Terms & Conditions

[Anonymous]

Bit stuck with this one. can anyone help please?

Pensioner couple owned a property and sold it in 2000 for £140k. They’d previously borrowed £80k from their son to pay off business debts so the son took the £140k, added another £100k and bought a bungalow for the old folks to live in. In 2004, the son decided to start charging them rent.
New claim for HB was made in Jan 05 and was processed. Just picked it up now on review and the question has arisen as to whether it ever should have been assessed? Are the parents in some way joint owners and treated as not liable?
Hmmmm………..

[markp]

Andy,

What does Land Reg say re owners? If they are named as owners and then transferred ownership to their son then you would have a case for previous owners of the property and therefore them not satisfying Reg 9 (1) (h). Otherwise you are left with the following (in Kevin’s order, sorry for cribbing!)

(1) No true liability;
(2) Liability exists but not commercial; or
(3) Liability contrived

Sorry about the questions but here goes…

What evidence has been offered by the way of proof of liability? Rent book or tenancy agreement? What proof have you got that money has actually changed hands? Do these show any inconsistencies? Has the son stated that he’d evict if rent isn’t paid?

I wouldn’t take the third option unless the evidence for contrivance gives you a strong case.

My final thought is asking about the fact the son took the £140k as repayment for the £80k loan (nice interest rate isn’t it! (sorry couldn’t resist that!)) so you have the question of whether you consider them to have deprived themselves of £60k in any case.

Food for thought and I’m glad that it’s not on my desk!

Do I know what I'm doing? The jury's out on that........................

[Kevin D]

*cough* 😉

(1) No true liability;

[b:0f4c9c7797]Insert: Long tenancy[/b:0f4c9c7797]

(2) Liability exists but not commercial; or
(3) Liability contrived

😈

[Anonymous]

Hello chaps,

Apologies for the delay in replying. The land registry shows the property in the sons name and theyve drawn up a proper tenancy agreement. Son said they could live there rent free but then the son ran into financial problems and started charging rent. No proof money changed hands so I’ll check that out. Son hasnt said yet if he’d evict (but guess he will say that if asked). The deprivation issue is a good one, as is long tenancy.

Thanks for the advice, much appreciated.

Andy

[Anonymous]

Hi Andy,

Another point to consider…

In my opinion there may be a presumption that the parents have an equitable interest in the property.

Where two parties contribute to the purchase price of a property, but the legal title is conveyed into the name of only one party, equity will imply a constructive trust – meaning that the son would be the trustee of the property for himself and his parents as the beneficial owners.

This might make them joint-owners of the property irrespective of the fact that only the son is registered as the legal owner.

[Author]

Posts