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Third party interests in financial proceedings

View profile for Kiren Dhillon
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When assets are in dispute arising out of a divorce it is increasingly common for a third party to have an interest in those assets and to have to defend their interest by becoming involved in the court proceedings. The court will then usually need to determine the extent of the third party’s interest in a separate procedure before it can resolve the financial claims between the spouses.

The most common scenario is when a relative has an interest in a property that forms part of the matrimonial assets. For example parents who provided money to purchase the family home and they retain an interest in that property. If the couple later decide to divorce, the parents will want to ensure they do not lose the money they loaned the couple.

The following steps can be taken to limit these types of disputes and friends/relatives being embroiled in lengthy and expensive litigation:

1. Ensure that any interest of friends or relatives is accurately recorded in a legally binding document for example a declaration of trust or loan agreement.

2. Register a restriction at the Land Registry so that the party with an interest is notified before the asset is sold.  

3. Keep evidence of any financial contributions made, for example bank statements and correspondence.

The law now requires that if there is a dispute then it is important that a third party be formally joined to proceedings at the earliest opportunity so that the third party’s claim can be dealt with prior to court-assisted negotiations take place between the divorcing couple. This is to assist them by maximising the chance of early settlement thereby limiting the emotional and financial consequences of the dispute so far as possible for all concerned.

The widely recognised TV Edwards Family Finance team has expertise in divorce and the related financial remedies. Kiren Dhillon has particular experience in the interests of third parties most especially in intergenerational disputes. She can be contacted on 0203 440 8000 / Kiren.dhillon@tvedwards.com.

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