Constructive Trust: A Quick Overview
If you have an interest in property you don’t legally own, the law may give you a basis to assert that interest, even without your name on the title.
A court can infer a constructive trust, recognising equitable rights in a property or asset that aren’t supported by legal ownership. It covers when one arises, how to prove it, and what evidence you need.
We act for individuals and companies in property disputes across England and Wales. If you believe you have rights based on shared intentions and financial contributions, contact our specialist litigation team.. Our property team have decades of experience dealing with similar cases. We would love to help you.
What Is a Constructive Trust in UK Law?
In UK law, a constructive trust arises in connection with property and other types of assets. The law confers a right to benefit from the asset and confers this on someone who has contributed to it even though they don’t have legal ownership.
A constructive trust is usually present in the absence of an express agreement or other defined legal rights and prevents one party from unjustly benefiting at the expense of another.
When Can a Constructive Trust Arise?
The most common examples of constructive trusts come from disputes over property between cohabiting couples, where only one party holds the legal title, but both have contributed financially.
These are property disputes and not family law matters. They fall within our practice as specialist property litigation solicitors. If your situation involves divorce or separation proceedings, that falls outside of what we do.
One party may legally own the property, while the other could have contributed to the purchase deposit, made mortgage payments, or spent money on refurbishments.
If the relationship fails and there’s a dispute over ownership and entitlement, the cohabitee who has suffered financial detriment may argue that there is a constructive trust, in this case, by common intention.
The idea is to give effect to the parties’ actual intentions regarding the property rather than follow what is simply recorded at the Land Registry.
Establishing a constructive trust depends on the individual circumstances of each case. The court will infer a constructive trust when it would be inequitable for the other party to deny the beneficial interest of the claimant. In other words, the court will consider whether it is fair and reasonable for someone’s beneficial interest to be recognised in law.
Recent case law has taken the doctrine of constructive trusts beyond the domestic context with a ruling suggesting that it can also apply to investment property jointly purchased by a cohabiting couple.
Common Intention Constructive Trusts Explained
In law, if one person owns an asset like a property, then the law presumes the beneficial interest in the property is also theirs because of legal ownership. A common intention constructive trust allows a departure from this principle.
A common intention constructive trust separates legal ownership and beneficial interest if one of the parties can demonstrate that the beneficial interest was intended to be different from legal ownership.
This is often the case with cohabitees where only one person in the couple owns the property and is registered at the Land Registry, but both are contributing.
What Evidence Can Help Support a Constructive Trust Claim?
Constructive trusts are inferred from the circumstances of a case; there is no express agreement to rely on. If you want to assert a beneficial interest, then you must be able to prove it on the balance of probabilities. Context is everything.
Some evidence of constructive trust by common intention includes joint finances, bank accounts, and financial collaboration in purchasing the property or asset.
If you’re asserting a beneficial interest in property, demonstrating that you’ve made financial contributions is valuable supporting evidence. This could be giving money towards the purchase price, making mortgage payments, or paying for renovations.
A court will also examine the parties’ intentions regarding the property, the nature of their relationship, and their conduct and behaviour. The more you can provide evidence that the other party intended you to have a share, the better.
You must also show that you acted to your own detriment in reliance on that common intention. This doesn’t have to be financial.
There are many other factors a court can consider, including the surrender of a career or employment opportunities in favour of contributing or living at the property.
How Do Courts Decide Beneficial Interests in Constructive Trust Cases?
If the court finds that a claim for beneficial interest is supported and a constructive trust is established, it must next determine the claimant’s share. If there is proof, verbal or written, of an agreement on the division of shares, the court will enforce it.
If there is no express agreement, the court considers what’s fair based on the evidence put forward, including the reason for buying the property, the parties’ relationship, and how they organised their financial affairs.
For cases where the property is legally held in one name, there is no prior assumption, such as a 50:50 split. The actual share will depend wholly on the facts of that case.
The court has the power to allot shares of ownership in a property. It can also order the sale of a property under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) and the distribution of the proceeds.
Why Specialist Legal Advice Matters in Constructive Trust Disputes
Constructive trusts are inherently unpredictable and open to interpretation, particularly when it comes to evaluating what evidence exists to demonstrate common intention.
Each case pivots on the specific and unique facts, and evidence is key. Even being able to demonstrate an intention to share is not enough; you must also be able to show that you acted on that common intention to your detriment.
Courts have discretion, and never more so than when it comes to determining constructive trusts. Specialist legal advice is vital to evaluate the strength of your case, and this is exactly what we provide.
Accurate assessment is essential to inform strategy in property disputes; a weak case may be better resolved away from the courtroom.
We can act on a No Win No Fee (Conditional Fee Arrangement) basis on qualifying property disputes. Subject to case assessment and our funding criteria. Available on qualifying disputes typically valued over £10,000 with strong prospects of success.
Frequently Asked Questions
What Evidence Is Needed for a Constructive Trust Claim?
You’ll need evidence to support a common intention and documentation that can corroborate activity that demonstrates that you relied on this, such as bank statements and payment records. An essential part of the evidence is showing that you relied on a common intention to your detriment; this doesn’t have to be financial.
Are Constructive Trust Claims Difficult to Prove?
The success of any case hinges on the available evidence, as there is no written agreement to rely on. Consequently, constructive trust claims are difficult to prove and often arguable on the presented facts. Without express agreement, you must be able to provide enough evidence to demonstrate common intention and reliance on this to your detriment.
Does a Constructive Trust Need to Be in Writing?
The whole essence of a constructive trust is that it is inferred by the court in the absence of formal legal rights to a property or asset. However, if cohabitants have written evidence of the basis of their arrangement, this can be used by a court to establish a common intention and, where appropriate, a fair division of shares.
Can You Claim a Share of a Property If Your Name Is Not on the Title Deeds?
To claim a share of a property without a formal legal right, you’ll need to show that there was a common intention and that you have relied on this and suffered detriment as a result. Even if the lived reality is that you have a beneficial interest, you’ll still need to be able to prove it.
Need Advice? Contact Helix Law.
We are a team of specialist litigation solicitors providing practical and strategic advice on all aspects of commercial, property, and financial disputes.
We represent clients in disputes over property ownership, land transfers, and commercial agreements, and can unravel the complexities of trust arrangements, including the legislation governing perpetuities and trust duration and any fiduciary duties and liabilities that arise between co-owners.
We work in these types of disputes, nationally. Our property litigation team has decades of experience working in these disputes, and we offer cost-effective funding options tailored to your circumstances. With our specialist team, we have sufficient strength in depth to be able to act quickly to protect your position. Because we’re experienced in broader litigation we are well placed to support your rights with compliant, realistic, and pragmatic remedies. If you are dealing with a problem relating to ownership of property, our specialist property litigation team would love to assist you. We regularly litigate these disputes and are well placed to assist you
