Third party interests: elderly parents

It is becoming increasingly common for couples to share their family home with an elderly parent, often on the basis that the elderly parent has financially contributed towards the acquisition or improvement of the home. In many cases, the elderly parent is not included on the title, and no trust deed is executed. If their adult child's marriage breaks down and the elderly parent intervenes in the resulting financial proceedings, the court must first determine whether, and to what extent, the elderly parent has a beneficial interest in the property as a result of their financial investment before it can address the appropriate division of the matrimonial pot. The recent case of A v N (R intervening) [2025] EWFC 371 (B) provides an example of the court's approach in these cases.

This column considers the test that the court will apply to determine beneficial ownership and the impact that this has on the analysis of needs when it is likely that the elderly parent will continue to live with their adult child going forwards. It also offers some practical guidance regarding how to approach these cases.

Joinder of third parties

Whilst joinder is not the main subject of this column (see September 2020 Family Law [2020] Fam Law 1137), it is important to note that a financial remedy order binds only the parties unless a third party is joined. Rule 9.26B FPR 2010 provides that a person may be added if:

• joinder is desirable to resolve all matters in dispute; or
• there is a connected issue involving that person which it is desirable to resolve in the same proceedings.

Where an elderly parent is asserting a beneficial interest in a family home, they will therefore need to be joined to the proceedings.

Where third parties are joined to proceedings, the no order for costs principle does not apply as between the spouse seeking the joinder and the third party who has been joined. The court will begin with a 'clean sheet' and therefore if the third party succeeds in proving his or her case, they may well be successful in claiming their costs. Calderbank offers can also be made.

Establishing the beneficial interest

Where a third party, such as an elderly parent, asserts a beneficial interest in the family home, their claim is determined by trusts principles. Following Stack v Dowden [2007] UKHL 17, [2007] 1 FLR 1858 and Jones v Kernott [2011] UKSC 53, [2012] 1 FLR 45, where there is question regarding beneficial ownership between those in a family relationship (such as an elderly parent and adult child) or cohabiting couples, the court must determine whether there is a common intention constructive trust. In doing so, the exercise that the court must carry out is as follows:

The court must determine whether there was a common intention, either expressed or inferred, for the third party to acquire an interest.

The court will determine whether there is evidence that there was an agreement, arrangement or understanding at the time of the financial investment that the third party should acquire a beneficial interest, and that their financial contribution was not, for example, a gift or a loan. Inferences can be drawn from a direct contribution to the purchase price. Significant capital contributions after purchase may also be sufficient. However, mere contributions to the domestic economy or to improvement works on the property of a cosmetic nature are unlikely to suffice, as such actions are better understood as being principally motivated by the relationship between the parties and the fact of their sharing a home together rather than being motivated by a desire to have underlying ownership of the property.

It is important to note that a common intention cannot be imputed to the parties, and this exercise does not involve consideration of what might be 'fair'.

If common intention is established, has there been detrimental reliance on that common intention?

This will be a question of fact.

If both above criteria are satisfied, the court must go on to determine the extent of the beneficial interest.

Unless there is evidence of an express agreement as to the amount of the third party's beneficial interest, it is at this stage that the court can look at the whole course of dealings between the parties. The court can infer what the parties' intentions were and, if necessary, can also impute intentions to them, considering what might be fair in the circumstances. In this way, matters which would not, in and of themselves, be sufficient to base an inference to share, can still be taken into account.

The burden of proof falls on the party who is not on the title and who wishes to establish the beneficial interest.

Evidence

Evidence of the parties' intentions will be key, which might include contemporaneous documents such as conveyancing documents, records of bank transfers, correspondence and emails. In addition, evidence regarding any increase in value as a result of the third party investment (for example where building works have been carried out) will also be central to quantification of the beneficial interest. In light of the potential costs consequences, it is advisable to consider the evidence carefully at the outset.

A recent example

The recent decision in A v N provides a useful example of the application of these principles. The husband and wife had been married for 29 years. The wife's elderly mother had contributed a significant sum to the purchase price of the family home. The only contemporaneous evidence was the completion statement, which described the contribution as a gift. On balance, the judge determined that this investment had been intended as a gift, and therefore it did not confer any beneficial interest on the wife's mother.

However, soon after the purchase of the property, a second substantial investment was made by the wife's mother, this time to fund some building works to build a self-contained annex, in which she was going to live. This increased the overall value of the property. Separately she also paid for the garden of the property to be redesigned. The judge found that there was no express agreement that the wife's mother would acquire an interest in the home by reason of her funding the building works but went on to consider whether there was sufficient evidence for an inference to be drawn. She had funded a substantial construction project, and had had to borrow funds in order to do so. She had subsequently paid for repairs to the annex roof, and the evidence therefore pointed to the annex being considered as a separate property belonging to her. He therefore drew the conclusion that she must have been understood to have some interest in the wider home referable to the extent of the annex.

There was clear detrimental reliance, particularly as the wife's mother had borrowed money to fund the building works.

Once these two criteria were satisfied, the judge was able to look to the wider picture to assess the extent of the wife's mother's share. In particular, payment for the redesign of the garden, which of itself would not be sufficient to justify a beneficial interest, became relevant. The court was imputing the parties' shares based on a holistic view, which could include an assessment of what was fair, having regard to the whole course of dealings between the parties. Ultimately the judge concluded that the wife's mother had a 12% interest in the net proceeds of sale.

Impact on needs

Once the court has determined if there is a beneficial interest, and its extent, its value will be excluded from the matrimonial pot, but the exercise does not end there. The court must also recognise the practical reality that the elderly parent will usually continue living with their adult child after the divorce and so will take their beneficial interest with them. Recorder Stirling captured this 'circularity' in A v N, in which he assessed the wife's housing needs (which included housing her mother) but also assumed that the mother's beneficial interest would move with the wife to her new property. As he highlighted, a pragmatic approach is therefore required.

Costs

As outlined above, where the third party has been successful in establishing their beneficial interest, it is likely that a costs order will be made in their favour. In A v N, having succeeded in establishing a beneficial interest, the wife's mother also achieved an order that the husband pay 70% of her costs.

As costs of living increase and multi-generational living becomes more commonplace, A v N is a helpful reminder of the court's approach where parental contributions to the purchase of a family home have not been reflected either on the title or in a declaration of trust. These cases are highly dependent on the evidence and can therefore be expensive, and because of the costs rules that apply, may result in hefty costs consequences. In many cases the effect will be somewhat circular, because of the practical reality of the elderly parent moving with their adult child, taking their beneficial interest with them. Pragmatism is therefore key.

Please note this content was originally published in the Family Law Journal, April 2026 edition, best practice section.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, May 2026