Learning Outcomes
After studying this article, you will be able to explain how implied trusts determine beneficial interests in family homes, distinguish between resulting and constructive trusts, and identify when direct and indirect contributions give rise to equitable interests. You will also be able to apply the relevant legal principles and case law to SQE1-style problem scenarios involving cohabitees and property disputes.
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. In your revision, focus on:
- 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
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.
- What is the main difference between a resulting trust and a constructive trust in the context of the family home?
- Can regular payments towards household bills (but not the mortgage) give rise to a beneficial interest under a resulting trust?
- What two elements must a claimant prove to establish a constructive trust where the property is in the sole name of one party?
- 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.
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.
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.
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.
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.
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
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.
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.
Worked Example 1.2
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.
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
The court may infer or even impute an intention to share ownership unequally if justified by the facts.
Worked Example 1.3
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.
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.
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.
Summary
| Trust Type | How Interest Arises | What Counts as Contribution | How Share Is Calculated |
|---|---|---|---|
| Resulting trust | Direct payment to purchase/mortgage | Only direct payments at purchase | Proportionate to contribution |
| Constructive trust | Common intention + detriment | Direct or indirect contributions, or significant non-financial acts | Court decides what is fair |
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
Key Terms and Concepts
- resulting trust
- common intention
- detrimental reliance
- presumption of equality
