Trusts of Land: Implied Co-ownership

Question 1

What is the difference between express and implied co-ownership of land?

Answer 1

Express co-ownership occurs when the legal estate is conveyed or transferred into the joint names of the co-owners, making the co-ownership visible on the title.

Implied co-ownership arises through trusts, such as when one party is the legal owner but both parties contribute financially, potentially leading to an equitable interest for both under a trust.

Question 2

What formalities must be complied with to establish an express trust of land?

Answer 2

To establish an express trust of land, it must be evidenced in writing as required by Section 53(1)(b) of the Law of Property Act 1925.

This often becomes problematic in relationships where parties do not formalize their intentions regarding ownership until a dispute arises.

Question 3

How can someone establish an implied trust to claim a share in the equitable interest of a property?

Answer 3

If an express trust cannot be established, an implied trust may be claimed under Section 53(2) of the Law of Property Act 1925, which does not require formalities.

This includes resulting trusts, which are based on the financial contributions of the parties, and constructive trusts, which are based on the parties’ intentions and actions.

Disputes under these trusts are governed by TOLATA 1996.

Question 4

When does a resulting trust commonly arise in the context of property ownership?

Answer 4

A resulting trust arises when two or more people contribute to the purchase price of property, but the legal title is registered in the name of only one of them.

Question 5

How are contributions to property considered under a resulting trust?

Answer 5

Contributions directly towards the purchase price of a property can lead to a resulting trust in favor of the contributors.

The equitable interest held is proportional to the size of each contributor’s direct financial input, excluding payments intended as gifts or loans (Bull v Bull[1955]).

Question 6

Can non-direct financial contributions to a property lead to an equitable interest under a resulting trust?

Answer 6

Non-direct contributions may not establish a resulting trust unless they can be seen as direct contributions to the purchase of the property (Curley v Parkes[2004]).

Legal fees, mortgage payments, and other ancillary expenses typically do not give rise to an interest under a resulting trust.

Question 7

How do mortgage payments influence the establishment of a resulting trust?

Answer 7

Mortgage payments made after the purchase of a property do not count towards establishing a resulting trust.

The trust is considered to arise at the time of purchase, with the mortgage borrower deemed to have provided their share of the purchase price at that time.

Question 8

What impact does mortgage financing have on the application of resulting trusts?

Answer 8

The reliance on mortgage finance has diminished the importance of resulting trusts in property disputes.

Instead, constructive trusts, which can consider a broader range of contributions and intentions, are more commonly applied to determine equitable interests in properties financed through mortgages.

Question 9

What is a constructive trust and how is it imposed in the context of co-ownership of land?

Answer 9

A constructive trust is imposed by the court to recognise the equitable interest of individuals in property due to their contributions or agreements, despite not being legal owners.

It addresses situations where, based on the parties’ actions or agreements, equity demands recognition of a beneficial interest in property.

Question 10

According to Lord Bridge in Lloyds Bank plc v Rosset, what must be shown to establish a constructive trust?

Answer 10

Lord Bridge stated that a constructive trust is established by evidence of an agreement between the partners to share the property beneficially and action to their detriment based on that agreement.

Direct contributions to the purchase price or mortgage payments can justify a constructive trust.

Question 11

How do direct contributions affect the imposition of a constructive trust?

Answer 11

Direct contributions to the purchase price or mortgage payments by a non-legal owner are crucial for inferring a common intention to share the equitable interest in property, forming the basis for imposing a constructive trust.

Question 12

How do mortgage payments influence the establishment of resulting versus constructive trusts?

Answer 12

While mortgage payments do not lead to a resulting trust as they’re seen as repaying a debt for a purchase that already occurred, they can be used as evidence of conduct inferring a common intention to establish a constructive trust.

Question 13

What role does detriment play in establishing a constructive trust?

Answer 13

In establishing a constructive trust, the non-legal owner must act to their detriment or significantly alter their position based on the agreement or understanding that they would share the equitable interest, showcasing the reliance on this shared intention.

Question 14

What are the two situations outlined by Lord Bridge in Lloyds Bank plc vRosset[1991] where a court could impose a constructive trust?

Answer 14

Lord Bridge identified two scenarios for imposing a constructive trust:

1. There is clear evidence of an agreement, arrangement, or understanding to share the equitable interest, coupled with action to the detriment based on that agreement.
2. Absence of an explicit agreement, where conduct of the parties leads to an inference of a common intention to share the equitable interest, with direct contributions towards the purchase price or mortgage payments being pivotal for such inference.

Question 15

How do the cases of Eves v Eves [1975] and Grant v Edwards [1986] illustrate the establishment of a constructive trust through deceitful statements?

Answer 15

In Eves v Eves [1975] and Grant v Edwards [1986], constructive trusts were established through deceitful statements made by the legal owners.

In Eves v Eves, the legal owner falsely stated that the property would have been in joint names if not for the partner being under 21.

In Grant v Edwards, the excuse was that joint ownership could negatively affect divorce proceedings.

Despite the deceit, these statements, relied upon by the non-legal owners, led to the establishment of a constructive trust, demonstrating the courts’ willingness to recognize equitable interests based on the reliance and detriment principle.

Question 16

What actions are considered an act to the detriment in the context of establishing a constructive trust based on reliance on an agreement?

Answer 16

Actions considered as detriment in the context of a constructive trust include:

1. Making significant financial contributions towards home improvements or renovations.
2. Working unpaid in the legal owner’s business.
3. Directly paying a portion of the home’s purchase price.

Actions not considered as detriment include
1. routine child care,
2. occasional bill payments not related to direct contributions to the home, and
3. general household labor without a direct impact on the property’s value.

Question 17

Why does an oral agreement about the ownership of equitable interest fail without evidence of acting to the detriment?

Answer 17

An oral agreement about the ownership of equitable interest in property fails without evidence of acting to the detriment because, in the absence of detriment, such an agreement is seen as an unenforceable express trust of land due to lack of written evidence.

Acting to the detriment or significantly altering one’s position based on the agreement is necessary to overcome this limitation and establish a constructive trust.

Question 18

How does the motive for acting to the detriment impact the establishment of a constructive trust?

Answer 18

The motive behind acting to the detriment is crucial for establishing a constructive trust.

Actions taken out of love and affection for the legal owner, without a direct link to an agreement about property ownership, are not sufficient.

Detriment must be directly related to the reliance on the agreement for sharing the property, as highlighted in Grant v Edwards [1986], distinguishing acts motivated by the expectation of obtaining a share in the property from those motivated by other reasons.

Question 19

What is required to establish a constructive trust when there’s no explicit agreement to share the equitable interest?

Answer 19

To establish a constructive trust without an explicit agreement:

1. Conduct: There must be conduct from the parties, such as direct financial contributions towards the purchase price, indicating a common intention to share the equitable interest.
2. Detriment: The non-legal owner must have acted to their detriment or significantly altered their position based on this inferred common intention. This includes scenarios where the majority of the home purchase is financed through a mortgage, and the non-legal owner contributes towards mortgage repayments or the initial purchase price.

Question 20

How do resulting and constructive trusts differ in the context of property co-ownership, especially regarding the basis for trust formation and the determination of a non-legal owner’s share?

Answer 20

Resulting trusts are based on the presumption that a non-legal owner’s financial contribution towards the purchase price of property results in them acquiring an equitable interest proportional to that contribution. This presumption can be rebutted by evidence suggesting a different intent, like a gift.

Constructive trusts, on the other hand, are established either through an express, albeit informal, agreement that non-legal owners should acquire an equitable interest or inferred from the parties’ conduct. Unlike resulting trusts, where the share is directly proportional to the contribution, the size of the share under a constructive trust is at the discretion of the courts and depends on the agreement’s terms or the extent of the non-legal owner’s detriment based on reliance on this agreement or common intention.

Question 21

How do courts determine shares in property under constructive trusts?

Answer 21

Courts consider the entire conduct between parties, including financial and non-financial contributions.

In Drake v Whipp, it’s noted that common intention about share sizes isn’t required.

Stack v Dowden emphasizes considering the whole course of dealings related to the property.

Question 22

What are the practical implications of applying different trust principles, as demonstrated by the Drake v Whipp case?

Answer 22

The Drake v Whipp case highlights the practical implications of applying different trust principles.

Initially, the case was treated under the resulting trust principle, granting Mrs. Drake a 19.4% share. However, upon appeal and the application of constructive trust principles, her share increased to 33.3%.

This shift underscores how the choice between resulting and constructive trusts can significantly impact the division of property shares, demonstrating the importance of the underlying trust principle in determining equitable shares.

Question 23

When are resulting trusts still relevant despite the preference for constructive trusts?

Answer 23

In commercial or investment contexts where property isn’t for cohabitation.

Laskar v Laskar shows resulting trusts apply when non-legal owners’ contributions directly affect their share, focusing on investment over personal relationships.

Question 24

What is necessary for a constructive trust to be recognized in property disputes?

Answer 24

Direct contributions to the purchase price or mortgage payments can infer a common intention to share property.

This principle is clarified in Lloyds Bank plc v Rosset, highlighting the necessity of financial involvement for recognizing constructive trusts.

Question 25

Why do courts prefer constructive trusts over resulting trusts in property co-ownership disputes?

Answer 25

Constructive trusts allow for a flexible assessment of both direct and indirect contributions, adapting to modern financing methods like mortgages.

Stack v Dowden illustrates this preference, enabling courts to account for the varied ways parties contribute to property.