Chapter 6- Trusts of the Family Home

Question 1

What is joint ownership?

Answer 1

When two or more people own land, the land is held on trust. In the case of the family home, the legal and equitable owners will usually be the same.

Question 2

How must legal title in the family home be held?

Answer 2

As JOINT TENANTS

Question 3

What is the difference between Joint Tenants and Tenants in Common?

Answer 3

Joint tenants are equally entitled to the family home. Right of survivorship
Tenants in common have distinct beneficial interests or shares in the family home. The size of the shares can be whatever size the couple wants.

Question 4

What is sole ownership?

Answer 4

One parter might be the sole registered proprietor of the family home. The partner owns the legal title to the home, but might still hold it on trust for themselves and their partner.

Question 5

What are the regimes dealing with separating couples?

Answer 5

Couples who were married or in a civil partnership and subsequently divorce- the family courts are given wide distributive powers under the Matrimonial Causes Act 1973 to determine who gets what.
If the couples were not married, engaged or in a civil partnership, then their affairs are governed by the ordinary principles of trusts law.

Question 6

Where are beneficial interests set out if an express trust has been created over the family home?

Answer 6

In the declaration of trusts.

Question 7

How can a declaration of trusts be made enforceable?

Answer 7

Must be evidenced in signed writing, s53(1)(b)

Question 8

What does becoming registered co-proprietors of the family home do?

Answer 8

Often, but not always, they will also have created an express trust that deals with the beneficial interests in the home.
An express trust over the family home is much less likely when only one partner is the registered proprietor.

Question 9

What do resulting trusts focus on?

Answer 9

They only focus on contributions to the purchase price that are made contemporaneous with the purchase itself. This comes with a number of consequences when it comes to purchasing family homes:
(a) Only contributions to the purchase price count
(b) Only contributions made at the time of the purchase count. A cash payment towards the deposit, or the completion price gives rise to a resulting trust
(c) Most importantly, a resulting trust only recognises monetary contributions. I.e, not staying at home with the kids.

Question 10

Common intention constructive trusts of the family home- the home is jointly owned

Answer 10

If both partners are registered a Co-proprietors, they hold the legal title to that home jointly and equally. If the couple have not created an express trust that addresses the beneficial interests in the home, it is presumed that each partner’s beneficial interest in the home is also joint and equal.
Equity follows the law. The law is trying to do what is right by fairness.
It is NOT an express trust, but an implied trust.
This is a common intron constructive trust.

Question 11

What should a claiming partner do to persuade the court that they should be entitled to a larger beneficial interest?

Answer 11

Not only must they evidence an agreement or common intention, but also that they relied on that agreement/ intention to their detriment.

Question 12

How can a partner prove they relied on something to their detriment?

Answer 12

(a) If the partners come to a clear agreement as to how the family home would be owned on which the claiming partner relied to their detriment, the beneficial interests will be that which the partners have agreed.
(b) If an agreement or common intention as to the shares of the family home have changed over time, that change must be supported by detrimental reliance. Eg, funding an extension to show they want a bigger share.
(c) In the absence of a clear agreement, the court will require evidence that the parties intended to share the house unequally and so acted to their detriment, before it will survey the whole course of dealing between the partners relevant to their ownership and occupation of dealing between the partners relevant to their ownership and occupation of the property to ascertain what is fair having regard to that course of dealing.

Question 13

What factors may the court take into account when surveying the whole course of dealing between partners?

Answer 13

(a) advice or discussions at the time of purchase
(b) the reasons why the home was transferred into their joint names
(c) the nature of the partners’ relationship
(d) whether they had children for whom they had a responsibility to provide a home
(e) how the purchase was financed, both initially and subsequently
(f) how the partners arranged their finances
(g) how they discharged the outgoings on the home and other household expenses

Question 14

Common intention constructive trusts of the family home- the home is solely owned

Answer 14

In the absence of an express trust, the other partner may be able to secure a beneficial interest in the home if a common intention constructive trust can be established.
The partner whose name is not on the legal title, has the burden of establishing that they are entitled to a beneficial interest in the first place.

Question 15

What are twos stages that must be followed where the family home is solely owned in a common intention constructive trust?☺️

Answer 15

STAGE 1- the common intention constructive trust must be established (where the hot is jointly owned, this is presumed) and;
STAGE 2- the beneficial interests under the trusts must be determined or quantified.

Question 16

What is Stage 1- Establishing the trust?

Answer 16

Rosset case.
A claiming partner can only obtain an interest in the family home under a common intention constructive trust if it can be shown that:
(a) there was a common intention between the partners that both were to have an interest and that
(b) the claiming partner acted to their detriment in reliance on that common intention
Hudson v Hathaway (2022) confirms that if a claiming partner wants to establish
(for solely owned) a constructive trust of the family home; or
(where jointly owned) that they have the greater beneficial share of the family home…
then ‘detrimental reliance’ must always be proven.
Although the detrimental reliance need not be monetary, just substantial.
There are two methods in establishing these concepts.
Method 1: the common intention his express
Method 2: the common intention is inferred from conduct.

Question 17

Method 1: Express common intention + detrimental reliance

Answer 17

You generally need to find a (typically oral) agreement or understanding between the couple that the home is to be shared beneficially, i.e that both parties would have a share in the home.
If an express common intention can be established, then it is necessary for the claiming partner to show that they acted to their detriment or significantly altered their position in reliance on the agreement.
Financial contributions towards the house (eg mortgage/ alterations), or substantial payments of housekeeping expenses suffice. Non- monetary domestic contributions such as being house mum may count too.

Question 18

Method 2: Inferred common intention + detrimental reliance

Answer 18

If there is no express common agreement or understanding about how the family home is to be owned, the court has to look at the couple’s conduct and see whether it can infer a common intention that both parters were to have an interest. A common intention can generally only be inferred form:
(a) a direct contribution to the purchase price
(b) a significant contribution to mortgage payments falling due after the purchase.

Question 19

What is Stage 2- Quantifying the beneficial shares?

Answer 19

Once a common intention constructive trust has been established, the next stage is to quantify the size of the partners’ respective beneficial interests or shares in the family home.
By contrast to homes in joint names, there is no presumption of joint beneficial ownership.

Question 20

What if there is no agreement between partners regarding their beneficial interests in common intention constructive trusts?

Answer 20

The court will award such shares as it considers fair having regard to the role course of dealing between the parties in relation to the property.

Question 21

What is proprietary estoppel?

Answer 21

It prevents someone from going back on their work in relation to property, when it would be unfair to do so.
It asks whether it would be ‘unconscionable’… if the answer is yes, it will provide some form of relief to the party that has suffered the detriment.

Question 22

What two stages are involved in proprietary estoppel?

Answer 22

Stage 1- the estoppel must be established
Stage 2- the estoppel must be satisfied

Question 23

What is Stage 1 in PE?

Answer 23

Establishing the Equity.
There are three key elements to establishing a claim in PE:
(a) Assurance
(b) Detriment
(c) Reliance

Question 24

What is assurance?

Answer 24

The legal owner must have made a representation or created or encouraged an expectation that the claiming party would become entitled to an interest in land. The assurance can either be
- active- the legal owner tells the claiming partner that they have or will have an interest in the land
- or passive- there is conduct on the part of the claiming party that clearly suggests that they think they have a right to property. The legal owner knows this but remains silent and fails to disabuse the claiming party of their belief.

Question 25

What is detriment?

Answer 25

The claiming party must show that they acted to their detriment in reliance upon the assurance made. The detriment need not be of monetary value, as long as it is substantial.
Eg, spending money on refurbishing
working without adequate remuneration
giving up a job and moving to a new area
Looking after someone who is gravely ill.

Question 26

What is reliance?

Answer 26

The assurance and detrimental must be connected to echoer. The assurance must cause the claiming party to act to their detriment.
The assurances relied upon do not need to be the sole reason for the claiming party’s conduct.
A claim in PE can fail if it can be shown that the claiming party acted for reasons other than assurance.

Question 27

What is Stage 2 in PE?

Answer 27

Satisfying the equity (remedies)
Once the elements of PE have been made out, the court have a discretion over whether a remedy should be awarded, and if so, what type?

Question 28

What remedies can the court grant in relation to PE?

Answer 28

(a) transfer of the legal ownership in land
(b) grant of a lease
(c) some right of occupancy
(d) financial compensation; or
(e) a beneficial share in the home

Question 29

What 5 step approach will the court usually take in exercising its discretion?

Answer 29

Step 1- Is the legal owner’s repudiation of their assurance unconscionable, given the claiming party’s detrimental reliance? If the estoppel has been established (Stage 1), then the answer will ordinarily be yes.
Step 2- If so, the court will ordinarily hold the legal owner to their assurance. If the legal owner promised to transfer property, the court should ordinarily enforce that promise by transferring the property to the claiming party
Step 3- The burden is on the legal owner to prove that enforcing the assurance would be all out of proportion to the detriment sustained by the claiming party. If established, the court may be restrained to limit the remedy granted
Step 4- If the assurance involved the transfer of property on the legal owner’s death, it might be possible for the court to order the transfer of that property whilst the legal owner is still alive, but the court should generally require a discount for accelerated receipt.
Step 5- The court should consider any remedy, ‘in the round’, asking itself whether the remedy would do ‘justice between the parties, and whether it would cause injustice to third parties

Question 30

When might a claiming partner under PE find themselves barred from obtaining a remedy?

Answer 30

(a) if the laming party’s conduct is unconscionable, they they may be denied the relief to which they would have otherwise been entitled… He who comes to equity must come with clean hands.
(b) an unreasonable delay in bringing a claim in PE may defeat the claim…. Delay defeats equity.