Resulting Trusts (implied trusts) Flashcards
what is an implied trust?
trust arising by operation of law as a response to particular circumstances
the legal owner did not intend to create it
it arises to correct the fact that legal ownership does not reflect what equity recognises to be the true beneficial ownership
what is a resulting trust?
arises where the legal owner has transferred ownership to a third party but equity recognises that they should retain their beneficial interest
they can either arise automatically or they can be presumed
when does a resulting trust arise automatically?
where a transfer on trust fails - this ensures that property returns to the settlor
who ever has legal title will be holding it on trust for the original owner who will have beneficial ownership - and can exercise SV rights to collapse the trust and regain legal title
this may happen when:
- a trust fails from the outset if the trust does not satisfy one of the three certainties
- a trust fails after it is validly created - e.g., runs the perpetuity period, or the purpose of a non-charitable trust is frustrated but surplus assets are ledt
when is a resulting trust presumed?
where a person makes a gratuitous transfer of property to a third party, equity raises the presumption of a resulting trust held by the third party for the original owner
this can be rebutted by evidence that the transferor did not intent that property be held on trust for them
when is there a presumed resulting trust for the transferor if they make a transfer of their property to a third party?
where the transfer is gratuitous and there was no intention to make the gift
when is a presumed resulting trust created when a person pays for an asset but a third party has legal title?
2 cases - paying full or part price
(1) if A pays the full price of an asset but B has legal title, equity presumes that B holds the asset on trust for A (and A has full beneficial ownership
(2) if A pays part of the price of an asset but only B has legal title, equity presumes that B holds the asset on trust for A and B in proportions to reflect their respective contributions
if A pays part price of a house which B is the only registered owner of - so that equity presumes B holds it on trust for A and B - what are the beneficial shares of A and B?
equitable title is held in proportions to reflect the parties’ contributions to the purchase price
- if A and B pay equal shares = B holds it on trust for A and B as tenants in common in equal shares
- if A and B do not pay equal shares = B holds it on trust for A and B in proportion to how much they each contributed to the purchase price (as tenants in common)
if A contributes 70% and B contributes 30% of purchase price of a house, and both are registered as legal owners, how is equitable ownership held?
A and B are joint legal owners
A and B hold the house on trust for A and B as tenants in common - A has 70% equitable share and B has 30% equitable share
