Property law Co-ownership: Acquiring a beneficial interest Lecture transcript Anne Street Hello and welcome to the Lecture Plus series my name is Anne Street.'m a lecturer in Property law at SOAS part of the University of London. In this lecture welll be looking at Co-ownership from Chapter 5 we will focus on how you acquire an interest in property. We would also briefly consider some of the issues that arise in Chapter 7 Proprietary Estoppel but this will be in outline only. Introduction The legal interest in land can be owned in a different way from the equitable interest;so it's important that you understand that in English law we have both legal interests and subsequent to that we can have equitable interest in property. So, if you are unfamiliar with this you could perhaps if you haven't studied Equity and Trusts you need to be familiar with this before we can move on. So please refresh your memory in relation to how legal title is held inland and her equitable title is held in land it may be that there are two or possibly more up to four legal owners of the land. They must be joint tenants it is impossible to have the legal title inland in any other way but their equitable interests may be held differently they can be held either as a joint tenancy or as a tenant in common; which means they have their own individual beneficial interest in the property. Alternatively it may be that there is a single legal owner so only one names shown on the deeds or in the register but there is another person who claims to have a beneficial interest in that property and we are going to be focusing on how these people can acquire and prove their beneficial interest in the property. This is how it may be represented: on the top line you can see the legal title;50 these are the people who have the legal interest in land. So in the first situation you have two legal owners, In the second situation a is the sole legal owner now if we imagine that ‘when the property was purchased A provided 25% and B75 percent you can see in equity, so that is below the line, in equity their equitable interest is significantly different from their legal interest. In this situation A would have 25 percent interest in proportion to the contribution and B 75. The presumption is different when there are joint legal owners we automatically presume that there is a trust. Inthe second situation where ais a sole legal owner B would have to establish first that there isa trust in existence and this is what we are going to focus on; both how you establish the trust and then also how you prove the size of your beneficial interest. Establishing ownership; here we are talking about beneficial ownership. Ideally the beneficial ownership will be expressly stated. An express trust in land must comply with section 53-1-B of the law of property Act. There must be evidence in writing to prove the beneficial interest in the land. If couples are married or in a civil partnership then there will be different statutory rules which should apply which we do not cover in this course; they would be covered by such things as a Matrimonial Causes act in the Family Law Act. So what we are dealing with is where there is an absence of any written evidence. Written evidence would be conclusive and there would be no February 2018 Page of?Video transcript:Co-ownership: Acquiring a beneficial interest further discussion following the case of Goodwins Collect; but where there is no written evidence then the courts may find an implied trust under section 53-2 of the law of property Actiand iti that which we are going to be focusing on. So just to recap, ideally they would be written evidence which would be conclusive if the couples are married or in a civil partnership different rules apply but this is where we are going to look at how a cohabitation where there is no written evidence and they are outside the matrimonial or civil partnership regulations. So, trusts in the family home as it is commonly called, it's a significant area as property ownership in the UK has expanded considerably. Since the 1980s there's been a huge growth in the number of people who actually own rather than rent their own property. There was also less ownership within the matrimonial setting as there are more cohabiting couples who do not take the formal step of matrimony or when to an interest civil partnership; and as in most situations that people will not actually sit down and discuss the property implications of their relationship. It's not always conducive to a loving relationship to sit down and discuss what's going to happen if you break up or who owns the property. People will often fail to see that there will be implications for not sitting down clearly establishing who owns things non-lawyerstend to feel that - well obviously I will get an interest -look the legal system does not work like that so we have to establish how people can actually get their beneficial interest. Trust in a home will fall into different categories: whether title is held by one person, so whether legal title is held by one person. Following clear explanation in Jones vs Kernotts;it is a two-stage process- so the legal title is held by one person there are two stages. First we need to establish that the claimant has a beneficial interest. Even under a resulting trust or under a constructive trust and that's what we'll be focusing on first in this lecture. They then need to move on to consider how do you quantified a beneficial interest? What's the size of the beneficial interest? 10% 20% 50%? So, they are two stage. You established a beneficial interest and then you quantify the beneficial interest. Establishingan interest- resulting trust Aresulting trustanalyse in many situations but here we are focusing on contributions to the purchase before or at the time of purchase. So, this is money contributions that are given to the legal owner;and with that money they buy land, Under Curley v Parkes, it must bea contribution to the purchase. So it cannot be, for example, paying the legal fees or paying for the registration fees- it must be to the actual acquisition of the property. Ifyou can prove that your money was used to purchase eitherall of it or a proportion of the land then you have established a resulting trust. Now, in Jones v Kernott, it was said that the resulting ‘rust principles are not suitable for family situations. What they mean here is the cohabiting situations because there very often are other factors that courts will want to take into consideration in time to establish how large the beneficial interest isin the quantification. It doesn't mean that they cannot be used. So, as in Laskar v Laskar, it can be used increasingly in the UK parents or grandparents are helping their children by property. Ifa parent or grandparent contributes towards the property this is the perfect example where a resulting trust will occur. So, they're not totally obsolete in relation to owning family property but where it's a cohabiting couple then their use is not the best option for both parties. ‘The reason is that if the resulting trust is established then the beneficial interest you have in the home is quantified in proportion to your contribution. itis done purely by arithmetic. So, if you contributed 20% of the purchase then you have a 20% share in the property- nothing else is Page 20f7Video transcript:Co-ownership: Acquiring a beneficial interest considered. Now, this is not always the best option for a party. So, even in a problem question if you can prove that there is a result in trust it may not be in the best interest of one or the other Parties. So, they may then want to move on to consider a constructive trust and this is where there isa lot of debate where you really need to make sure you understand what happened in the cases. So, establishing an interest under a constructive trust constructive trust. Lloyds Bank andRosset- and this is a House of Lords decision - and therefore as a matter of precedent it should be binding on the lower courts. The trouble is that this case has been severely criticised (and if you read your textbooks and you see from a study guide it's an area where the courts have not absolutely agreed) and there's a lack of clarity which means understanding the cases and understanding what they say and what the arguments are is imperative. From Lloyds Bank and Rosset, Lord Bridge divided the claim to a beneficial interest for wise in two circumstances. An express common intention constructive trust for this to arise you need express common. intention ('m going to look at that in more detail at the moment). if there is an express common intention then that must be followed by detrimental reliance. If youcan prove those two elements then you have got an express common intention constructive trust. Ifyou cannot prove the express common intentionthen Lord Bridge says you may be able to infer a common intention constructive trust;and this is where it becomes much more contentious. I's very narrow set of conduct that will infer this common intention. Lord Bridge said it will be direct financial contributions that arereferable to the acquisition of the property;and itis this as really divided the courtsand academics in relation to how you can acquire a beneficial interest. So, let's first look:Express Common Intention Constructive Trusts It must be express not what people think. Springettev Defoe did not do this by telepathy. f you see OKelly v Davisyou will see how important it was for the judge in what the people had actually said to each other what they'd understood of what was said. So, read your questions very carefully to make sure that you have understood what the people are saying to each other;and not what they are thinking, it must be common it must be shared by both parties. f! say, | think we should share everything and you say | think that's lovely we have not shared the same intention, It must, bea reflection of it. We are notlooking for legal words but we are looking for what the court can objectively ascertain has been your shared common intention;and it must be in relation to the ownership of the home. Again, look at O'Kelly v Davis, where there was conversations about the business rather than the home. Itis very important in that judgment what was being discussed. You are looking forexpress common shared by both parties; intention about the home.Now if you can establish that it must then be followed by detrimental reliance. Now, hereit's clear from cases like Eves v Eves and Grant v Edwards that the detrimental reliance doesn't need to be financial reliance. In Eves v Eves;it was carrying our heavy manual work by the young lady. The court felt that she would not have done that, but for the statements made by the legal owner, Mr Eves. He said well when | told her that she couldn't be on the deeds- | was lying, It wasn't my intention to actually share the beneficial interest;and the court said here but what you've said, so it's not what you're thinking, what you said was that she would have an interest but she is too young. Therefore, your express common intention as evidence objectively was ‘emulation to the home she then followed that by detrimental reliance doing the heavy manual ‘work (maybe note here that this does not need to be financial).So, here this is the less contentious area Page 3 0f7