I Also Own A Share Of The Property!

It is quite frequently the case that two or more people buy property and only one of them is registered as the legal owner. This may be for a number of reasons, such as one of the parties might have difficulty obtaining a mortgage. How does the person who is not the legal owner, establish a interest in the property and the extent of the interest?

The starting point is that a person who is the sole legal owner of property is the absolute beneficial owner and anyone claiming a beneficial interest must prove that the legal owner holds the property upon trust to give effect to his interest: see Pettitt v. Pettitt [1970] AC 777 at 813-814, HL per Lord Upjohn.

However, depending on the circumstances this is not too problematic to overcome. Beneficial ownership may be established on the basis of an express, constructive or a resulting trust. Very often at the point of purchase the conveyancing solicitor will ask the purchaser whether any other person is to have an interest in the property. If so, a Declaration of Trust will be drafted and this will be conclusive of the parties interest save in exceptional circumstances.

In the absence of an express Declaration of Trust the courts will look to impose either a resulting or constructive trust to give effect to the parties common intention. In recent years it has been recognised that the resulting trust approach should not apply in the context of a matrimonial or quasi matrimonial home: Stack v. Dowden [2007] UKHL 17, HL per Lord Walker at para 31

A constructive trust arises where:

(1) There was a common intention that both parties should have a beneficial interest at the time of purchase;

(2) The claimant has acted to his/her detriment in the belief that by so acting he/she was acquiring a beneficial interest; and

(3) It would be unconscionable for one party to deny the other an interest: see Lewin on Trusts at 9-66

A common intention arises either by evidence of an agreement – this can be oral, an informal arrangement or understanding between the parties or from the conduct of the parties: see Lloyds Bank v. Rossett 1 AC 107 at 132E-F, HL.

Detriment is established by evidence that the claimant has done something, which he/she could not reasonably be expected unless he/she was to have an interest in the...