Implied trusts and trusts of the family home - Joint ownership and equitable interests in the family home

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Overview

Understanding implied trusts and equitable interests in family homes is essential for success in the SQE1 FLK2 exam. This guide covers constructive trusts, resulting trusts, joint ownership, and proprietary estoppel. By understanding these topics, candidates will enhance their ability to tackle complex property disputes and excel in exam scenarios. The interaction between legal and equitable ownership, especially in domestic settings, forms a key aspect of property law crucial for aspiring solicitors.

Constructive Trusts in Family Homes

Constructive trusts play a significant role in ensuring fairness when there are no explicit agreements. They may emerge from express or inferred common intentions, often based on different forms of contributions to the property.

Common Intention Constructive Trusts

The concept of common intention constructive trusts has developed notably, highlighted in cases like Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53. These cases generally presume equal ownership, but this can be challenged by evidence of a different agreement.

Key principles include:

  1. Express common intention: Evident through discussions or agreements.
  2. Inferred common intention: Deduced from actions and contributions.
  3. Imputed common intention: Determined by the court based on likely intentions.

Application in Practice

Consider Alex and Taylor, who purchase a house together. Alex pays the deposit, while Taylor handles major renovations. Without a formal agreement, their actions may establish a common intention constructive trust.

The court would examine:

  • Initial financial contributions
  • Ongoing arrangements
  • Non-financial contributions like Taylor's renovations
  • Discussions about ownership
  • Overall conduct during the relationship

This approach allows for a more detailed determination of beneficial interests.

Resulting Trusts and Their Development

Resulting trusts traditionally center on financial contributions at the time of purchase. They assume ownership reflects financial input.

Key Principles of Resulting Trusts

  1. Presumption: Arises when property is bought in another's name.
  2. Rebuttal: Can be overturned by showing contrary intention.
  3. Quantification: Focused on financial contributions.

Modern Approach to Resulting Trusts

There's a shift towards a more contextual approach, especially in family settings. The rigid financial model is viewed as less suitable for these arrangements.

In Laskar v Laskar [2008] EWCA Civ 347, the Court distinguished between domestic and commercial contexts, suggesting flexibility for family arrangements.

Practitioners should consider:

  • Relationship nature
  • Context of property acquisition
  • Intentions regarding ownership
  • Fairness of purely financial perspectives

Joint Ownership and Beneficial Interests

Joint ownership introduces complexities between legal and equitable titles. Understanding these is vital for determining beneficial interests.

Legal vs. Equitable Title

  • Legal Title: Formal ownership recorded legally.
  • Equitable Title: Reflects actual beneficial interest.

Forms of Co-Ownership

  1. Joint Tenancy:

    • Right of survivorship
    • Equal undivided shares

  2. Tenancy in Common:

    • Separate shares
    • No right of survivorship

Determining Beneficial Interests

Legal joint ownership starts with equal shares, but this can be changed by evidence of different intentions or contributions.

The Jones v Kernott [2011] UKSC 53 case introduced a two-step approach:

  1. Determine if equal shares were intended.
  2. If not, infer intentions from overall conduct.

The court may look at:

  • Initial and subsequent contributions
  • Financial arrangements
  • Ownership discussions
  • Family responsibilities

This method reflects the complexities of modern property relationships.

Proprietary Estoppel

Proprietary estoppel prevents unfair treatment regarding property rights and protects individuals who have acted on expectations.

Elements of Proprietary Estoppel

  1. Assurance: Given by the legal owner.
  2. Reliance: The claimant relied on this.
  3. Detriment: The claimant suffered because of the reliance.

The Unconscionability Test

Courts focus more on the overall fairness of the situation. This approach was highlighted in Thorner v Major [2009] UKHL 18.

In Suggitt v Suggitt [2012] EWCA Civ 1140, a son's work on his father's farm based on inheritance promises led to upholding his claim, stressing fairness after years of reliance.

Remedies in Proprietary Estoppel

Courts may:

  • Grant the property interest
  • Award compensation
  • Impose a constructive trust

The remedy should match the detriment suffered and assurance given, as in Jennings v Rice [2002] EWCA Civ 159.

Conclusion

A solid understanding of implied trusts and equitable interests in family homes is vital for the SQE1 FLK2 exam. Key takeaways include:

  1. Constructive trusts emerge from intentions and consider both financial and non-financial inputs.
  2. Resulting trusts focus on financial contributions but now incorporate broader factors in family situations.
  3. Joint ownership starts with equal shares, modifiable by different intentions or contributions.
  4. Proprietary estoppel protects those who rely on property assurances.
  5. Courts now emphasize fair and contextual evaluations in each case.

By mastering these principles and applications, aspiring solicitors will be well-prepared to handle property law challenges and excel in their exams and future careers.