What is proprietary estoppel?
Financial disputes between unmarried couples often centre on their home. One of them owns it in the sense that they are registered proprietor according to the Land Registry but the other contributes by paying for improvements or often by buying materials and doing the work themselves. There are broadly two legal claims they might make.
The first would be to claim that they have an interest in the house, or in common parlance that they own part of the equity. I will not discuss that issue in detail here because there is already a lengthy discussion on the website.
The second legal claim would be for something known as "proprietary estoppel". Sometimes the line between the two legal claims becomes a little blurred but for lawyers they are distinct.
I appreciate that ‘proprietary estoppel’ is not a phrase that people other than lawyers would ever use so it needs an explanation.
The legal principle of "proprietary estoppel" has arisen as a result of judicial decisions over the years, so it is to be found in case law rather than in any Act of Parliament. As such it is slightly unclear, and some judges have said that it is important that it should remain flexible, because it is intended to protect the weaker party in some property disputes.
To succeed with a claim based on proprietary estoppel you would essentially have to show the following: –
1. That the other person gave you some kind of "assurance, or if they didn't actually give you an assurance they did not correct you, and allowed you to go ahead believing that they had such an assurance; and
2. That you "acted to your detriment" on the basis of the assurance you had been given, or thought you had been given.
The reported cases about proprietary estoppel, which is where the law is to be found, typically involve farms, where a lot of money is at stake. Typically a younger member of the family will work for many years on the farm for no money or for a very limited wage, on the understanding that the farm will be passed to them in due course, usually when the owner (the older member of the family) dies. But in the event the older member, dies and leaves the farm to someone else and so there is a dispute. In some of those cases the disappointed younger family member has received quite substantial compensation by claiming proprietary estoppel – for example part of the farm might be transferred to them, or they might receive quite a large sum of money.
But those cases are different notably because they involve a very significant detriment on the part of the younger person (many years working on a farm for a low wage) and the farm in issue is very valuable.
In claims concerning ordinary residential properties the house is often less valuable, and the extent of the detriment is smaller – paying for or doing some building work compared with years of labouring of a farm.
There is a further issue as follows. Where someone successfully establishes a claim for proprietary estoppel in the courts, the judge then has to decide what remedy is appropriate. In the end it is very much in the discretion of the judge to decide what they think is fair, but there are broadly two trains of thought. In some cases the judge has said that the disappointed claimant should be given that which he was assured he would get – that is to say the farm (or most of it) in farming cases. On the other hand in lesser cases the judge has said that it should simply be reasonable compensation for whatever it was the person spent in reliance on the assurance sometimes the cost of the work or the amount by which the work has increased the value of the house, whichever is less.
But proprietary estoppel claims have a slightly lower threshold than claims for a share of the value of the house, which lawyers refer to as claims for a “trust”. Because in the case of the trust you have to demonstrate a fairly clear agreement that you would get a share of the house for the work you do, whereas in proprietary estoppel it can be something less than that – perhaps you would be allowed to live there, or that you would be fairly paid for the work you have done.
Disputes between unmarried couples about property are very technical in nature and you should get advice about your own situation if you are uncertain where you stand.
Health Warning :This post is intended as a general guide only – It is important to obtain expert advice about your own situation, I can certainly accept no responsibility for any loss you might suffer as a result of relying purely on the information on this website.
John Pratley is an expert divorce lawyer, who has more than 25 years’ experience advising clients purely about divorce and related family law issues, such as the financial consequences of separating and divorcing. After establishing the first niche family law practice in Bristol, and going on to senior management roles in a national firm, John set up Apple Tree Family Law in 2018. Apple Tree Family Law solicitors specialise in advice about divorce and financial issues.
We are based in Bristol and Exeter, but we have clients all over the UK and further afield. We offer, simply, clear and accurate advice about divorce and family law issues, and the very best client service, for a clear and reasonable price.