Wife retains home despite claims brought by husband’s creditors

A woman has won the right to keep her family home despite attempts by her husband’s creditors to claim a share of the property following his bankruptcy.

Natalie Henderson Solicitor in our dispute team reports on this recent case.

The dispute centred on whether the husband, who left the family home after admitting to an affair, had retained any ownership over the property they had bought together during their marriage.

The couple purchased the house in 2001 in joint names, sharing the mortgage and household expenses. After separating in 2009, the husband said he no longer wanted any interest in the property, agreeing verbally with his wife that the home would be hers, as long as it eventually passed to their children.

Based on this understanding, the wife took over full responsibility for the mortgage payments, household bills, and made improvements to the house over several years, using money from an inheritance she received.

Despite their separation, the legal title to the property remained in both their names. The couple didn’t officially divorce until 2018, and shortly after, the husband was declared bankrupt, with the creditors trying to claim a share of the property as part of his assets.

The wife argued that she was the sole owner of the house, having taken on all financial responsibilities and having acted on her husband’s promise that the home was hers. The husband supported her claim, confirming that he had no interest in the property.

However, the trustees in bankruptcy challenged this, insisting that the husband’s share of the house should be included in his estate.

The court ruled in favour of the wife, deciding that a common intention constructive trust had arisen. This meant that the verbal agreement between the couple, backed by her actions in taking over the mortgage and other expenses, had given her full ownership of the property.

The judge also dismissed the creditors’ counterclaim, which argued that this transfer amounted to a transaction at an undervalue.

In the end, the wife retained full ownership of the family home, and the creditors were unable to claim any portion of it. The judge noted that the husband’s assurances and the wife’s actions in paying the mortgage and taking on all household expenses had created a clear understanding that the property belonged to her alone.

The wife had relied on this agreement to her detriment, by foregoing financial remedy proceedings and investing her own money into the home.

If you would like more information about the issues raised in this article please contact Natalie on 01228 516666 or click here to send her an email.