Where an individual is not named on the title register to a property, but has paid towards the purchase price, mortgage or renovation costs, does that individual have any property rights?
The short answer is yes. Where property is held in the name of one party, that person is the ‘legal owner’ and is presumed to be the owner of the entire “beneficial interest”, which is an interest in the economic benefit of the property. Non-owning co-occupiers of a property often fail to formalise the extent of their respective beneficial interests in a shared home. This can create significant uncertainty for a non-owner, particularly if the relationship subsequently breaks down or a creditor is seeking to repossess a legal owner’s property.
In order to establish a beneficial interest in a property, a cohabitant may be able to assert his or her interest by showing that there was some kind of implied trust in place. These trusts are often known as ‘Resulting’ or ‘Constructive’ trusts. There is also a concept known as “Proprietary Estoppel”.
This is where a person contributes to the purchase price of a property without being a party to the
Conveyance/transfer (unless, of course, that money was given by way of a gift). Ordinarily, the financial contribution would need to have been made at the time of purchase, but in some cases, a court will accept later contributions if they were contemplated at the time that the property was acquired.
A Constructive Trust can arise where there is some sort of express or implied agreement, arrangement or understanding (also known as a ‘common intention’) that the beneficial ownership of the property should be shared, and the conduct of the non-owner supports this.
Where the Constructive Trust is based on an express agreement, that agreement, however imperfectly remembered and however imprecise, must generally arise prior to the purchase of the property and relate to the shared ownership of the property as opposed to an agreement about the occupation. These factors must be accompanied by some kind of detrimental reliance or significant alteration on the part of the non-owning party.
Where there is no express agreement, the court may infer an agreement from the way in which the parties conducted themselves, for example, direct contributions to the purchase price or subsequent contributions to mortgage instalments can show a shared understanding that the paying party would have an equitable interest in the property.
Other contributions can include substantial renovations to the property, or capital improvements (such as a new kitchen, bathroom or extension works) that would not ordinarily be expected from a non-owner or someone who was simply occupying the property.
What is Proprietary Estoppel?
Proprietary Estoppel is another way non-owners can establish property rights.
Property rights under Proprietary Estoppel will be asserted by the court when the following three requirements are established:
Assurance. The property owner induces, encourages or allows you to believe that you have or will have some right or benefit over the property.
Detrimental reliance. In relying upon the assurance, you act to your detriment to the knowledge of the property owner.
Unconscionability. It would be unconscionable for the property owner to fail to uphold the assurances that they have made.
What if I am able to establish a beneficial interest?
If you can prove to the court that you have a beneficial interest in a property by establishing one of the above trusts, the court will then consider the value of the beneficial interest. For Resulting Trusts, the size of the interest will be in proportion to the extent of the contribution made. For Constructive Trusts, if there was an express agreement, the size of the interest will be in line with that agreement or calculated on the basis of a ‘broad brush’ assessment having regard to all the circumstances. Where there wasn’t an express agreement, the size of the interest will be calculated following an assessment of the parties’ ‘whole course of dealing’. If you establish a claim based on proprietary estoppel, the court has a wide discretion on determining the extent of your claim.
If you would like to discuss a possible claim, please do not hesitate to contact Sangita Manek on email@example.com or call on 01923 725004.