Trusts in Family home

Introduction to Family Home

  • It is common for couples and civil partners to buy property/land together as a family home to provide for themselves and their children.
  • The ownership of the family home is sometimes in the name of the couple or both partners and sometimes it is only one partner whose name is on the deed or in conveyancing documents
  • Which effectively means that he/she is the one who owns the house as the property is legally in his/her name
  • The problem often arises where the relationship breaks down or mortgagee seeks possession which requires a need to establish where beneficial interest lies or who owns what in the party or what is the exact share of each partner?

Presumptions

  • It is presumed that if the couple is a joint tenant (please refer to co-ownership) or jointly registered as owners then they own the house jointly/equally although the law allows the couple to rebut that presumption. Which means that the disagreeing partner can ask the court or request to court that they are not joint tenants or hold the family home in equal shares

Example

Amanda and Steve bought 20 Sydney Avenue as their family home as Joint Tenants. Which means that they both hold the house equally. Upon a disagreement, Steve argues that it is not joint tenancy and he holds 80% of the house instead of equal shares. Steve can always ask the court to adjudicate or rebut the presumption that he and Amanda hold the family home equally

  • If the property is only in the name of one person (either partner or either in the name of husband or wife) then the other person, whose name is not on the deed or in conveyancing document must prove that he/she also hold some interest in the family home despite the fact that his/her name does not appear in the legal documents

Example

Amanda and Steve bought 20 Sydney Avenue as their family home but due to some reason (which could be anything), only Steve’s name appears on legal documents as the owner of the family house. Upon a disagreement, Steve argues he is the only owner of the family house and Amanda has nothing to do with the family house. Amanda can always ask the court to adjudicate the matter and must prove that she holds an interest in the family house as well, despite the fact that her name does not appear on the deed or in the conveyancing documents.

Evidence/Proof

The party whose name is not on the legal documents can prove the interest in the family home by proving that there was

  • An express trust:
  1. Arises at the express intention of the parties, and
  2. Parties must evidence their intention in writing
  • Implied Trust:
  1. No express intention or no formalities for express trust
  2. The law recognises equitable interests through contributions to property/conduct of parties:
  3. In the form of resulting trusts or constructive trusts

Example

Amanda and Steve bought 20 Sydney Avenue as their family home but due to some reason (which could be anything), only Steve’s name appears on legal documents as the owner of the family house. Upon a disagreement, Steve argues he is the only owner of the family house and Amanda has nothing to do with the family house. Amanda has to prove that there was an express trust between her and Steve that they will be joint or equal owners of the family house or the court may imply a trust by looking into the circumstances and the contributions or sacrifices made by Amanda in acquiring and maintaining the family home and may impose a constructive/resulting trust

Resulting Trusts

  • Where a couple or a civil partnership have expressly agreed to hold the family house between them as joint owners or in any other arrangement, the courts may find no difficulty in enforcing the promise and the partner whose name is not on the legal documents gets his/her fair share.
  • Under resulting trusts, the court gives effect to the unexpressed intention of the parties.
  • The party claiming a relief and whose name is not on the legal documents must have to make a direct financial contribution to the purchase price of the property at the time of purchase.
  • Contributing to household expenses is an indirect contribution and it may not be held sufficient under resulting trusts.
  • Where a partner contributes to the purchasing price at the time of purchase it is presumed that such partner intended to keep an equitable interest to the value of that contribution
  • Where a partner pays monthly mortgage payments the courts may imply resulting trusts if there was an agreement at the time of purchase.
  • The courts may not imply a resulting trust where the couple agree to any arrangement in regards to mortgage payment after the purchase of a family
  • If a partner makes a direct financial contribution to the purchase price of the property a resulting trust is presumed and the presumption is rebuttable by evidence that such partner did not intend to acquire any beneficial interest by making the direct financial contribution to the purchase price.
  • In cases of special relationships, for example, a father and son/daughter, a son-in-law/daughter-in-law it is presumed that any financial contribution was an advancement instead of a direct contribution to the purchase price, however, it is a rebuttable presumption and the person who provided the financial assistance can always provide evidence contrary to the presumption.

Important Note

Both resulting trusts and constructive trusts are implied by the court by looking into the evidence and the overall arrangement between the couple and civil partners in regards to purchasing, maintenance and daily running of the family home.

Constructive Trust

The third way where a civil partner or a husband/wife whose name is not on the legal documents can claim an equitable interest in the family house is through constructive trust. A constructive trust is implied by the court.

  • Courts recognise common intention couples and civil partners to share the equitable ownership of the property
  • The basis of a constructive trust is unconscionability and the questions raised by the court is, would it be unconscionable for the legal owner to deny the other partner an equitable share?
  • If it is unconscionable, the court may enforce a constructive trust for the family home

Criteria for Unconscionability

  1. The legal owner’s conduct led the other partner or couple to believe she/he had a share in equitable ownership
  2. The other partner /couple acted in reliance upon this to her detriment

Example

Steve and Amanda agreed to buy 20 Sydney Avenue as their family home and agreed on that. Steve will secure the deposit of the house and Amanda will contribute towards the necessary repairs of the kitchen, washroom and garden and they both are a joint owner of the house.

Upon the breakup of the relationship, Steve now claims that he is the sole owner of the family home and Amanda has nothing to do with the family home

In such circumstances, the court will look into the conduct of Steve and Amanda and as Amanda may have acted in reliance upon to her detriment by helping to repair the kitchen, washroom and garden, it is likely the court may imply a constructive trust and decide on the exact share of Amanda and Steve

Common Intention

Common intention can be expressed in which parties have expressly stated their intention (agree) to share the equitable ownership. Common intention can be inferred from the conduct of the parties as well.

Detriment

Detriment refers to a change in position (generally the financial situation) which has occurred due to common intention or understanding between the couple

Example

Paying housekeeping expenses and looking after children = detriment

 Direct financial contribution to the purchase price = detriment

Quantifying the share

The courts quantify the share by looking at the common intention of the parties or where the intention of the parties is not clear, the courts will examine the whole course of the dealings between the parties to find out the common intention and award the appropriate percentage to each party.

Approach

  • The courts will search for the common intention of the parties
  • The courts will take a ‘holistic’ approach to the quantification of shares
  • The courts decide on a case-by-case basis

Non-exhaustive list of factors considered by Courts

  1. Parties’ financial contributions to the home
  2. Discussions at the time of transfer
  3. Purpose for which the home was acquired
  4. How the purchase was financed
  5. Nature of the relationship & the children of both parties
  6. The couple’s financial arrangements – how they paid outgoings
  7. The parties’ individual characters/personalities
  8. The reason for any relevant declarations on the land register

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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