I have a client with serious mental health problems. She was discharged after spending nearly 2 years in a psychiatric hospital in July.The family home is up for sale (she is separated from her husband)so HB are ignoring it for 6 months but Income Support are looking at the issue now. At some point, she signed over all the rights on the property to her husband and was taken off the deeds. The above regulation is the one that is being applied i.e. did she hand over any claim to the house to make herself eligible for benefits. She does not know anything about the value of the property, how much of the mortgage has been paid or anything else she is being asked and says there are debts to be paid out of any profit. I thought i might write to the husband and try to get satisfactory answers to the DWP questions but would appreciate suggestions. Also, I think a rat has been smelled re how she came to sign her rights over (HB have been asking about her capacity, did she have legal advice at the time etc.if we ask her anything about this, she panics and we are trying to avoid any more hospital admissions).

Are you saying that the DWP are trying to construct some kind of deprivation case because she has divested herself of legal title to the property?

If so, then they are on a hiding to nothing. The law of equity demands that (in the absence of evidence that the cash contributions of a person to the purchase price of the house were a gift or loan) s/he who contributes cash shall retain a beneficial interest in the property (whether s/he has legal title or not) and have their investment reimbursed from the proceeds of sale in direct proportion to their percentage contribution if they are tenants in common. Joint tenants will benefit 50% each if 2, 33% if 3, and so on.

When she makes a claim for IS then she (or someone on her behalf) needs to supply information as to her actual (if any) contributions to the purchase price of the property (both deposit and mortgage payments) and the DWP must obtain a proper valuation of the market value of the property.

Your client’s beneficial interest is her percentage contribution of the proceeds of sale after 10% has been deducted for sale costs and after anyone else with a higher priority charge on the property (i.e. mortgage lender) has also been reimbursed.

This will be a case about actual capital not notional. She either has a beneficial interest or she doesn’t. As I hinted earlier a person cannot deprive themselves of capital by divesting themselves of legal title only. She has to divest herself of any beneficial interest she has for notional capital regs to bite. Hope this helps a little.

Regards
Paul