Co-ownership disputes over commercial property can be just as messy as the personal kind, but the legal path is often less understood by business partners. The same rules that govern a couple buying a house together also apply to industrial units, farmland, or office space shared by two or more people.
Many small businesses own some form of physical asset. Sometimes the company itself — a separate legal entity — holds the title. Other times, particularly in partnerships or unincorporated businesses, the asset sits in multiple individual names. When those individuals fall out, the question of what happens to the building can quickly become a legal battle.
How the law sees co-owners
Under English law, co-owners hold property on trust for each other. You cannot split a physical building down the middle, so each party holds the other’s share in trust. This relationship is governed by the Trust of Land and Appointment of Trustees Act 1996, often called TOLATA.
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The first thing to establish is who owns the property and how. In England and Wales, ownership is split between legal and beneficial interests. The legal owner is the name on the title deeds. The beneficial owner holds a share of the equity, usually based on financial contributions. Sometimes they are the same person. Sometimes they are not.
Joint tenants versus tenants in common
If it is registered in multiple names, the next question is how they hold it. Joint tenancy means each owner gets a 50% beneficial share, regardless of who paid what. It also comes with the rule of survivorship: if one joint tenant dies, their interest automatically passes to the other. That applies even in a commercial property context, though this article does not cover married couples or civil partnerships.
Tenants in common works differently. Each co-owner holds a share equal to what they contributed. That split is usually recorded in a declaration of trust or on the Form TR1 filed with HM Land Registry. It may also appear in the company’s articles of association. Survivorship does not apply here; if a tenant in common dies, their share goes to their estate, not to the other owner.
What to do when things go wrong
If you are joint tenants and a dispute arises, you can sever that tenancy by serving notice on the other owner. That converts the arrangement to a tenancy in common held in equal shares. Going the other way — converting tenants in common to joint tenancy — is more complicated and requires specific formalities.
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Where no declaration of trust exists, or the details were not recorded on the TR1, an equitable accounting exercise may be needed to calculate each beneficial owner’s share.
Once you understand your legal and beneficial position, the next step is pre-action correspondence. This involves exchanging letters to narrow the issues and try to find a resolution. Settlement discussions or mediation with a neutral third party may help. Under the Civil Procedure Rules, parties must go through this process before issuing court proceedings. The courts see litigation as a last resort.
Going to court under TOLATA
If pre-action steps fail, an application to court can be made under TOLATA. Typical remedies include a declaration of how the building is held beneficially and an order for sale. That sale could be on the open market or to one of the existing owners.
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Litigation takes about two years on average to reach trial. In that time, a lot can happen. Separate proceedings under company law might be running alongside the property dispute. For smaller businesses especially, partnership and boardroom rows can hit day-to-day operations hard.
The usual cost rule is that the loser pays the winner’s legal fees, but how that plays out depends on the claim and the outcome.
Katarina Morgan, a partner at Taylor Walton Solicitors, advises anyone in this position to take legal advice early. Understanding your legal position matters, but so does thinking about tactical steps to reach a swift and cheap resolution. That is even more urgent when the people arguing over the building are also the people running the business.
