Pankhania v Chandegra - A Reminder To Joint Owners Of Property To Sign A Declaration Of Trust

In Pankhania v. Chandegra [2012] EWCA Civ 1438, the Court of Appeal upheld a written declaration of trust which set out how the equity in a property should be divided between its two legal owners. The outcome is good news for our clients who have put such a trust in place for their own properties and a reminder to those who have not yet done so.

Background

The property in question was purchased by the claimant nephew and his aunt in 1987. The aunt and her brother contributed the vast majority of the purchase price and made all of the mortgage payments on the property save for some contributions by the nephew during the period 2005 to 2009. The aunt lived at the property for some of the period of ownership. The nephew did not live there at any point.

At the time of the purchase, the nephew and aunt executed an express declaration of trust to say how the equity should be divided in the event of a sale. This stipulated that the equity was to be divided 50/50. The nephew sought an order for sale of the property and his 50% share of the sale price. The aunt claimed that she should receive 100% of the sale price and that the declaration of trust be disregarded.

The Court of Appeal has now ruled that the declaration of trust be upheld and the sale proceeds divided 50/50 between the nephew and aunt. The Court confirmed that an express declaration of trust is conclusive of equitable ownership unless the parties vary it, ask for it to be...