Implied trusts and trusts of the family home - Legal title i...

Learning Outcomes

This article explains the principles governing implied trusts of the family home, including:

• distinguishing legal title from beneficial interests where property is held in a sole name or in joint names;
• identifying when resulting trusts arise from direct financial contributions to the acquisition of the family home;
• identifying when common intention constructive trusts arise, and the role of detrimental reliance and unconscionability;
• understanding how express declarations of trust interact with implied trusts and when an express declaration is conclusive;
• analysing the evidential and formal requirements relevant to disputes over beneficial ownership of the family home;
• applying leading case law on domestic contexts to determine whether and in what shares beneficial interests exist;
• comparing how courts quantify shares where legal title is held in a sole name versus joint names, using the “whole course of dealing” approach;
• using these principles to tackle SQE1-style problem questions on cohabitation disputes and family property ownership.

SQE1 Syllabus

For SQE1, you are required to understand the application of trust law principles in the context of the family home, including differentiating between legal title and beneficial ownership and how implied trusts arise and operate to determine parties' shares, with a focus on the following syllabus points:

• The distinction between legal and equitable interests in land and the trust of land framework when land is co‑owned.
• The nature and creation of resulting trusts, including the presumption of advancement and its rebuttal; evidential timing and what counts as “purchase money”.
• The nature and creation of constructive trusts in the context of family homes, including the requirements of common intention and detrimental reliance; the two routes to common intention (express agreement and inference).
• How the court quantifies beneficial interests when legal title is in a sole name versus joint names, considering the principles established in leading case law on domestic contexts (including the “whole course of dealing” approach).
• The effect of express declarations of trust regarding the family home; formalities for trusts of land (s.53(1)(b) Law of Property Act 1925) and the exemption for implied trusts (s.53(2) LPA 1925).
• The relevance of form TR1 declarations and Form A restrictions; the role of overreaching (s.27 LPA 1925) when property is sold.
• How TLATA 1996 ss.14–15 can be used to obtain orders for sale or declarations of beneficial interests where co‑owners disagree.

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. A couple, not married, buy a house together. Partner A contributes 70% of the purchase price, and Partner B contributes 30%. Legal title is registered in Partner A's sole name. There is no express declaration of trust. What type of trust is most likely presumed initially?
   1. Express trust
   2. Constructive trust
   3. Resulting trust
   4. Bare trust
2. In the scenario above, what would Partner A's beneficial interest likely be under the presumed trust?
   1. 100%
   2. 70%
   3. 50%
   4. 30%
3. If legal title to a family home is registered in the joint names of a cohabiting couple with no express declaration of trust, what is the starting presumption regarding their beneficial interests?
   1. They hold as tenants in common in shares proportionate to their contributions.
   2. They hold as joint tenants in equity (equal shares).
   3. The person who contributed more financially holds a larger beneficial share.
   4. A resulting trust arises based on financial contributions.

Introduction

When determining ownership of a family home, particularly upon the breakdown of a relationship between cohabitants, the name(s) registered on the legal title do not always reflect the true beneficial ownership. Equity may impose a trust to ensure a fair outcome based on the parties' contributions and intentions. These trusts, arising by operation of law rather than express declaration, are known as implied trusts. For SQE1, understanding how resulting and constructive trusts operate in the context of sole and joint legal ownership of the family home is essential. This article examines the principles applied by the courts to ascertain beneficial interests in these situations.

A practical threshold issue is the couple’s legal status. On divorce or dissolution of a civil partnership, the court has wide statutory powers to redistribute property, including the family home. In contrast, unmarried cohabitants do not benefit from that regime; their disputes are resolved by applying trust law and, where necessary, seeking orders under the Trusts of Land and Appointment of Trustees Act 1996 (TLATA), such as declarations of interest or an order for sale.

Legal Title vs Beneficial Interest

It is essential to distinguish between legal title and beneficial interest (also known as equitable interest).

Key Term: Legal Title
Formal ownership of property as recorded in official documents (e.g., Land Registry title). The legal owner(s) have the power to manage and deal with the property.

Key Term: Beneficial Interest
The right to enjoy the benefits of property ownership (e.g., live in the property, receive rental income, or share in sale proceeds). This represents the true equitable ownership.

In many family home situations, especially with unmarried couples, the legal title may be held by one partner, while the other partner has contributed financially or otherwise, based on a shared understanding about ownership. Implied trusts address these scenarios where the legal title does not mirror the beneficial reality.

Where land is co‑owned, a trust of land arises automatically, with the legal estate held as a joint tenancy by up to four trustees. The beneficial interest, however, may be held either jointly or as tenants in common (in equal or unequal shares). In registered land, a Form A restriction on the proprietorship register signals that the beneficial interest is held as tenants in common, ensuring overreaching protections apply on a sale by two trustees.

Implied Trusts: Resulting and Constructive

Implied trusts are not created by express intention but arise by operation of law in specific circumstances. They are exempt from the formality requirement of being evidenced in writing applicable to express trusts of land (s.53(2) Law of Property Act 1925).

Resulting Trusts

A resulting trust typically arises in two main situations relevant to family homes:

1. Voluntary Conveyance: Where property is transferred to another without consideration (though this is less common with land due to s.60(3) LPA 1925).
2. Purchase Money Contribution: Where one party (A) contributes financially to the purchase price of a property, but legal title is registered in the name of another party (B), either solely or jointly with A.

Key Term: Resulting Trust
An implied trust where the beneficial interest in property returns (results back) to the person who provided the purchase money, or reflects their proportional contribution.

The presumption is that the person providing the purchase money intended to retain a beneficial interest proportionate to their contribution, unless evidence shows it was intended as a gift or loan.

Resulting trusts in the family home context are most commonly presumed by direct contributions to the acquisition price (e.g., the deposit or sums paid at completion). Some decisions treat mortgage liability assumed at acquisition, or early mortgage instalments closely connected to purchase, as part of the acquisition funding. However, later mortgage payments and household expenditure typically fall outside a resulting trust and are instead relevant to constructive trust or estoppel.

Worked Example 1.1

Anna contributes £50,000 and Ben contributes £150,000 towards a house purchased for £200,000. Legal title is registered in Ben's sole name. What interest does Anna likely have?

Answer:
A resulting trust is presumed. Anna contributed 25% (£50,000 / £200,000) of the purchase price. She is presumed to hold a 25% beneficial interest in the property, with Ben holding the legal title on trust for both of them in shares of 75% (Ben) and 25% (Anna).

Presumption of Advancement

The presumption of a resulting trust can be rebutted by the counter-presumption of advancement (gift). This traditionally applied where a father provided money for a child or a husband for a wife, presuming a gift was intended. This presumption is now considered outdated and discriminatory (and will be abolished when s.199 Equality Act 2010 comes into force) but can still technically apply. It does not apply in favour of a mother, although evidence in practice can still show a gift was intended. Evidence of the actual intention (e.g., loan or gift, contemporaneous statements) can rebut either presumption.

Key Term: Presumption of Advancement
A rebuttable presumption that certain transfers (historically father–child or husband–wife) were intended as gifts rather than trusts.

Evidential timing matters. Acts and declarations at or before the transfer are admissible for or against the transferor; later statements are admissible only against the transferor (they cannot be used by the transferor to reclaim property as not intended to be a gift, but may assist the transferee if they support a gift/advancement).

Limitations in Family Home Context

Resulting trusts primarily focus on direct financial contributions made at the time of purchase. They often fail to account for the complexities of shared lives, such as subsequent mortgage payments by a non-owner or non-financial contributions (e.g., childcare, significant home improvements). Consequently, courts increasingly favour constructive trusts in domestic contexts to reflect parties’ intentions and reliance throughout the relationship. Discounts obtained by sitting tenants and other acquisition-related advantages may also inform resulting interests where the benefit can be valued as part of the purchase money.

Constructive Trusts

A constructive trust is imposed by equity where it would be unconscionable for the legal owner to deny the beneficial interest of another. In the context of family homes, it arises from the parties' shared common intention regarding ownership, coupled with detrimental reliance by the claimant.

Key Term: Constructive Trust
An implied trust imposed by law based on the parties' conduct and common intention, where it would be unconscionable for the legal owner to deny another party's beneficial interest.

Key Term: Common Intention
A shared understanding or agreement between the parties that the beneficial ownership of the property is to be shared, which can be express (e.g., through discussions) or inferred from conduct.

Key Term: Detrimental Reliance
Action taken by the claimant, to their detriment, based on the common intention. This could include financial contributions, significant improvements to the property, or altering their life circumstances based on the shared understanding.

Establishing a Constructive Trust

The claimant (the party not on the legal title or seeking a larger share than presumed) must establish:

1. A common intention that they should have a beneficial interest (or a different share than the legal title suggests).
2. Detrimental reliance on that intention.

Common intention can be:

• Express: Evidenced by oral discussions between the parties regarding ownership (e.g., "This house is as much yours as mine", assurances that title would be in joint names but for some temporary issue, as in Eves v Eves). Express declarations of beneficial shares, if properly evidenced in writing, create an enforceable express trust; absent that formality, the same words can underpin a constructive trust when reliance follows.

• Inferred: Deduced from the parties' conduct. In sole name cases, the classic route is by direct financial contributions to the deposit, purchase price, or mortgage instalments, pointing to shared ownership. Following Lloyds Bank v Rosset, non-financial domestic contributions alone are generally insufficient to infer common intention in sole name cases, though they may be relevant to quantification once an interest is established. In joint name cases, courts more readily infer a shared intention to own equally unless displaced by clear contrary factors.

Detrimental reliance must be causally linked to the common intention. Examples include funding significant structural improvements, assuming liabilities, sacrificing career prospects to maintain the household, or making sustained financial contributions consistent with an expectation of ownership. Purely domestic contributions (childcare, housekeeping) without more traditionally do not establish common intention, but can influence the size of shares once an interest exists.

Worked Example 1.2

Leo buys a house in his sole name. His partner, Maya, moves in. They discuss that the house is 'their home'. Maya gives up her job to look after their children and uses her savings to build a substantial extension, significantly increasing the property's value. Is Maya likely to have a beneficial interest?

Answer:
Yes, likely under a common intention constructive trust. The discussions might constitute an express common intention. Maya's significant financial contribution to the extension, altering the property's value, likely constitutes detrimental reliance. Even if the discussion was ambiguous, her contribution might allow the court to infer a common intention.

Express and inferred common intention in practice

In sole name scenarios, courts require cogent evidence of express agreement (“we will share this home”) or direct financial contributions towards acquisition to infer intention. Domestic enhancements such as redecorating or routine bills typically fall short. In joint name purchases, the starting point is equal beneficial ownership, and a broader range of conduct may be examined to determine whether the presumption should be displaced (for instance, meticulously separate finances and marked asymmetry in contributions).

Quantifying Shares under Implied Trusts

• Resulting Trusts: Shares are quantified strictly in proportion to the direct financial contributions to the purchase price. This approach can be rigid and may not account for later reliance or changes in arrangements.

• Constructive Trusts: Once established, the court quantifies shares based on what is fair, having regard to the whole course of dealing between the parties (Stack v Dowden, Jones v Kernott). That framework allows the court to consider:

  • The parties’ discussions and advice received at the time of purchase.
  • The purpose of the property (e.g., family home).
  • The nature of the relationship and whether there are children.
  • How household finances were arranged (pooled or kept rigorously separate).
  • Direct and indirect financial contributions (deposit, mortgage, major improvements).
  • Transfers between the parties, life insurance cash‑ins used for housing, and other significant financial decisions connected to the home.
  • Any clear evidence of a departure from equal sharing or a change in common intention over time.

Key Term: Whole Course of Dealing
A comprehensive evaluation of parties’ conduct and arrangements over time, used to infer or impute the shares they intended to hold.

Quantification is flexible. Courts may infer an actual common intention as to shares from the evidence. Failing that, they may impute an intention, drawing a fair share from the whole course of dealing when it is clear the parties intended to share but did not address precise proportions.

Legal Title in Sole Name

Where legal title is held by one partner (A), the starting point is that A is the sole beneficial owner. The burden is on the other partner (B) to establish a beneficial interest through either:

1. Resulting Trust: By proving a direct financial contribution to the purchase price (e.g., deposit, completion monies). The share will be proportionate to the contribution; later household spending and general living costs do not usually qualify.

2. Constructive Trust: By proving common intention (express or inferred) and detrimental reliance. The court will then determine a fair share based on the whole course of dealing. In sole name cases, reliance on non‑financial domestic contributions alone is generally insufficient to prove the initial common intention, though such contributions may affect quantum after an interest is found.

If there is an enforceable express declaration of trust in favour of the non‑owner, it must be evidenced in signed writing to satisfy s.53(1)(b) LPA 1925 for land. Express declarations specifying shares are usually determinative unless set aside for fraud, mistake or undue influence.

In appropriate circumstances a claimant may pursue proprietary estoppel instead of (or in addition to) a constructive trust. Estoppel requires assurance, reliance and detriment, and can lead to tailored equitable remedies where a trust analysis may be unavailable or too rigid.

Key Term: Proprietary Estoppel
An equitable doctrine allowing relief where a claimant relied to their detriment on an assurance relating to rights in property, and it would be unconscionable for the promisor to resile.

Worked Example 1.3

Noah buys a flat in his sole name. Before completion he tells Priya, “We’ll treat this as ours; I’ll put you on the title when your credit score improves.” Priya pays the solicitor’s fees and later pays for a structural kitchen renovation worth £20,000. After separation, can Priya claim a share?

Answer:
Priya is unlikely to establish a resulting trust from paying conveyancing fees alone (not purchase money). However, Noah’s assurance supports an express common intention. The substantial structural renovation constitutes detrimental reliance. A common intention constructive trust is likely, with Priya’s share quantified having regard to the whole course of dealing (including her renovation expenditure and any other relevant factors).

Legal Title in Joint Names

Where legal title is held in joint names, the starting presumption is that the beneficial interest is also held jointly and equally (as joint tenants in equity) – Stack v Dowden.

• Rebutting the Presumption: This presumption can be rebutted by evidence of a contrary common intention, either at the time of purchase or evolving later. Proving a contrary intention requires demonstrating that the parties intended their shares to be unequal. The court will examine their entire course of dealing (including whether they kept finances compartmentalised, their respective contributions, the origin of funds, and any significant indicators that they did not intend equal shares).

• Quantification: If the presumption of equal shares is rebutted, the court quantifies the shares based on the whole course of dealing, similar to sole name cases once a constructive trust is established. Courts have stressed that unequal financial contributions alone are often insufficient to displace the presumption of equality in a domestic context; robust evidence is usually needed that the parties intended to hold in unequal shares.

Worked Example 1.4

Chloe and Dan buy a house in joint names. Chloe pays the deposit (£30k) and Dan pays the balance (£170k) via a mortgage in his sole name (as Chloe has poor credit). They share household bills. There is no express declaration of trust. They separate. What are their likely shares?

Answer:
The starting presumption is that they hold the beneficial interest equally (50/50) because the legal title is in joint names. Dan would need to provide strong evidence to rebut this presumption and show a common intention that their shares should be unequal, reflecting his larger financial contribution via the mortgage. Simply contributing unequally is often not enough to rebut the presumption in a domestic setting. The court would consider their whole course of dealing. Without strong evidence otherwise, the 50/50 split likely prevails.

Worked Example 1.5

Ami and Rees purchase in joint names as their family home. They never pool finances; each maintains separate accounts, separate savings, and pays specific outgoings. Ami pays the entire deposit and all mortgage instalments; Rees pays utilities and food. Years later, they separate. Can equal sharing be displaced?

Answer:
Possibly. The equal presumption for joint names is strong, but it may be rebutted where the evidence shows a contrary common intention. Stringent separation of finances throughout, combined with Ami’s exclusive mortgage and deposit funding and clear arrangements pointing away from pooling, can rebut equal sharing. The court would quantify shares by surveying the whole course of dealing (including deposit and mortgage payments and any major improvements), which may lead to an unequal split.

Revision Tip

Remember the starting points: Sole legal owner = sole beneficial owner unless proven otherwise. Joint legal owners = joint and equal beneficial owners unless proven otherwise. The burden of proof dictates who needs to establish a different arrangement.

Express Declarations of Trust

If the parties explicitly declare how the beneficial interest is held in writing (e.g., in the TR1 transfer form or a separate trust deed), this declaration is generally conclusive, regardless of contributions, unless there is evidence of fraud, mistake, or undue influence (Goodman v Gallant).

Key Term: TR1
The Land Registry transfer deed for registered land; includes a panel for declaring the beneficial interests.

When beneficial interests are held as tenants in common, a Form A restriction appears on the proprietorship register, protecting purchasers by requiring payment to two trustees (or a trust corporation) to overreach equitable interests. Overreaching removes equitable interests from the land and attaches them to the sale proceeds.

Key Term: Form A restriction
A Land Registry entry indicating that the beneficial interest is held as tenants in common; ensures overreaching is triggered on sale by two trustees.

Key Term: Overreaching
Statutory mechanism (s.27 LPA 1925) by which beneficiaries’ equitable interests under a trust are detached from land and attached to sale proceeds when purchase money is paid to two trustees or a trust corporation.

In practice, an accurate express declaration at purchase is the most reliable way to avoid later disputes. If an express trust is not declared, implied trust principles (resulting or constructive) govern. Where a dispute arises, TLATA 1996 s.14 allows interested persons to apply to the court for orders declaring the extent of interests or for sale; s.15 guides the court’s discretion by listing relevant factors (the intentions of the settlor, the purposes for which the property is held, the welfare of minors occupying the property, and the interests of secured creditors).

Key Point Checklist

This article has covered the following key knowledge points:

• Legal title represents formal ownership; beneficial interest represents true equitable ownership.
• Implied trusts (resulting and constructive) arise by law to reflect parties' contributions or intentions where legal title is misleading.
• Resulting trusts arise from direct contributions to the purchase price, with shares proportionate to contribution (subject to presumption of advancement and admissible evidence).
• Constructive trusts require common intention (express/inferred) plus detrimental reliance; shares are quantified based on the whole course of dealing.
• For sole legal ownership, the non-owner must prove an implied trust to claim a share; domestic contributions alone rarely prove initial common intention in sole name cases.
• For joint legal ownership, equal beneficial ownership is presumed unless a contrary common intention is proven; rigorous separation of finances and clear evidence may rebut equality.
• Express declarations of trust in writing (e.g., TR1) are generally conclusive; Form A restrictions indicate tenancy in common and engage overreaching on sale.
• TLATA 1996 ss.14–15 provide procedural routes to obtain declarations of interest and orders for sale in co‑ownership disputes.

Key Terms and Concepts

• Legal Title
• Beneficial Interest
• Resulting Trust
• Constructive Trust
• Common Intention
• Detrimental Reliance
• Presumption of Advancement
• Proprietary Estoppel
• Form A restriction
• Overreaching
• TR1
• Whole Course of Dealing