Tenants in Common, Trusts and Title Splits in Lifetime Mortgages

Title Splits

Title splits come in a few different forms, and in the equity release market, they most often show up when your client has been advised to hold their home as tenants in common (either in equal shares, or unequal shares).

Some splits are routine, while others can stop a case in its tracks until the legal position is clarified. The earlier you spot them, the easier it is to set expectations with your client and avoid delays once an offer is on the table.

In this article, we cover the two main types of splits that advisers come across: 1. ownership splits (tenants in common and trusts) and 2. land/title splits (where part of the land has been transferred or carved out of the registered title).

1. Tenants in common and estate planning

Some estate planners or solicitors recommend tenants in common as part of asset protection and wider estate planning, because each owner can leave their share under their Will rather than it passing automatically to the survivor.

For example, Wills can be drafted so that, when the first spouse dies, the survivor has a life interest and can remain living in the property, but the legal and beneficial interest in the deceased’s share passes to other beneficiaries (often children).

In practice, that arrangement creates a trust when the first spouse dies, which can be entirely appropriate for estate planning, but it can complicate a lifetime mortgage later. It may mean a Deed of Variation is needed, or the trust has to be dismantled before lending can proceed. Either way, it can add legal cost and time, so it’s worth spotting early.

2. Splitting the title to the land

Some title splits are about the land itself, for example, where part of the plot has been sold off, or where a property is simply too large for the purposes of a lifetime mortgage. These are workable, but they need handling carefully.

Land Registry won’t allow a person (or couple) to split a registered title and keep the new title in exactly the same ownership as the retained title. In practice, the carved-out piece usually has to be registered in a different name. This is a key risk point, as the new legal owner will have full legal and beneficial ownership of that land, with no automatic recourse for the previous owner.

Access, boundaries and easements

If your client has transferred or is planning to transfer part of their land, it is extremely important that the retained property is not accidentally left without proper access (in other words, ‘landlocked’). This can happen if access points are blocked or removed when the other part of the title is transferred away.

Where access can’t be avoided, the acting solicitor will need to put the right rights of way in place. These should be granted as easements, so they attach to the retained property and continue to apply if the transferred land is sold on.

Why an early title check matters

Even where a title has been split correctly, problems can still crop up, such as incorrect titles being registered, title plans that do not reflect what was actually transferred, or Land Registry requisitions that were never answered. In the worst cases, the new title has been left unregistered, which will prevent a lifetime mortgage from proceeding until it is resolved.

Where there is more than one title

Where a client owns a large plot, it is not unusual for more than one title to relate to the land. Clients may not want the lifetime mortgage charge to attach to the full extent of what they own, but in most cases, lenders will want to charge every parcel of land in the client’s ownership.

It is important to refer to the valuation to establish how much of the land has been valued and offered on. Borrowers’ solicitors are not provided with the valuation, so it is worth checking with the client early on what they believe has been valued, what the valuer looked at, and what land the offer is based on. Finding out after the offer is issued can cause substantial delays.

Specialist solicitors can download title registers and title plans from the Land Registry and, where appropriate, carry out map searches to confirm the full extent of the land a client owns.

What to ask your client (and what to flag early)

• How is the property owned today - joint tenants or tenants in common? If tenants in common, is there any trust wording/restriction on the title?

• Has any part of the land ever been sold off, transferred to family, or registered under a separate title number?

• If land has been split, does the retained property still have clear, documented access? If not, rights of way/easements may be needed.

• Where there are multiple titles or a large plot, ask what the valuer inspected and what the offer is based on - borrowers’ solicitors won’t see the valuation, so this needs client input early.

• If the client mentions a historic title issue (unregistered transfer, Land Registry requisitions, missing documents), consider introducing a specialist solicitor sooner rather than later.

Sorting issues early

Identifying issues at the outset can avoid unexpected delays later on. If problems are found, clients may be able to go back to their previous solicitor to rectify them. If that is not possible, a specialist solicitor can identify what needs to be done, give a realistic timescale, and provide an estimate of the costs involved to put the title in order so the lifetime mortgage can proceed.

Selling off part of the title to clear a mortgage shortfall

If a client ever needs to sell part of their land to deal with a shortfall when redeeming an existing mortgage, they should be introduced to a specialist solicitor straight away. These transactions are extremely complex and will usually require the lender’s solicitor's involvement, so they are best dealt with on a case-by-case basis.

Title splits and their effect on lifetime mortgage applications

Title splits, whether they’re ownership-based (tenants in common/trusts) or land-based (historic transfers and multiple titles), can affect how quickly a lifetime mortgage case can move. In the equity release market, a basic title check early on, plus a few targeted questions with your client, can help you spot complications, manage expectations and avoid surprises later.

This note is general information only and is not legal or financial advice. Always check the lender's requirements and seek legal advice where needed.

Written in partnership with Carol Nuttall, Solicitor, Adlington Law.