Sometimes, disputes can arise between co-owners, spouses cohabitees, or other loved ones about the extent of their respective interests in a property owned jointly or solely by one of them.
These disputes are known as ‘Trust of Land Disputes’ and are subject to the Trusts of Land and Appointment of Trustees Act 1996 (‘TOLATA’).
Legal and Beneficial Ownership
There are two types of ownership – legal and beneficial. “Legal ownership” refers to whose name is on the title register or deeds and who is responsible for managing and dealing with the property. “Beneficial ownership” refers to who is entitled to the benefit of that asset, i.e. the sale proceeds of the property, if the property is sold.
Often, the legal and beneficial owners will be the same people, however, they can, in some cases, be different. For example, one person can be the legal owner of the property and hold it on trust for another person, who is the beneficial owner of the property.
There can also be more than one beneficial owner of a property. Where there is more than one beneficial owner of a property, they can hold the beneficial ownership of the property in specific shares, for example, 50:50, or in thirds or quarters. The beneficial owners can also hold the beneficial ownership in unequal shares, for example, 75% to 25%. How the beneficial ownership of the property is held will be determined by way of a declaration of trust. If there is no declaration of trust, it is assumed that the co-owners own the property in equal shares.
Types of Trust of Land Dispute
Trust of Land Disputes can arise while the owner(s) of the property are still alive or on their death. There are two main scenarios in which a Trust of Land Dispute may arise:
- Where one co-owner believes that they have a greater beneficial interest in the property than that which they are currently legally entitled to (‘Joint Names Cases’); and
- Where an individual who is not legally entitled to a beneficial interest in the property claims that they are legally entitled to a beneficial interest in the property (‘Sole Name Cases’). The starting point is that the beneficial ownership of the property will be the same as the legal ownership of the property. Therefore:
- In a Joint Names Case, the starting point will be that the co-owners own the property in equal shares, or as per the terms of the declaration of trust; and
- In a Sole Name Case, the starting point will be that the legal owner is solely entitled to the beneficial interest in the property.
It will be for the aggrieved party to prove they are entitled to a beneficial interest in the property, or a greater beneficial interest in the property than that which they currently have.
Grounds to Claim
There are two main grounds on which a Trust of Land Dispute can be based:
- Common Intention Constructive Trust; and
- Proprietary Estoppel.
Common Intention Constructive Trust
There are two requirements to establish the existence of a constructive trust:
- A and B share a common intention that B should have a beneficial interest in the property;
- In reliance on that common intention, B acts to its detriment.
Proprietary Estoppel
There are three requirements to establish the existence of a proprietary estoppel claim:
- A makes an assurance to B that he has or will have some right or benefit over the property;
- In reliance on that belief, B acts to its detriment; and
- It would be “unconscionable” to deny B the right it expected to have.
Bringing a Claim
Trusts of Land Disputes are often very complex and can turn heavily on the available evidence. As a result, they can be costly claims to bring, however, given that an interest in a property is at stake, there is often a great financial benefit to bringing a claim. Stakes can therefore be very high in Trust of Land Disputes.
It is therefore important to seek independent legal advice at the earliest opportunity if you consider that you may be entitled to bring a claim.
If you believe that you may be entitled to pursue a claim, get in touch and speak with one of our experts for further guidance.
