to the household by either of the members of a couple.

Reading between the lines of your post I’m guessing that your client’s parents were the original legal owners, put up the purchase price and paid the mortgage repayments.  Your client’s name was added to the title at a later stage, for whatever reason, subject to an agreement that he would not sell it thus rendering his parents homeless.  Is the agreement in writing?  And is it legally enforceable?

It seems to me that the first issue is whether he is legally prevented from selling the house at the present time and secondly, if he is not, then what if any is his beneficial interest in it.  He should really be seeing a solicitor about this

Thanks for your reply.

Client believes that the agreement was in writing and is going to try and find a copy and get back to me next week. Hopefully, this should then shed a lot more light on the exact nature of the agreement and where he stands. He is quite young, seems confused by the arrangement as a whole, angry that his parents put his name on it without him having an understanding of the implications because as far as he understood it he would neither benefit nor be affected in any way just by his name being on the deeds until his parents died and the property became his to do with as he choses. I agree, may necessitate advice from a solicitor.

NB - The parents do not live in the property, they rent it out, and the client does not recieve any of this rent money. Apparantly another part of the agreemenet -that he wouldn’t recieve any rent money of financial gain from the property whilst they were alive either. So the agreement that he can’t sell wouldn’t be to prevent homelessness for the parents.

If we can get supporting evidence for all of the above then I think he will have a really strong case, lets hope he can find that agreement!

There might be something in the mortgage agreement about one owner not being able to sell without the consent of the others but from your last post it seems probable that in any event he doesn’t have any beneficial interest at all.

I hope there is something in writing because this is in fact a trust: the client is only a trustee and his interest only falls into possession on the death of his parents. In law (s 53(1)(b) of the Law of Property Act 1925), any trust affectingland or an interest in in land must be evidenced in writing, signed by either the person who set up the trust or one (at least) of the trustees. That evidence ideally should be contemporaneous with the creation of the trust - if it is created later, especially in the circumstances described here, it will not look credible.

There is a very weak presumption in equity that if a person transfers his own property into the name of another there is no intention to create a gift - this is the “presumption of resulting trust” which means that the whole equitable interest “results” (bounces back) to the transferor. This is however very weak indeed. And in fact on the story here there IS a trust of part of the equitable interest, which would fail if there was no consideration (money or money’s worth) from the child in respect of the interest in remainder. Consideration will always remedy a formal defect in trust formation.

Did the client here pay anything towards the purchase of the property, or guarantee a mortgage for the parents? When I was a solicitor in practice I often used to deal with people helping out their parents under the right to buy legislation, with the intention of creating a right for the parents to occupy the property for life with remainder to the child on the death of the surviving parent. I always ensured that a very precise trust instrument was drawn up to make this clear. If that can be shown to be the scenario then it is a future interest in property as already suggested.

If that was the understanding and there is no trust instrument it is harder to prove as it would be so easy to raise the idea afterwards. If ther was a solictior involved who knew all about the proposal then there really ought to be a trust deed.

Thanks for your reply, the trust idea is possibly very useful.

No, no contribution by the client towards the cost of purchasing the property or gurantee to keep the mortgage for the parents, just a name on some deeds, drawn up at some time, which as of yet we don’t know if a copy of which has been kept.

Spoke to client yesterday, apparantly Solictor has been contacted so hopefully copy of any agreement will materialise and shed some light on things.

Even if your client is the beneficial owner of a share in the property, the value of their interest (as opposed to the value of property itself) may be less than capital limits. 

DWP and LAs often seem to get this wrong with desktop valuations done by Valuation Office Agency which seem too often to bear little relationship to the actual value and which value the building with vacant possession, rather than establishing the correct share and valuing it on the basis that the other share owner is unwilling to sell.  Caselaw has held that this is the correct approach.

Have look at R(IS) 4/03, R(SB) 6/84, R(JSA) 1/02,  R(IS) 26/95, R(IS) 5/07, CH/1953/2003 and CH/3197/2003.