TRUSTS OF FAMILY HOME Flashcards
LEGALTITLE IN BOTH NAMES
Where the legal title is registered in the names of both par-ties, they hold legal title as** joint tenants** (recall from Land Law that joint tenants own equally and have a right of survivor-
ship). However, equitable interests in property do not have to be held the same as the legal interests, and so joint tenants of the legal interest may hold equitable interests as** joint ten-ants** or as** tenants in common** in equal or unequal shares.
Express Declaration ofTrust
a.Tenants in Common
b.Joint Tenants
Tenants in Common
For legal owners to register their interests as tenants in com-mon in equity, they must make an express declaration stating the proportionate shares in which they hold their equitable
interest. Such a declaration will be conclusive in the absence of fraud or mistake—even if the owners did not make equal
fnancial contributions.
EXAMPLE
Alice and Bert were close friends. They purchased a house together as joint legal owners. Alice provided 70% of the purchase price and Bert provided the rest. The property transfer form declared that Alice and Bert were benefcial tenants in common with each having a one-half interest.
joint tenant
Alternatively, the transfer may state that the legal owners are to hold as joint tenants in equity. In that case, the benefcial interest is held** in equal undivided shares **and will be distrib-uted equally on sale of the property. And again, it does not matter that their actual contributions were unequal.
No Express Declaration ofTrust
If the legal title is registered in the names of both parties but there is no express declaration of trust, the usual presump-tion is based on the equitable maxim** “equity follows the law”**: it is presumed that the equitable interests in the property, like the legal interests, are joint and equal. However, a party can rebut this presumption and claim more if they can prove that both parties intended otherwise—either when the property was purchased or subsequently.
No Express Declaration ofTrust
Proving Common Intention
To determine whether joint owners intended to hold the property in unequal shares, courts will look at the entire course of conduct between the parties in relation to the property, including:
*Advice received by the parties or discussions they had at the point of purchase;
*The purpose for which the property was purchased;
*Their motivation for purchasing the property jointly;
*The nature of the relationship between the parties;
*Whether there are children of the relationship for which the parties have a responsibility to provide a home;
*The way in which the parties arranged their fnances (for example, separate bank accounts);
*The way in which the parties paid bills and other outgo-ings in relation to the property; and
*The reason why one party was authorised to give a valid receipt for capital monies.
LEGALTITLE IN SOLE NAME OF ONE PARTY
Express Declaration ofTrust
- When there is a single legal owner—that is, only one nameis registered—a declaration of an express trust in favourof the non-legal owner would need to be evidenced by a signed writing. If there is a signed writing, the non-legalowner will have an enforceable benefcial interest. The dec-laration can be made** at the date of the conveyance or at a later date**. An express declaration is generally conclusive
of the outcome of the case. - A declaration may be overridden by a propri-etary estoppel claim which purports to contradict the validexpress declaration.
propri-etary estoppel
For a pro-prietary estoppel claim to be established, the claimant must demonstrate the following:
*A** representation was made** or an assurance was given to the claimant;
*The claimant** relied** on the representation or assurance; and
*The claimant** incurred some detriment **as a conse-quence of that reliance.
LEGALTITLE IN SOLE NAME OF ONE PARTY
Common Intention Constructive Trust
Where a claimant attempts to assert an equitable interest in the family home, the courts have been prepared to impose a constructive trust where certain requirements are satisfed.
The claimant must establish that:
*The parties had a common intention, either express or inferred, that the claimant should have an equitable inter-est in the property; and
*The claimant relied to his detriment on the common intention.
Common Intention Constructive Trust
Express Common Intention
To establish that the parties had an express common inten-tion that the claimant should have an interest in the property, the claimant must show that there were actual discussions
between the parties which led the claimant to this belief. The parties’ common intention has to relate to ownership of the land, not merely sharing a home or a life together.
Common Intention Constructive Trust
Inferred Common Intention
*A direct contribution to the purchase price;
*Mortgage payments;
*Payment of household expenses made specifcally to enable the legal owner to make mortgage payments; or
*Substantial renovations to the property by one party.
Common Intention Constructive Trust
Detrimental Reliance
Once common intention has been established, the claimant must demonstrate** detrimental reliance**; that is, that they have signifcantly altered their position in reliance on the agree-
ment. This is easy to show where the claimant has made payments towards the purchase price or has made mortgage payments, but the court will also take into account signifcant payments towards household expenses and acts such as
home improvements. Minor acts, such as decoration or over-seeing builders undertaking renovations, will not sufce.
Common Intention Constructive Trust
Quantifcation of Claimant’s Share
When deciding on the size of the claimant’s equitable inter-est, the court attempts to infer the parties’ intentions. The court will normally give an express agreement efect, but the share agreed can be varied if the subsequent behaviour of
the parties would make the share inappropriate. If there was no express agreement, the court must infer an intention from the parties’ conduct or impute an intention to the parties through their “whole course of dealing” .
Trust of a Family Home - Interests and Shares
