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What Does Beneficial Interest Mean?

31 January 2019 - Posted by TalkAboutDebt

Beneficial interest is when you have contributed in some way to the property or household. For example, you have made substantial and identifiable improvements to the household, such as adding a garage or extension to the house. This article explains everything you need to know about beneficial interest.


Do I have beneficial interest in a property?


Whether you have any beneficial interest in the property will depend on the timescale involved. If you have only recently moved in then the beneficial interest in the property will be minimal and therefore the property may not even be a consideration in bankruptcy. However, if you have previously contributed to money, or money’s worth, to the cost of any improvements to this house, this could give you beneficial interest. It would be impossible to list every way in which the property could be of interest to the Trustee in bankruptcy but a few examples may be:

  • You have previously paid a lump sum towards the property.
  • A previous property could have been jointly owned and your share of the profit is now in this house.
  • You may have added an extension and enhanced the value.

The OR may also view the following payments as a minimal beneficial interest in a property:

Please be aware that establishing a beneficial interest would not stop the property being viewed as an asset in your bankruptcy and the OR would have an interest in the bankruptee’s share of any equity, which could lead to the house being sold.


How much beneficial interest do I have to pay?


Your beneficial interest in the property might then be the financial value of that improvement. Please note, beneficial interest is different from having the legal title to a property. The amount of beneficial interest would determine your share in the property.


Transfer of beneficial interest in a property


If you sell your beneficial share and this was done properly through the Official Receiver (OR) or trustee in bankruptcy, then your creditors will not be able to pursue your share. However, if your creditors obtained charging orders before the bankruptcy, those debts will still be charged against the house. You can check the land registry for this information. Once the beneficial share has been sold, you have no interest in the property and no responsibility for the mortgage. If you think there has been an error, you can ask the Or running your bankruptcy for clarification.

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