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Beneficial Interest in Property

  • 07 Pages
  • Published On: 27-11-2023

Introduction

A beneficial interest rightfully arises in a property to establish the financial right over the property along with the right to secure the property either by expressed terms, resulting or constructive trust. The interests may arise in between couples who have who are either cohabiting as a married unit or unmarried but the conflicts seem to arise in times where the relationship between the spouses are under tension, thus posing a huge legislative problem as there is no statutory coverage of all such situations that may arise to determine the position of either married couples or couples cohabiting without a marital relationship. In cases of such a situation in a family home, having no legal joint ownership, the only resort lies on the establishment of an equitable interest. The interest of cohabiting couples have seen to rise in the given times, provided the rising housing costs or availability of properties especially for cohabiting couples thus securing the legal position of the parties in the family home. Thus, if any dispute may occur in the future, in that case the declaration that was made by the parties in an expressed manner shall clarify the stand and provide sufficient clarity on the rights of the parties. The Law of Property Act, 1925 requires the declaration, if made to be in a written form and free of any fraud or mistake in order to claim such beneficial interest in the property. However, according to the Law of Property Act, 1925, S. 53(2), in case such written declaration is not made, the courts shall resort to the form of resulting or constructive trusts and proprietary estoppel which does not necessarily have to be in a written form. The need for such declaration arises in cases where the joint legal ownership is not clearly placed, especially for a non-legal owner of such a property the establishment of the beneficial interest becomes an essential criterion. Such interest may be established through the resulting trusts which arises in case money has been expended by a party on the property of the other which could have been considered as a gift but disregarding that, such can be considered as an equitable obligation on the legal owner of the property.

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  1. Shuman, Karen, “The Family Home: Joint Title” available at http://kshuman@1chancerylane.com
  2. Establishing Constructive Trust

    The constructive trust must be established in case of a non-legal owner has not provided with a formal written declaration which is basically the exhibition of a common intent to create constructive trust. In the case of Thompson v. Hurst, it was held that the presence of a common intention of one party to create a trust on the property by the legal owner including the non-legal owner as well but if such is declared, then such assumptions are not required. This common intention is mostly inferred from the pattern in which the parties conduct their position either the intention of the non-legal owner to pay the price or contribute partially may indicate the willingness of the non-legal owner to have an interest in the property. Secondly, the ultimate position of the spouses in financially contributing to the domestic needs of the parties, be it with necessary expenses or luxury shall also indicate the interest of the non-legal owner of securing a life together in that property. However, the court in the case of Stack v. Dowden had elaborately accounted the amounts required to be contributed in acquisition of a property along with the action of the parties in an constructive manner must be considered to establish the position of acquisition but the wife’s position of interest in the property can be clearly inferred from her interest and intention to provide contributions in the mortgage shall also establish the beneficial interest in the property. The share of the parties are generally deduced from their over all intention and conduct exhibited and this intention to have a beneficial interest over the property is backed by the constructive trust within the property but if such is difficult to decipher, the court has the power to intervene to quantify the interest of the wife or the non-legal owner and divide the share equitably considering all the contributions of the partners.

    Establishing Proprietary Estoppel

    Proprietary estoppel can be applied where somebody has acted to their impediment upon a conviction supported by the lawful proprietor of the property that they have or will have an interest in that property. The sole legitimate proprietor should have given their accomplice some


  3. Bank v. Rosset 1990] UKHL 14 [1991] 1 AC 107 [1990] 2 WLR 867 [1990] 1 All ER 1111
  4. Morris v. Morris 1885. 92 N.C. 142 (N.C. 1885)
  5. Abbot v. Abbot 560 U.S. 1 (2010)
  6. Le Foe v. Le Foe [2001] EWCA Civ 1789
  7. Oxley v. Hiscock EWCA Civ 546, Fam 211
  8. Bridger L, 2017, RadcliffsleBraseur LLP, “ Establishing a beneficial interest in the property”, < https://www.rlb-law.com/briefings/family/establishing-beneficial-interest-property/ > accessed on 6th February, 2021
  9. kind of portrayal, affirmation, or support that if the partner is contributing to outward expenses including luxuries, that may establish the beneficial interest in the property. In this case, the court may intervene to provide a reasonable remedy if required in terms of repaying the contributions of the parties or the owner to reside in the property for a certain period of time.

    Principles established in Stack v. Dowden

    The case of Stack v. Dowden has established a roadmap for sole legal ownerships as well as joint legal ownerships for future cases. This case had brought forward two primary issues firstly concerning the position of non-married partners in a family home and the beneficial interest of the parties and the position of the parties if the beneficial interests are not clarified. The person who is the owner shall be considered as the only equitable owner of the property.This case was absolutely against the principle that “Equity should follow the law”. Earlier, the only way the parties were given the power to prove their acquisition, or gatherings to guarantee fair intrigue was to contend an interest in a helpful trust or an impartial interest in a subsequent trust. After the judgment in Stack v Dowden the subsequent trust alternative appeared to be utilized all the more regularly. In Stack v Dowden, hence it was indicated that the equitable interest isn't in relation to the legitimate proprietorship as in the end the House of Lords choice was to grant Mr. Stack 35 percent of the equitable interest in the family property. The basic assumption that value keeps the law may now be viewed as rebuttable. As the House of lords appeared with their discoveries, inconsistent monetary commitments towards the price tag are viewed as when the court considers parties gainful interests in trust. o decrease the impact of coming about trusts in the division of fair interests in family property, a development is required" However, in many occasions of dispute that have arisen in property homes, those disputes have been brought to terms by implementing the constructive trusts. The


  10. Ibid
  11. Stack v Dowden [2007] UKHL 17
  12. Holbech, Charles, “Beneficial Interests of Cohabitees Following Stack v Dowden”
  13. Informaworld website, Constructive Trusts: The Family Home Introduction in Ramjohn, M (2004) Cases and Materials on Trusts, Routledge-Cavendish, London < https://taylorandfrancis.com/ > accessed on 6th February, 2021
  14. The TimesOnline website (2007) Presumption of equality in couple’s joint ownership< http://business.timesonline.co.uk/tol/business/law/reports/article1706505.ec> accessed on 6th February, 2021
  15. constructive trusts are not as adequate as one would think it to be an often leads to inefficient solutions. Resulting trusts solely looks into the financial contributions made by the parties as opposed to constructive trusts and the court adjudicates the position of the parties by questioning every other variables. However, the family properties have not been treated as equally in the case of Stack v. Dowden and has been reprimanded concerning both scholarly and functional purposes, there is an assumption that there is a reasonable qualification between family properties and different properties. There could be varied scenarios where the family homes might not be restricted to the usages of a living household but could have been used for other purposes, but the courts failed to look into the case in this light. It is not practical to differentiate the properties on basis of purposes On the off chance that the property is utilized as a family home, a remortgage can be viable in raising extra capital for a non-family reason nonetheless, in such manner a useful trust can't be appropriately applied. Notwithstanding, if a property is moved into joint names on a remortgage, sometimes this doesn't give the non-selling party any option to get relative privileges, yet as a necessity set out by the loan specialists. The approach of constructive trusts are difficult especially with the given times as the idea of a family home has several interpretations and cannot be easily restricted one idea only. It ranges from several ends , thus dismissing the core concept of constructive trusts in general. It was, thus, proper for their Lordships to utilize the subsequent trust approach rather than the valuable trust approach in Stack v Dowden to manage the fair responsibility for family home, despite the fact that this methodology was not normal of value observing the law. The constructive trust approach was inefficient and had several issues if it were to be applied uniformly, thus it was further discussed by Baroness Hale in the case of Abbot v. Abbot, that the trust would primarily include the question of common intention and regarding their normal aim and this could incorporate goal which was genuine, ascribed from lead or induced gave that there was an immediate or circuitous commitment, in real money or in kind, to the procurement of the land'. Commo intention had secured enough value that put sense to the approach of constructive trust.


  16. George R H, Stack v Dowden – Do as we say, not as we do? (2008) Journal of Social Welfare and Family Law, 30:1
  17. Cooke, E, Cohabitants, Common Intention and Contributions (Again) (2005) Conv 555
  18. Worthington, S (2006) Equity, Oxford University Press, Oxford
  19. Wong, S, Constructive trusts over the family home: lessons to be learned from other Commonwealth jurisdictions? (1998) Legal Studies, 18 (3)
  20. Wilkie, M, Malcolm, R and Luxton, P (2002) Equity and Trusts, Oxford University Press, Oxfor
  21. Analysis

    It can be considered that in case it can be established that there a joint legal ownership in bteween the parties, the chances of establishing a joint beneficial interest in the property or a joint beneficial ownership. This can be further backed if there is sufficient evidence on the conduct of the parties, that there has been a 'common intention' to contribute in the household expenses and other expenses are taken care of equally or if they potentially kept their accounts independent, and didn't contribute similarly, then such shall not be considered as the presence of common intention. Howevr, the same shall be presumed in case of sole legal ownership and the beneficial interest also rests solely within the property which will only be criticized if there is also the formal declaration. However, if the assumption is disproved, at that point the portions of the gatherings will be surveyed similarly as they are evaluated for a situation of sole legitimate proprietorship. Notwithstanding, that assumption will be countered, in the event that there is an express understanding, or immediate or circuitous commitments to the price tag. Whenever it has been set up that the petitioner has a few helpful interest, at that point the court can consider matters other than monetary commitments in surveying the quantum of the inquirer's offer.

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    Conclusion

    Therefore, the position of monetary commitments of a party plays a pivotal role and somehow precedes any other requirement in case of establishing acquisition. There are vital, albeit uncommon where monetary commitments will be exceeded by more major inquiries for a useful trust approach.However, the function of resulting trust seems to be more valuable in such cases as it provides lucidity of division, with no space for parties to squirm; it might, anyway be unfeasible. Only if the resulting trust seem to be unfair an biased can the constructive trust be meant to function, thus serving equity for all the parties in all circumstances.

    BIBLIOGRAPHY

    Articles/ Journals


  22. Supra 10
  • Shuman, Karen, “The Family Home: Joint Title” available at http://kshuman@1chancerylane.com
  • Bridger L, 2017, RadcliffsleBraseur LLP, “ Establishing a beneficial interest in the property”, < https://www.rlb-law.com/briefings/family/establishing-beneficial-interest-property/ > accessed on 6th February, 2021
  • Holbech, Charles, “Beneficial Interests of Cohabitees Following Stack v Dowden”
  • Informaworld website, Constructive Trusts: The Family Home Introduction in Ramjohn, M (2004) Cases and Materials on Trusts, Routledge-Cavendish, London < https://taylorandfrancis.com/ > accessed on 6th February, 2021
  • The TimesOnline website (2007) Presumption of equality in couple’s joint ownership< http://business.timesonline.co.uk/tol/business/law/reports/article1706505.ec> accessed on 6th February, 2021George R H, Stack v Dowden – Do as we say, not as we do? (2008) Journal of Social Welfare and Family Law, 30:1
  • Cooke, E, Cohabitants, Common Intention and Contributions (Again) (2005) Conv 555
  • Wong, S, Constructive trusts over the family home: lessons to be learned from other Commonwealth jurisdictions? (1998) Legal Studies, 18 (3)
  • Cases

  • Bank v. Rosset 1990] UKHL 14 [1991] 1 AC 107 [1990] 2 WLR 867 [1990] 1 All ER 1111
  • Morris v. Morris 1885. 92 N.C. 142 (N.C. 1885)
  • Abbot v. Abbot 560 U.S. 1 (2010)
  • Le Foe v. Le Foe [2001] EWCA Civ 1789
  • Oxley v. Hiscock EWCA Civ 546, Fam 211
  • Stack v Dowden [2007] UKHL 17
  • Books
  • Worthington, S (2006) Equity, Oxford University Press, Oxford
  • Wilkie, M, Malcolm, R and Luxton, P (2002) Equity and Trusts, Oxford University Press, Oxford

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