What To Do If A Third Party Claims To Have Interest In Your Property When You Divorce

• Published date: 11 July 2023
• Subject Matter: Litigation, Mediation & Arbitration, Family and Matrimonial, Arbitration & Dispute Resolution, Divorce
• Law Firm: Birketts
• Author: Stephanie Butler and Francesca Skakel

When it comes to property interests, arrangements between friends and family members are often informal. With rising house prices, these arrangements - particularly 'the bank of mum and dad' - are increasingly common. Such arrangements may work well while everyone is on good terms. But what happens if you and your spouse get divorced?

Reaching a financial divorce settlement with your spouse can be difficult at the best of times. However, if a third party has - or alleges to have - an interest in relevant property, this could make matters even more complicated.

Ways in which a third party may have an interest

One spouse may assert that the other is beneficially entitled to property held in the name of a third party, or that they have a proprietary estoppel claim in respect of property held in the name of a third party. For instance, you may believe that your spouse has a beneficial interest in their parents' property because they contributed part of the purchase price of that property.

Alternatively, a third party may have a beneficial interest, or a proprietary estoppel claim, in property held in the legal name of one or both spouses. This is what happened in Pamela Jane Teasdale v Rebecca Sarah Carter v Daniel James Teasdale [2023] EWHC 490 (Fam), 2023 WL 02372885 (the "Teasdale Case"), discussed later in this article.

For more information on when a non-legal owner can acquire a beneficial interest in property, see our previous article "How can I prove that I own a share in a property?". For more information on proprietary estoppel, see our previous articles "You broke your promise! Estoppel in the commercial property context" and "One day my son, all this will be yours".

Resolving matters where an amicable settlement cannot be reached between you, your spouse, and the third party

You or your spouse can commence financial remedy proceedings in the family court if an agreement cannot be reached outside of court (e.g. in mediation, 'around the kitchen table', or between solicitors). In financial remedy proceedings, the court is asked to make a decision about how the matrimonial assets should be split. Often, financial remedy proceedings are needed where there is a purported third party interest in a 'matrimonial asset' and the parties cannot agree on this issue.

If a third party has an interest - or alleges an interest - in relevant property, they may be joined to the proceedings as an "intervenor". This allows the court to determine the nature and extent...