When a mortgage is secured against a property, the lender will always seek to ensure that their interest takes priority over the rights or interests of any adults living at the property.

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To ensure the lender is not prevented from repossessing and selling the property if the terms of the loan are breached, the lender will require any non-owning adult occupiers to sign an agreement stating that any interest they may have in the property will rank behind the interest of the lender.

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There are many ways in which a person can acquire an interest in a property, even if they are not the owner. This is known as beneficial interest. An adult who lives in a property in which they also have a beneficial interest in may have a number of rights that could make it difficult for a lender to repossess the property.

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Ways in which a person may acquire an interest in the property include:

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• Marriage

• Common Intention Constructive Trusts - this is where unmarried parties intended that the non-owner would acquire a beneficial interest in the property and the non-owner acts to their detriment believing they are entitled to a share in the Property

• Financial contributions - for example contributing towards the purchase price, mortgage repayments and costs of maintenance or improvement 

• Proprietory estoppel - this is where the non-owner has acted to their detriment based on assurances by the owner that they have or will be given, an interest in the property

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Any adult occupier who does have a beneficial interest in a property should think very carefully before entering into such agreements. Where we identify that an occupant may have a beneficial interest, we may be able to offer solutions to assist the occupier in protecting their interest.

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If you have been advised to take Independent Legal Advice in relation to an Occupier's Consent Deed or a Deed of Postponement, please get in touch to see how we can assist.