This article deals with law and procedure and examines the relevance of the Trusts of Land and Appointment of Trustees Act 1996 in family law. Healys family solicitors in London and Brighton can offer expert advice on all issues arising from family breakdown or divorce; including the complex law surrounding property in a financial settlement where the parties with interest in the property are not married.*
In order to decide whether someone (call him/her ‘B’) has a share in a property, the legal title to which is registered in the sole name of someone else (call him/her ‘A’), there are two main legal concepts which are relevant.
The first is known as a ‘resulting trust’. This arises when B has made a direct financial contribution to the purchase of the property in A’s name, and there are no circumstances (e.g. an express or implied agreement) to show that the contribution was intended to be a gift or a loan. For this purpose we must look at how the price was found and paid at the time of the purchase itself, and not at, for example, who paid the mortgage instalments later on. A resulting trust means that A holds either all or part of the property on trust for (i.e. for the benefit of) B. I deal with the question of the size of B’s share under a resulting trust later on in this letter.
If B did not make a direct financial contribution to the purchase of the property in A’s name, the concept of resulting trust cannot apply. The second, more complex concept is known as ‘constructive trust’. But there are two very different ways in which this can happen, and I must set them out separately. They are:
- Where there is an express agreement, arrangement or understanding between A and B as to who should own what particular share in the property, or, at any rate, A promises B or induces B to believe that B will receive a share in the property. Such an agreement, arrangement, understanding or promise may be in a formal document or it could be confirmed by a statement only made orally and very imprecisely.
However, such an express agreement, arrangement, understanding or promise is not enough by itself, unless it is in writing and signed by A (this would then be called an ‘express trust’ rather than a ‘constructive trust’). Except in that case it is also necessary for B (the person claiming a share in the property) to have acted to his or her detriment (disadvantage) or altered his or her position in reliance on that agreement, arrangement, understanding or promise.
- Where there is no such express agreement, arrangement, understanding or promise the Court may in some cases regard the matter as if there had been one. Often the Court calls this ‘imputing a common intention’. In order to do this, the Court looks at the conduct of A and B in relation to the property. If B contributed directly to the payment of mortgage instalments, or to payments for a substantial improvement to the property, the Court may infer that this must have been because there was a common intention to share the property. People do not usually pay other people’s mortgages for nothing. But less important contributions, like contributing to household expenses, will not do, because there may be many reasons why people pay those, other than an intention on the part of A to give away a share in the property to B in return.
Ascertaining the share
The major difference between the two types of trust – resulting and constructive – is that the concept of a resulting trust relies upon the precise share in the property usually being based on the amount of the direct capital contribution, proportionate to the purchase price. However, under the concept of constructive trust, once it is established that either through 1. or 2. above the intention was for someone to share in a property then the court will take into account a wider range of factors, not just the proportion of the contribution to the purchase price, in deciding what the amount of that share should be.
As a matter of family law, if a party and their [former] partner have had children together the Court can order payment of capital to cover limited past and current capital needs and towards the purchase of a property. The Court can also order a transfer and/or sale of a property to be used to house the children.
Where money is ordered to be paid to purchase a property or a property is to be transferred then this can only be on the basis that the capital is in effect held on Trust for the children until they are aged 18 or 21 when the capital will revert to the children’s father. This may often mean that the property will then have to be sold.
The Court has the power to make an Order for child maintenance only where the amount of child maintenance is agreed, and in other very limited circumstances. Otherwise an application has to be made to the Child Support Agency to assess the amount of child maintenance.
The Court has no power whatsoever to order payment of maintenance or capital for a former partner. Despite popular use of the term, there is no such concept in law as ‘common law’ husband or wife.
Healys divorce solicitors in London and Brighton – advice on property law
Healys’ team of family law solicitors in London and Brighton can advise on all issues arising from relationship breakdown, including provision of maintenance, arrangements for children and division of assets.
Our many years’ experience as specialist divorce lawyers and family law solicitors has taught us that each individual situation is different. Healys can help by listening sensitively and giving you straightforward legal advice so you can weigh up what options will work best for you.
Call direct to Catherine Taylor on 01273 669 124 or e-mail on firstname.lastname@example.org
*The information in this article is intended for general guidance only. It provides useful information in a concise form and is not a substitute for obtaining legal advice. If you would like advice specific to your circumstances please contact us.