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Trusts of the Family Home, Stage 2: quantify the beneficial shares,…
Trusts of the Family Home
when purchasing a house in joint names, couple can finalise a valid declaration of trust by completing relevant section of TR1.
Sole ownership
if there is an express trust, law can rely on that
if not, if couple were married or civil partnership and got divorced, we can use the Matrimonial Causes Act 1973 to determine who gets what out of the divorce. If not married, engaged or in CP, affairs are governed by ordinary trusts law.
express trusts of family home
if couple have created an express trust over family home, their beneficial interests are set out in the declaration of trust. to be enforceable, it must be evidenced in signed writing to comply with s53(1)(b) LPA 1925.
if one has not been created need to consider if an implied trust has been created > remember no formalities apply when creating an implied trust over land.
if someone contributes money to purchase property in the name of another, a resulting trust will often be presumed giving them a B interest, commensurate with amount of contribution. BUT, only contributions towards purchase price count at the time of purchase. Only monetary contributions count.
Common intention constructive trusts of family home
home is jointly owned
it is presumed parties will hold the legal title jointly and equally - not an express trust
Presumed equal shares- if a claiming partner wants to persuade court they should get larger B share, not only must they evidence an agreement or common intention to that effect, but also that they relied on that agreement/ intention to their detriment. if court decide not to do equal shares- court will shares in regards to what is fair having regard to the whole course of dealing between partners in relation to the property.
Home is solely owned
If only one partner is the registered proprietor, then in the absence of an express trust, the other may be able to secure a B interest IF a common intention constructive trust can be established. Partner not on legal title has burden of establishing they are entitled to a B interest.
stage 1- establish the trust as there is no automatic trust - must be established
show: 1. there was a common intention between partners that both were have an interest AND 2. the claiming partner acted in their detriment in reliance on that common intention. the reliance does not have to be money but must be substantial
method two of proving this: common intention inferred from conduct
a common intention can be inferred from A. a direct contribution to the purchase price; or 2. a significant contribution to mortgage payments falling due after the purchase.
Can only show this via money!
Method one of proving this: express common intention
need to find (typically oral) agreement or understanding between couple that home was to be shared beneficially ie that both parties would have an interest in the home. Here, detriment can be shown via money or domestic things!
PE is another method by which partner may become entitled to interest in family home
stage 1- establish the estoppel
got to show there was: 1. assurance (can be active ie telling non-legal owner they will have an interest in land, or can be passive ie, conduct suggests they think they have a right to property and legal owner known this (or must have known it) but remains silent and fails to disabuse the claiming party of their belief), 2. detriment (need not be expenditure of money) and 3 reliance (the assurance and detriment must be connected ie, assurance must cause claiming party to act to their detriment but dont have to be SOLE reason for claiming party's conduct BUT claim will fail if you can show that claiming party acted for reasons other than the assurance/
stage 2- satisfy the estoppel (remedies)
remedies include: 1. transfer of legal ownership in land, 2. grant of a lease, 3. some right of occupancy, 4. financial compensation; or 5. a B share in the home.
court normally adopt 5 stage approach: 1. is the legal owner's repudiation of assurance unconscionable? 2. if so, court will ordinarily hold legal owner to their assurance. 3. burden is on legal owner to show enforcing the assurance would be out of all proportion to detriment sustained by claiming party. if established, court may be constrained to limit the remedy granted. 4. if the assurance involved the transfer of property on the legal owner's death, it might be possible for court to order transfer of that property whilst the legal owner is still alive, but the court should generally require a discount for accelerated receipt. 5. court should consider any remedy 'in the round' by asking whether the remedy would do justcie between the parties.
may be barred from remedy in PE is claiming party's conduct has been inequitable or unconscionable OR there has been an unreasonable delay in bringing the claim in PE.
Stage 2: quantify the beneficial shares
there is no presumption of joint beneficial ownership. if parties come to an agreement= we respect that. If there is no such agreement, it is more likely the court will award shares as it considers fair having regard to the whole course of dealing between the partners in relation to the property.
Resulting trust of the family home