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Joint-owner of property refusing to sell
I have a client who has been asked to attend an IUC by her local authority. This appears to be about her claiming HB while jointly owning a property with her brother which they inherited after their parents passed away. I don’t know the full details but apparently she tried to sell it in 2019 and had a sale agreed, but her brother prevented the sale from going through, moved into the property and has since stonewalled her. She has since been trying through solicitors to get her share of the inheritance and is still awaiting an outcome. She says she hasn’t gained a penny from this inheritance yet and therefore didn’t think she needed to tell the local authority about it until it’s resolved with solicitors. What view is the local authority likely to take? Would happens in situations like this when someone jointly owns property but the joint owner refuses to allow it to be sold?
It’s never a good idea to not disclose you own a capital asset like a property as this will almost inevitably have serious consequences as your client has discovered.
However, there is the 26-week disregard which can be extended where you are taking steps to sell the property and there’s also the case of Palfrey (cribbing this from our social care factsheet on valuing jointly owned property).
In the case of Chief Adjudication Officer v Palfrey [1995] 11LS Gaz R39, [1995] Times, 17 February, Mr Palfrey, a joint property owner, had gone into residential care and a question arose about how his share in the family home should be valued when assessing entitlement to the social security benefit, Income Support. The house had been acquired by him and his daughter as beneficial joint tenants.
The Judge ruled that, although Mr Palfrey was no longer present, where a capital asset is a jointly owned property held for the purpose of accommodating the joint owners and that purpose is on-going, the sale of the house could not be enforced. Mr Palfrey’s beneficial interest might at that time only have a nominal value. Based on this reasoning, the ongoing purpose would disappear if the joint owner vacated the property at some future point.
There are other UT decisions taking different views but it’s certainly arguable that your client hasn’t done anything wrong, sure others can advise you in ,more detail but I am just about to leave work.
I’ve had a couple of cases like this, and there’s some UT authority on it as well as the Palfrey case. I think your client can start from the legal position that the sale of a jointly-owned property requires the consent of both the co-owners. As the brother won’t agree the house can’t be sold its value to your client is zero. That may get her off the hook of having failed to disclose capital but the LA would then I suspect argue that she can sell her beneficial interest or apply to the county court for an order for sale under the Trusts of Land and Appointment of Trustees Act (“TOLATA”). There is UT authority that there is a market for beneficial interests and while that may be true generally what matters is whether anyone will buy this client’s beneficial interest. For that she has to test the market either through ordinary estate agents or specialist agents. Once she starts doing that she can argue that she is taking reasonable steps to dispose of the asset and its value is then disregarded.
If the LA argue that she should use TOLATA she should argue that such proceedings are prohibitively risky and expensive.
This area is explored in mind-boggling detail in this thread: https://www.rightsnet.org.uk/forums/viewthread/16454/
I’m with Paul Stockton here. I’ve pretty much had this exact case. The sole difference being that the brother had a tenant from whom the sister did not profit at all. At the point I stepped in no disclosure had been made. I disclosed in full and ESA valued the share not as nil - that’s very unlikely - but at an amount well under the capital limit. Helped that the sister had taken steps to dispose such as going to estate agents to get a valuation of her share and had examples of essentially being laughed out. Matter resolved on disclosure i.e. no MR or appeal required.
I am not sure this is just about capital though although there may be an active market at auction and the Rent Officer may give a valuation taking the situation into account.
If the claimant has a right to live in the property she jointly owns why is she living elsewhere might be a starting point? The Council may want to explore this type of issue.
You do not say if the claimant is of pension age. If not the Council may create a large overpayment of HB and advise the claimant to apply for UC (and ask them to recover it)?
There is also the Council Tax Support position which would depend on capital and the wording of the local scheme or national scheme.
A number of UT decisions have considered these delays in selling (for divorce in particular) and whether the claimant has gained by the delay.
It seems to me the claimant needs an effective lawyer prepared to push through the sale or obtain an offer from the brother. If the brother is living there on his own he should be making a compensation payment to his sister for use of her share. She may not be receiving anything from the property but is that because she has not really pressed her brother?
I am not sure this is just about capital though although there may be an active market at auction and the Rent Officer may give a valuation taking the situation into account.
I agree it’s worth considering all of hbinfopeter’s points but I’d be very cautious about any valuation provided by the Valuation Office Agency in a case of this kind. The standard for a VOA report is set out in R(JSA) 1/02. The valuer must show expertise in this type of case and as the market for beneficial interest is vanishingly small the chances of any valuer having the necessary expertise is also small. In my case the report came nowhere near those standards and was regarded as useless by the tribunal.
I am preparing a case for tribunal in a pension credit appeal where the client jointly owns a property in Sophia with her daughter who is unwilling to sell
The property was disclosed but we are arguing that the DWP has over valued the part share.
I had another case (JSA ESA PC and HB)which went to Tribunal this time aa property in Spain jointly owned with former husband. Overpayments amounted to over £90k in total
The Pensions Service were particularly nasty, JSA and ESA did not have much to say, and HB were more or less with us at the hearing ( they had followed the DWP decisions throughout but accepted my submissions on the day)
The Tribunal put a value of nil on the share and the appeal was allowed
FIS (not the Pensions Service themselves) then asked for a statement of reasons, but did not go on to ask for leave to appeal.
Lots of stuff to recycle for the new appeal
Valuation office are, in my experience, irrelevant to this sort of case. Willing seller to willing buyer. That’s the only real consideration.
Have never yet had a share valued above £14,500 in a case like this in 36 years. Valuations veer between nil, which is not really credible, and any figure up to the aforesaid.
Valuations will depend on the individual circumstances of the case
This includes the practicality for the buyer of realising the asset in the future and the practicality of disposing of the asset for the for the claimant
It was held in R(IS)1/03 that the potential right to obtain a property adjustment order on divorce was not a capital asset
I would also advise the client in this case not to attend any IUC without a solicitor and to heed her solictor’s advice if advised to give no comment answers to questions from the LA
The caution is there for a reason