Implied trusts and trusts of the family home - Direct and in...

Learning Outcomes

This article explains implied trusts and beneficial interests in the family home, including:

• How courts determine and recognise beneficial interests through implied (resulting and constructive) trusts where legal title is incomplete or misleading
• The doctrinal distinction between resulting and constructive trusts, and when each is the appropriate analytical tool in SQE1 problem questions
• The circumstances in which direct financial contributions, indirect financial payments, and substantial non-financial contributions can establish an equitable interest
• The requirements of common intention and detrimental reliance in constructive trust claims, and how these are evidenced through discussions, conduct, and the parties’ whole course of dealing
• The modern approach to joint-name and sole-name disputes following Stack v Dowden, Jones v Kernott and subsequent case law, including the presumptions and how they may be rebutted
• The limited evidential weight of purely domestic contributions and how they differ from contributions referable to acquisition of an ownership stake
• How courts quantify and adjust beneficial shares over time, including the role of inference and imputation once an interest has been established
• The impact of the presumption of advancement and the doctrine of actual occupation on third-party purchasers, registered title, and overriding interests in examination-style scenarios

SQE1 Syllabus

For SQE1, you are required to understand how implied trusts operate in the context of the family home, especially where legal title does not reflect the parties’ true intentions or contributions, with a focus on the following syllabus points:

• The distinction between resulting and constructive trusts in family home disputes
• The legal effect of direct and indirect contributions to the purchase price or mortgage
• The requirements for establishing a constructive trust, including common intention and detrimental reliance
• How courts quantify beneficial shares where there is no express agreement
• The relevance of key cases such as Stack v Dowden and Jones v Kernott
• The limited role of resulting trusts in joint-name family home cases
• The presumption of advancement (father–child) and its current status
• The potential for equitable interests in actual occupation to bind purchasers (Land Registration Act 2002)

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the main difference between a resulting trust and a constructive trust in the context of the family home?
2. Can regular payments towards household bills (but not the mortgage) give rise to a beneficial interest under a resulting trust?
3. What two elements must a claimant prove to establish a constructive trust where the property is in the sole name of one party?
4. How do courts determine the size of a beneficial share where there is no express agreement between cohabitees?

Introduction

When people buy or live in a home together, the legal title may not always reflect their true intentions or financial contributions. English law uses implied trusts—resulting and constructive trusts—to resolve disputes over beneficial ownership, especially for unmarried couples. This article explains how direct and indirect contributions can give rise to equitable interests, and how courts decide the size of those interests.

A trust of land will normally arise automatically where land is co-owned, with the legal estate held as a joint tenancy and the beneficial interest held under a trust (Trusts of Land and Appointment of Trustees Act 1996). However, implied trusts are critical where legal title is in one party’s sole name, or title is joint but the parties’ intended beneficial shares differ from the legal joint ownership.

Key Term: resulting trust
A trust implied by law where a person who contributes to the purchase price of property is presumed to have a beneficial interest in it, unless evidence shows a gift was intended.

Key Term: common intention
A shared understanding or agreement (express or inferred from conduct) that both parties are to have a beneficial interest in the property.

Key Term: detrimental reliance
Action taken by a claimant to their disadvantage, based on the belief that they have or will have a beneficial interest in the property.

Resulting Trusts and Direct Contributions

A resulting trust arises where a person makes a direct financial contribution to the purchase price or initial mortgage of a property, but is not named as a legal owner. The law presumes that the contributor did not intend to make a gift, so they acquire a beneficial interest in proportion to their contribution.

Only direct payments towards the purchase price or mortgage at the time of acquisition count. Later payments for household expenses, renovations, or bills do not create a resulting trust. In practice, the kinds of payments that typically count as “purchase money” include deposit funds, cash at completion, and usually purchase-specific acquisition costs such as stamp duty land tax and conveyancing fees, provided they are part of the acquisition funding.

Where legal title is taken in joint names, modern family home disputes are generally resolved through constructive trusts rather than resulting trusts. In sole-name cases, a resulting trust remains relevant if the claimant cannot establish a constructive trust but can prove direct contributions to the acquisition funding.

Key Term: presumption of advancement
A counter-presumption that certain transfers (classically, father to child) are intended to be gifts. This can rebut a presumed resulting trust. Note: Equality Act 2010 s199 (which would abolish this presumption) is not in force.

Worked Example 1.1

Amira pays £30,000 towards the deposit on a house bought for £150,000. The property is registered in her partner Ben’s sole name. Amira makes no further payments. What is Amira’s likely beneficial interest?

Answer:
Amira is presumed to have a resulting trust for a 20% share (£30,000/£150,000) in the property, unless evidence shows she intended to make a gift.

Worked Example 1.2

Noah contributes the entire stamp duty and legal fees on purchase of a flat registered solely in Ava’s name, while Ava funds the deposit and mortgage. There was no discussion about beneficial shares. Can Noah rely on a resulting trust?

Answer:
Acquisition costs (stamp duty, conveyancing fees) are commonly treated as part of the purchase money. Noah’s contribution can found a presumed resulting trust proportionate to his total contribution to the purchase price, unless evidence shows a gift was intended or a counter-presumption of advancement applies.

Worked Example 1.3

Priya paid the full price for a house but put it in her adult son’s sole name. Years later she seeks to reclaim a share. How does the presumption of advancement apply?

Answer:
A father-to-child transfer classically triggers the presumption of advancement. Although there is no general presumption for mother-to-child, courts will consider all evidence of intention. In this scenario, if the relationship were father–child, the advancement presumption could displace a resulting trust unless rebutted by contrary evidence. The statutory abolition is not in force, so the presumption remains applicable.

Constructive Trusts and Indirect Contributions

A constructive trust can arise even if there is no direct contribution to the purchase price. The court will recognise a constructive trust if two requirements are met:

• There was a common intention that both parties would share the beneficial interest (express or inferred)
• The claimant acted to their detriment in reliance on that intention

Indirect financial contributions—such as paying household bills so the legal owner can pay the mortgage—or significant non-financial contributions (e.g. substantial renovations, childcare) may support a claim if they show reliance on a common intention to share ownership.

Express common intention can be found in discussions about sharing ownership or future sale proceeds (e.g., “this home is ours,” “we will share the equity”). Even where there is no express agreement, the court can infer intention from conduct, giving particular weight to contributions to mortgage instalments or the deposit. Following Lloyds Bank v Rosset, purely domestic contributions (e.g., housekeeping alone) have limited probative value in establishing acquisition of an interest. However, modern cases emphasise the parties’ whole course of dealing: sustained indirect contributions that are referable to ownership may be sufficient when combined with other evidence of shared intention.

Where title is in joint names, the starting point is equal beneficial ownership (Stack v Dowden). Unless rebutted, a constructive trust will reflect equality. If rebutted, courts assess intention to share unequally by reference to the whole course of dealings (Jones v Kernott), including how finances were arranged, mortgage payments, and major improvements, and may impute an intention at the quantification stage to achieve a fair outcome. Imputation cannot be used to establish the initial acquisition of an interest; it is confined to deciding shares once an interest is found.

Worked Example 1.4

Chris and Dana live together in a house in Dana’s sole name. Chris pays for a new kitchen and most household bills, while Dana pays the mortgage. They discuss that the house is “theirs together.” After a breakup, Chris claims a share.

Answer:
If the court finds a common intention (from their discussions and conduct) and that Chris acted to his detriment (paying for improvements and bills), a constructive trust may be found, giving Chris a beneficial share.

Worked Example 1.5

Liam and Sofia jointly purchase a home registered in Liam’s sole name for mortgage reasons. Sofia later pays half of the monthly mortgage for five years and finances a loft conversion. There was no express declaration of trust. What is the likely route and outcome?

Answer:
Mortgage instalments and substantial capital improvements strongly support an inferred common intention constructive trust. If an interest is established, the court will quantify shares by assessing the course of dealings. Depending on the facts, Sofia’s share could be significant, reflecting both mortgage contributions and the value added by the loft conversion.

Quantifying Beneficial Shares

If a resulting trust is found, the share is usually fixed in proportion to the direct contribution. For constructive trusts, if there is no express agreement about shares, the court will determine what is fair based on the whole course of dealings between the parties.

Relevant factors include:

• The parties’ discussions and conduct
• The nature of their relationship
• How finances and household expenses were managed
• Who paid for improvements or major works
• Any children and their care arrangements
• Contributions to mortgage instalments, deposit, and acquisition costs
• Separate vs pooled finances and their consistency over time
• Changes in circumstances (e.g., separation) and post-separation contributions

Where there is a change in common intention over time (for example, after separation), the court can reflect that in the shares (Jones v Kernott). The court may infer or impute an intention to share ownership unequally if justified by the facts, but imputation is used only at the quantification stage after an interest has been established.

Worked Example 1.6

Ella and Faisal buy a house in Faisal’s sole name. Ella pays nothing towards the deposit or mortgage, but looks after their children and pays for extensive repairs. There is no written agreement. Faisal claims full ownership.

Answer:
If the court finds that both intended Ella to have a share (from their conduct and discussions), and that Ella relied on this to her detriment, a constructive trust may be found. The court will then decide a fair share, which may be less than 50% but more than zero.

Worked Example 1.7

Maya and Arun buy in joint names. Arun pays the deposit and most of the mortgage; the couple keep strict separate finances. Years later they separate; Arun remains and pays all outgoings for ten years. There is no express declaration of shares.

Answer:
The presumption of equality applies to joint names, but may be rebutted. Factors such as separate finances, unequal deposit/mortgage contributions, and long-term post-separation payments can justify unequal shares. A court may infer or impute that their common intention evolved, awarding Arun a larger share to reflect contributions over time.

Joint Ownership and the Presumption of Equality

Where property is bought in joint names, the starting point is that both own the beneficial interest equally. This presumption can be rebutted by evidence that they intended unequal shares, either at the time of purchase or later.

Key Term: presumption of equality
The default rule that joint legal owners are presumed to share the beneficial interest equally, unless evidence shows a different intention.

Key cases such as Stack v Dowden and Jones v Kernott confirm that courts will look at the parties’ whole course of conduct to decide if the presumption should be displaced. Evidence of separate finances, disproportionate contributions to deposit and mortgage, and statements about ownership can rebut equality. The court may also conclude that the common intention changed over time, particularly after separation; in such cases, shares can be adjusted to reflect subsequent conduct.

It is important to distinguish acquisition of an interest from quantification. In joint-name cases, the interest is normally established by the joint legal title; the focus is on quantification. In sole-name cases, the claimant must first establish an interest by proving common intention and detriment.

Worked Example 1.8

Zoe and Omar buy in joint names. They pool some household expenses, but Zoe funds the deposit alone and consistently pays the mortgage from her income. Omar pays for food, utilities, and a modest bathroom upgrade. They never discussed shares.

Answer:
Starting presumption is equal shares. However, long-term separate handling of major outgoings, Zoe’s deposit and mortgage payments, and the scale of contributions may rebut equality. The court could award Zoe a larger share, with Omar taking a smaller share reflective of his lesser contributions.

Third Parties and Occupation

Where a cohabitee acquires an equitable interest and is in actual occupation, their interest may bind a purchaser by overriding the disposition of registered land (Land Registration Act 2002, Sch 3). The occupier’s interest will not override if it is not obvious on a reasonably careful inspection and the purchaser made inquiries of the occupier which were answered inconclusively or with nondisclosure.

Key Term: actual occupation
A factual state of physical presence or occupation at the time of the disposition that can give overriding status to certain equitable interests in registered land.

Worked Example 1.9

Tom has a constructive trust interest in a registered house in his partner’s sole name and is in actual occupation. The partner sells to a buyer who does not inspect and makes no inquiries. Can Tom’s interest bind the buyer?

Answer:
Tom’s beneficial interest coupled with actual occupation can override the purchaser’s registered disposition. Absent inspection and inquiries, the buyer is likely bound by Tom’s overriding interest.

Exam Warning

In family home disputes, courts distinguish carefully between resulting trusts (direct contributions only) and constructive trusts (broader conduct and intentions). Do not confuse the two in SQE1 problem questions.

• Do not treat household bills or purely domestic contributions as sufficient for a resulting trust. They may, however, support a constructive trust alongside evidence of common intention.
• In joint-name cases, start from the presumption of equal beneficial shares and assess whether it is rebutted on the evidence.
• In sole-name cases, acquisition of an interest requires proof of common intention and detrimental reliance. Imputation is available only for quantification after an interest is established.
• Always check for any express declaration of trust at acquisition: if present and valid, it is usually conclusive as to beneficial shares unless set aside.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• The difference between resulting and constructive trusts in the family home context
• Only direct contributions to the purchase price or mortgage at acquisition create a resulting trust
• Constructive trusts require common intention and detrimental reliance, and can include indirect or non-financial contributions
• Courts may infer or impute intentions and will consider the whole course of dealings to decide shares
• The presumption of equality applies to joint legal owners unless rebutted by evidence
• The presumption of advancement can rebut a presumed resulting trust in certain relationships (not yet abolished)
• Equitable interests coupled with actual occupation may override a purchaser of registered land

Key Terms and Concepts

• resulting trust
• common intention
• detrimental reliance
• presumption of equality
• presumption of advancement
• actual occupation