Stepmother wins appeal over partial ownership of her home

The stepmother of a man who bought a home for her and his father has a legitimate claim to partial ownership, the Court of Appeal has ruled.

Chaudhary v Chaudhary concerned a house bought in 1996, for him and the woman, called Mrs BC in case reports. Mrs BC and the Mr Chaudhary senior had three children but insufficient income to secure a mortgage.

Mr Chaudhary junior bought the home in his sole name so the couple could live in the home, but the deposit, a sum of £5,000, was paid for by Mr Chaudhary senior and his wife through loans from family and friends.

The family agreed that the son would be their landlord but Mr Chaudhary senior hoped to be able to buy the property in the future. He later died, however, leaving the woman and her children living in the property. She made housing benefits claims to which she was not entitled and reportedly also did not pay rent due under an agreement with her former husband’s son.

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Mr Chaudhary junior claimed ownership of the property, as well as rent arrears. She resisted these claims, arguing she had sole ‘beneficial interest’ in the property – ie she was entitled to live in the property under the original agreement. At the first court hearing, the judge rejected her argument, saying she had no valid beneficial interest in the property and describing the payment of £5,000 as equivalent to an “arrangement fee”. She was ordered to pay her husband’s son the rent arrears.

She appealed. The Court of Appeal concluded that there was no evidence to suggest the payment of £5,000 was an arrangement fee, and in the absence of conclusive evidence as to the intentions behind it, the payment was most likely intended as a down payment on the property, and not a gift to the younger Mr Chaudhary.

Therefore Mrs BC did have an beneficial interest in the property, equivalent to around eight per cent of its total value. However, the judge rejected a claim that this eight per cent claim meant she was entitled to eight per cent of the profits from the property from the date of its purchase, and this amount should be deducted from the rent arrears due. She would have to make any such claim at the County Courts, but was unlikely to succeed, the Court of Appeal said, due to her fraudulent claims for housing benefit and the amount of time that had passed.