Where an individual is not named on the title register to a property but has paid towards the purchase price, mortgage or renovation costs together with their partner, who is the registered owner, does that individual have any property rights?
The short answer is yes, you may well have rights.
Where property is held in the name of one party only, that person is known as the “legal owner” and also presumed to be the owner of the entire beneficial interest as well.
Cohabitants and/or 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, either under bankruptcy or pursuant to a judgment obtained at court.
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.
What are Resulting trusts?
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.
What are Constructive trusts?
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 there is some form of relevant conduct on the part of the non-owner to support 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 acquisition of the property (although in some cases a later date will be accepted) and relate to the shared ownership of the property as opposed to an agreement about the occupation of the property. 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 during the course of their relationship, for example, direct contributions to the purchase price initially or subsequent contributions to mortgage instalments which are genuinely referable to 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 that would not ordinarily be expected from a non-owner or someone who was simply occupying the property. Mere DIY or general housework will not be enough to establish a beneficial interest in a property.
What if I am able to establish a beneficial trust?
If you can prove to the court that you have a beneficial interest in a property, 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”.
Any claim for a beneficial interest in a property, whether by a resulting or a constructive trust needs to be made under the Trust of Lands and Appointment of Trustees Act 1996.