Who Pays Legal Fees in a Forced House Sale

In the UK, a forced house sale typically arises from a court order following a dispute between co-owners, divorce proceedings, or debt recovery. When this occurs, the legal fees associated with the sale can become a point of contention. However, there are well-established principles that determine who pays for what, depending on the reason for the sale and the decisions made by the court.

Understanding how legal fees are allocated can help those involved prepare for the financial consequences of a forced sale, whether you are the one initiating the sale or the one opposing it.

What Is a Forced House Sale?

A forced house sale happens when one party is compelled to sell a jointly owned property, usually through legal action. Common examples include one co-owner wanting to sell while the other refuses, a relationship breakdown where both parties cannot agree on what to do with the home, or a creditor securing a charging order and forcing a sale to recover debts.

The most common legal mechanism used is an application under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA), where a party applies to court for an order to sell the property. In divorce cases, the court may issue a financial remedy order under the Matrimonial Causes Act 1973.

General Rule on Legal Costs

In most civil legal proceedings, including forced house sales, the general rule is that the losing party pays the winning party’s legal costs. This means if you bring a claim to force the sale and the court agrees with you, the other party may be ordered to cover your legal fees, either in full or in part.

However, the court has discretion to allocate costs differently. If it believes both parties acted reasonably, it may order each side to bear their own legal fees. In cases where behaviour was obstructive or unreasonable, the court is more likely to penalise that party with a cost order.

Legal Fees Related to the Sale Process

Once the court orders the sale of the property, the associated sale costs such as estate agent fees, conveyancing fees and disbursements are usually paid from the proceeds of the sale. These costs are deducted before any remaining equity is split between the parties.

If a solicitor is appointed to manage the sale on behalf of both parties, their fees are typically shared or taken from the sale proceeds. The court may also appoint a trustee or enforcement officer in certain cases, and their costs will also be paid from the final proceeds.

Debt Recovery and Charging Orders

In cases involving debt recovery, a creditor may obtain a charging order against a debtor’s share in a property and later apply for an order for sale. If successful, the creditor’s legal fees may be added to the debt, increasing the amount that must be paid out of the debtor’s share. The creditor will generally not pay for the sale process itself unless the court decides otherwise.

The property will still need to be marketed and sold properly, often through an estate agent, and the sale expenses will be deducted before paying the creditor and the other owner, if applicable.

Disputes Between Co-Owners

When co-owners cannot agree on whether or when to sell a property, one may apply to court under TOLATA. In these cases, legal fees can be significant, especially if the dispute is long and complex. While the successful party may be awarded costs, this is not guaranteed. If both parties have contributed to the breakdown in communication, the court may decide each party should pay their own way.

If the sale is granted, the court will usually order that the sale costs be paid from the property value, including legal fees associated with conveyancing and any administrative or trustee services.

How Legal Fees Are Recovered

If a cost order is made by the court, the winning party may recover legal fees directly from the other party or request that they be paid from that party’s share of the sale proceeds. The court will provide directions on how funds should be distributed following completion.

It is important to note that legal costs can quickly reduce the net equity available after the sale, especially if the property has limited value or is subject to a large mortgage. Parties involved in a forced sale should seek early legal advice to minimise unnecessary costs and avoid further complications.

Conclusion

In a forced house sale, legal fees may be paid by one party, shared between both, or deducted from the property’s sale proceeds, depending on the circumstances and court direction. The general rule is that the losing party in legal proceedings may be liable for the other’s costs, but courts have wide discretion. Sale-related fees such as estate agents and conveyancers are typically settled from the proceeds before equity is divided. Getting professional advice early on is key to navigating the financial impact of a forced sale and ensuring that legal obligations are met fairly.