welcome to this presentation. On come, ownership trumps declarations. Produce it by myself. Steven Desmond On behalf of Data Law, I'm going to be presenting this subject in matters with ways, which hopefully are most relevant to residential conveyances. Some of these, you feel consider, will be the contents of a bespoke declaration of trust. But I'm also mindful that many, if not the majority of people by jointly might not want to have the what they perceive as the extra expense off a whole detailed declaration of trust. Also, consider circumstances which might advise where trust can arise, even though there is no express declaration of trust. So the first issue that I would like to focus on is where there's an undeclared trust. All that is merely a an indication in, for example, Trump's. For that the parties merely wish to be joint tenants and tenants in common, with no further elaboration on their intentions visible just to mention that as well, highlighting just about it, it is possible that's parties who might be buying property in circumstances where one of them is the registered soul over on the other party will be, for example, on adult occupier it might be no circumstances when they originally purchased that there was no intention for the third party occupier to acquire any share of the equity of the property. Talk those circumstances like change Andi. As I mentioned in the slide, there are two possible trusts which could rise in such circumstances. Second, company the case of a resulting trust. It is always perfectly possible one person who has contributed towards the purchase of the property well, perhaps towards mortgage repayments or even has paid a contribution in cash terms or money's where towards the improvement of a property that was a campaign. So you'd only be presented with a proposition that you're acting one of the parties. But it's worth bearing in mind in terms of advice to the person who sold purchaser advice and clearly that the lender, if there's 100 balls, may not accept trust in favor of the third party and separately also that they may wish to get something in writing from the occupier. In terms of the occupier is not seeking to acquire any share in the interest in the property, that could be particularly the case if the purchaser is a first time buyer on the comb purchase is not married to them, and he or she might have an interest in the residential property. Uh, constructive trust can also arise dimensions in the notes by virtue of some form off agreement, arrangement or understanding reached between parties that the property will be shared. But officially, between them, that means the party, claiming a beneficial interest, acted to his detriment in reliance on such agreement, arrangement or understanding it might be, that's you. Advise your client who is the sole patches, that it may be advisable to have something in writing that the other co owner will not be seeking to acquire any share in the equity of the pop. To be quiet now, it might be the party that might sign. I have a present intention of doing so on the question of whether or not such a written declaration may be successful in reporting. Any subsequent argument that a constructive role resulting trust may have risen is doubtful. So it may be that the person best place to give any independent financial advice to the third party occupy it, maybe a family lawyer. But from the perspective of a of a answer. You. Hopefully, in this situation will make your client who's purchasing aware off risk that if the other person waas to make any direct or indirect contributions that they might be beamed at a later stage toe required to share in the equity of the property. Just some examples of cases where there have been issues between car owners, where the co owners did not consider the issues in question from the outset. So if you look at the boats and Stimson case, which is mental, my notes what happened in this case is two individuals purchase the house, and they did so subject to a mortgage they, in the 1st 2 years of ownership, equally contributed towards mortgage repayments. One of them, however, was then made redundant Mr Rates, so he was unable or willing to pay his agree chair of the mortgage contributions. The parties then verbally agreed that he would Trump's for his beneficial share of the property to the other co owner, Mr Simpson. So get to a mortgage or payment of £2500 the next six years, Mr Stimpson, active twos detriment in reliance on that verbal agreement, Andi, continue paying mortgage instalments on all the out going to the property here. His father also expended almost £5000 in repairs and improvements to the property. No, I guess when the polities at first set out on their journey of coalition together, they have no written declaration, which went beyond merely their equity on equitable ownership in the property as a committed. So it's always difficult to know whether the circumstances can advise. But it is not inconceivable that parties relationships might write down. You might have a scenario where one person exams house on ceases to make contributions. So at that stage, if the co owners do no wish to make an express declaration for that particular contingency, I eat, for example, agreeing that India about the one person leaving out that the occupier will maintain the property and keep insured whether or not the other party agrees to make a purported contribution. Also, it is exactly mortgage what sometimes happens as in this particular case, order the cases one person made, vacate the property and make ceases to make contributions to the property. One person may vacate the property and ceased to make any contributions whatsoever to the mortgage repayments. I also like to highlight an important Supreme Court case. Jones buses could now the details of this decision, a primarily relevant to Patrimonio lawyers who deal with relationship breakdown between car owners, especially between car owners who are married, although it may in an appropriate case be a decision which is also relevant to married couples who are splitting up, although with married couples splitting up. Of course, you will be aware that courts have you're restriction on relevant patrimonio legislation to adjust property interests. So it might all be that the court will order a transfer from one party to the other. Or it might be the party's interest in the property or adjusted, for example, 75% in favor off spouts a 25% in favor. Smiles be when pry it's of the order the parties would. Tennessee called unequal shares, for example, be very points about the Jones versus Kurd, a case The parts in this case had cohabited or nine years on jointly purchase a property. Together, they each contributed towards household outgoings mortgage expenses, the parties and separated. He vacates the property and seeks to make any contributions to 18 mortgage payments, endowment policy premiums, all the outgoings of the property. He said that the joint tenancy and then I bought another property, sold A with a mortgage. Now the Court of Appeal applying relevant principles of bull but at the time decided it's there was no reason from departing from the presumption of joint ownership. He stopped by earlier House evolved decision, Stuck Buses, founder on the court, found that nothing could probably be inferred from the party's conduct that since separation, a joint intention have developed over time, the 50 50 split would be buried. The Supreme Court, however, had a very different view. They considered relevant principles which are applicable where a family home is bought in the joint names of a couple beating couple who are both responsible for any mortgage but without any expressed declaration of their interests. So the point was made. That equity follows the law on, and so where you have two people what Lauren joint tenants, they will be presumed to be joined. Tens inequity that presumption can be displaced by showing that the parties have a different common intention of time when they acquired the home or they later formed the common intention that their respective shares would change. How the courts go about ascertaining common intention by conduct is regarding scope this present texture, however, the court also in detective. But if it was not possible to ascertain the parties change to common intentions, the courts can have regard to what they consider as shares which a pair for each party having regard to the whole course of dealing between in relation to the property. What this case really illustrates also is that you may start off with parties having an express declaration of trust on if they're unmarried or maybe their friends or family buying together, but not in a spousal relationship with each other, that they might start off with a declaration of trust in the beginning and then because of the same circumstances. For example, one party paying the lion's share of the mortgage contributions after a relationship breakdown between the parties, not situation. The court, if the matter was litigated, would then look at their common intention after purchase or their course of dealing at the purchase. I would say we just Capades is what this case really highlights is that from your perspective, when you're acting for purchases, you're really acting for them in circumstances where you're asking them to give you an indication off their present intention. Andi making them also where that courts do now have powers to make these adjustments of property interests. For example, in the Jones case, the parties ended up with court deciding that the share of the parties now have to be buried so that the share was regarded as one of the parties of being 90%. That's the person who remained in occupation of boxing, paying the mortgage. I'm hey, who had moved out. His share was now reduced from 50% to 10%. So just making the courts, whether that the courts do have that power just very briefly Thompson Hearst CASE What happened here is a local authority. Tenants purchase a council house in her soul name on advice from the mortgage broker you paid the mortgage contributed the whole amount of the discount because if you're buying a council property, you have to bury mind that the discount that the tenant has acquired over time as tenant is to be treated as a financial contribution to the purchase price. Even though the amount of the discount no show in Trump's for in terms of working out how much people have contributed towards the purpose of right to buy property, the discount should be treated as a financial contributor. The Court of Appeal found that attendant on her partner at that time had the common intention to buy jointly, but there was no common intention to his chef. So, looking at the circumstances and the course of dealings between the parties, the court thought it was fair that he would have attempts a chair. But they responded, whose the purchaser would have a 90% share. The court took into account that she was the only person you made any financial contribution to purchase, and she acquired the discount. She's consistently paid rent before you're the party of taking off occupation off the property, very briefly. Also looking at the Austin LV Cade's This case concerned the parts of a farm owned by Mr Aspen. Then he transferred a bomb forming part of the Farm League required to the defendant this L B. He also carried out significant works to convert bound into a dwelling, and it also contributed £73,000 towards the cost of the works. So in the face of the trumps for the transfer would only its face have been an outright transfer off the whole of his interest in the Bomb two missile way. Andi, the court decided that's Miss LV therefore became the legal inequitable owner of the bomb following completion of registration of the transfer. How is a called also took into account the fact that Mr Austin had carried out significant work and that work would substantially increase the value of the bonds. His financial contribution towards the conversion was somewhere in the wheat from 65 to £70,000 and the court took into account the course of dealing between the parties On decided that is, there will be held the bar after 75% herself in 25% for Mr Aspect. Just very briefly. It's also possible that governors may end up falling out with each other. Onda, a not uncommon scenario is one of them, which is to sell the property on Field one poses a sale. Often it's the person who remains occupation property. Who's opposing sale course? You have powers under Section 14 off the trust off land and appointment of trustees at 1986 to order a sale on the application of one party courting. Meeting. Such a decision as to whether or not to grant the order is required to take into account various factors, such as the intentions off the creators of the trust, the purposes for which the properties will get to trust his help, also the interests of any minor who might occupy the property. Also, in the case of dispute, the circumstances and wishes off the majority beneficiaries according to the bound their combined interests. For me being by that, if you have, for example, one person owns the equity in the amount of 75% if they wish to have a sale because they have the majority of the equity, the courts will usually no. That's not always, but usually will take that into account of actor. But it might be by being the majority shareholder. We can use that phrase that the courts will accede to that person wishes and allow the order percent trouble. This of all the for sale is no guarantee. Um, the issue for the campaign, sir, is to make clients, aware that when they purchase jointly they also sell jointly. So if one of them is refusing to signing the transfer or agree tow trucks for at some stage in the future, the matter can only be dealt with either by example of right of first refusal in D, which is not uncommon. There's a lot of writers refused or right of pre emption in the trust excavation, but that's not very common scenario in the context of residential joint ownership. You're the possibility is that provide for made aware that they state expressly in the trust declaration why they originally which to purchased the property, why they originally wish to set up the trust declaration. So, for example, I ate my will have been that they originally agreed to buy the property as a home for themselves that the property is no longer held a home. It might be. The purpose of trust is then deemed to come to an end. If it goes to court, court might decide that is a factor in favour. Stale. However, if the person who is living at the property is also looking at the Children, Andi, maybe there's no end of equity in the property to be able to sell the property, the court might look about the circumstance in justifying an order for maybe bearing sale until some stage in the future again. It's not the conveyances role when acting for joint purchases to second guess what the court might decide because it's first say, first of all, that there's no guarantee that the court will find in favour, off sale or find against a sale. In many cases, there's also the issue that parties often don't have the financial resources to take a particular matter to court now purely on it. Don't Lee. I have heard family lawyers who have indicated that the costs involved off Section 40 applications could range somewhere between 3 to £15,000. The most recent case I heard off the case, which was settled outside of court. When the amounts off, the, uh feeds that the client to pay Waas in the region about 7.5 £1000. That's also with the 80 on top. Now you have declined. Who is forming a hiring about just declarations? All that's gonna be full, too expensive, or why do I need top on Bove's well, it's the clients choice, of course, if they choose to help. But if their circumstances for example, one person putting in the lion's share of the purchase price and a green Tennessee comical chest one pat one purchases parents is putting in a big contribution, then in this case, if they choose not up the declaration of trust, it is entirely a risk on the declaration. Interest, to a certain extent, is safeguard Andi protection for that individual se With that for B. If the parties agree they might wish to stay in the trust exploration, what would happen it? There was a relationship right that now the trust declaration being prepared money incur costs depending on how complex Declaration is several parents, or even be trusted to £300. But ultimately, the trust acclamation also doesn't guarantee a court would necessarily give in effect to any which states did there, for example, in the relationship. Right, Because again, the trust declaration is a declaration of the party's intentions at the time the declaration was meant, but it is something with the courts can take into account and indeed are required to take into account the sexual 14. But the 2nd 40 applications could be brother expensive for parties on parties do not always obtain the order. For example, in order for sale that they are seeking, One other factor to take into account would come over. It is also the risk off bankruptcy, so it's often the case that covers are buying with a mortgage. And it's also typically the case of that situation that the party will be assessed on joint income. So where one of the parties, for example, might be earning the lion's share of household income? The breadwinner? If we could use that phrase, then what happens if the breadwinner that loses that job or is May Croat and then you're in the situation where there's a large mortgage which is owed on a joint property the person is now bankrupt, is unable to make contributions Their income. I can no longer be applied towards mortgage repayments. Andi, Suddenly the other person is in a situation where they are now severally liable for the mortgage repayments but unable to meet their mortgage repayments. So it might be a that particular case. The property then comes to be sold now, put a sale to proceed by the properties jointly. Oh, that would need both parties who enjoy overs to agree to sail because bankrupts still remains on the legal title because it's deemed illegal. Title is always held. Tendency on the legal title is held it and the legal title relates to the legal estate in land. Where is your equitable interest in land, which is the rights to the equity? Or that sale proceeds is either held as a joint tenancy or tenancy in common? It could be a fuse. The bankrupt may not be willing to sell our nick. That case it might well be the next age is your party. If they can raise sufficient funds, might be able to persuade the balky under tow. Allow the party to be transferred. If they can afford to buy out the amount that the trustee in bankruptcy is asking for. Want to buy out? He'll come out share. But there would be the next issue of whether or not the mortgage lender would be agreeable to a Trump's first subject about mortgage. The more his under may not allow that. So realize case where the mortgage lender was saying that we can't agree transfer because there's 100 £8000 on your mortgage. The breadwinner has lost his job. He's out of bankruptcy on the Romanian, colored in a situation where she's working part time teaching assistant £12,000 again on the lander is not agreeable. Toe taking over so responsible mortgage. It could be the London repossessing, but also the situation would be A's. That's if there is an application by a trustee in bankruptcy or or for sale. Then usually the trustee in bankruptcy is given priority. The actual wording in the relevant statute is the interests off the creditors outweigh all other considerations unless the circumstances of the case are exceptional. So usually, if the trustee in bankruptcy waits for more than a year following the day off the bankruptcy, then the trustee usually gets in order for say, occasionally the order might be deferred. Example. I repeated time to allow people to find alternative accommodation, usually of the order sales is given. I just want to cases which are highlighted in the presentation regarding Section 40 applications, one of the cases currently considered its Finch versus Hall. So four parties to this action have inherited a residential property in accordance with the terms of their father's will probated be granted to woman before siblings. The premises will then lead to a succession of tenants a few years after the grab privately and if you'd lt's executed a declaration trust in which they agree they hold the properties. Tenancy comedy jazz on the property was invested in full joint names. There was a condition in the declaration. Any sale of the property must be agreed to by all the property owners. Andi. It mentioned that 100 signatures off to the trustees would be required for sale or any over major commitment to be. Finally, it also stated it wasn't a central term of this agreement. They my sign only if they have received positive consent of all the property owners to their doing. So this paragraph is of fundamental importance on must be brought to the attention of any agent or potential buyer. For example, the trust declaration did not say that there would be assailed, with three of those four siblings vote in favor of it. On the face of the condition, it required unanimity between the parties. What one of the owners, now one of the siblings opposed application on the application had been made for in order for sale for 40 because to current tenants were close to exchanging contracts on the sale of the property seriously. The court ruled that condition to did not have the effect of preventing forever side of the property without unanimous consent. This is because the agreement has been made immediately prior to putting the property on the market that only a few months before the quote offer, quote, close quote was received condition to only apply to the immediate marketing operation covered by contemplated by the agreement. So the court refused, but also for sale without you. None of us consent did say if the property was to be marketed, it would not be subject to the agreement on the condition of the application and the provision of the trust declaration would have applied for affected by it. It's one final case on home ownership. Is the Bagan on these case in this situation, the property was a four bedroom housing is into building. It was owned as tenants in common in three shares. Mrs. Bagan to sums Mr Hobbies, Mr Hey, initially the counterculture to decided that you have no jurisdiction to make an older, so by the mother because she was seeking an order requiring the purchase of the share off Mr Hi from Mr Beads. A lot of the court did make an order directing the trustees to sell a property on terms that Mr Heavy should have the first opportunity to buy the property for a prize determined on valuation evidence by the court very much within six weeks of that determination that property should be sold on the open market for liberty, with liberty for all the beneficial owner Sturbin the matter then went to the Court of People on the Court of Appeal, then identified the relevant provisions off the 1996 acting with Section 14 Section 50 Corn Appeal upheld the judge's order. IM said it fell 1,000,000,000 squarely within her jurisdiction under Section 14 off the 1996 act. Could it be also, however, clarifying the court does not have power for Section 14 off tomato toe order or direct the one beneficiary Under trust of Love, the court does not have power under Section 14 of Lotte Order or direct, the one beneficiary under trusted lone cell or Trump's further beneficial interest to another beneficiary. So in the Bacon case, the parties have not given consideration to the situation of I Z. It might not have been contemplated at the time of purchase, but again, he also illustrates the difficulty for the conveyance in the often you are only acting polities who are buying property in this case, 10 to go. They're not telling you what their intentions would be or what their course of dealing to be between them. In the event example that the mother wished at one of the sons to be able to buy out the other, we also illustrate some of the complexities off co ownership on it is just a reminder that combines that need to be where, off the limits, off the scope of their retainer. You're not my large from the lawyers not advising on taxation issues you would not trying to second guess what might happen. It was a 2nd 40 application because the parties can agree on sale. You also know trying Teoh at second guess what provision should be the trust declaration in circumstances where the parties don't want trust declaration. So the bottles we keep to limits out on a retainer. Be aware risk. In relevant cases, I would be able to communicate that risk while explaining to find what doesn't does not fall within our roles in vain. So hopefully we will, in both cases protect ourselves next. Moving onto issues which may arise if you are preparing bespoke Declaration of trust 1st 1 is the issue as to whether or not one of the joint owners made benefit from independent legal advice, for example, if they are contributing the lion's share of the purchase price, But they're instructing you that they want a tenancy in common, equal shares schools. One can always forced the other person to see that independent legal advice. But that may well be cases where is beneficial to at least consider doing that next, the parties they wish to agree. But in the event that they are buying a property jointly for the purpose of living, that whether it's a single household or single fumbling, then what happens if one of them moves out to the property? So they might agree that while the living there they will each contribute equally to outgoing, such as maintenance, repair, insurance mortgage repayments. They might also wish to make provision. In the event of example, one of them continues to live there that the occupier might continue to pay those outgoings, or it might be mutually agreed that both parties will do so and the parties also to include mutual indemnity governance. So the one party ends up paying, for example, all the expenses. They will be a right all that person to claim an indemnity off half of those costs from the other party. Look, it's a real life example or waitress declaration in the Paris key case. What you have here is a purchase under the right to buy where you have the tenants who are purchasing that council property and the sun is funding the purchase. The trust declaration contained sons confidence to pay all sums due to the lavender under the mortgage. I'm to indemnify the parents against all actions and costs at Centra if there was non payment. It was also provision that the sun, in effect, would lose the whole off his equitable interest in the property if he failed to keep up with the mortgage repayments. That was a case where the courts actually upheld that declaration of trust. Looking at another example, there is the next case which is holding versus house. I'm in that particular case, the corpse was satisfied that the mutual intentions of the parties you created trust and the purpose for which a property was held Subject trust was to provide home one of them in this case of the defendant, so long as she wished. In other words, that was a primary purpose of tension. Ondas longer the person concerned which to continue living there. Then the courts would not order a sale of the property against her wishes. Another case is Richard versus would. This was also a right to buy purchase where tenants were relying on a family member to help contribute towards the purchase price. The tenants contributed the about the discount. There was evidence that the stolen more had provided them with £9400 to fund the purchase. However, the Declaration of Trust attributed 20,000 only off at 9400 parents to the son in law. Mr Richards Declaration further continued that the balance of the 4400 parents have been provided by the tenants at the Court of Appeal held that so far as the cash contributions were concerned, being declaration between the parties was conclusive, and they were therefore bound by the statement that they agreed even if the cash contributions in actual fact had been different than those stated in the declaration was born, that contributions are accurate stated in the collection. Equally, it might be that there will be no contributions by one individual, in which case the declaration made bake the point that's at one parties contributed all the equity or all the purchase price. But the parties have agreed a tenancy in common, whether or not in equal or unequal chairs. There's also the issue mentioned previously. What happens if the property is registered in one party's name? Do the parties wish to include a cause that the other person, for example co occupy? It will have no claim to the equity. The property, Uh, do they wish the regiment right? A whole of trust at the bank of the mortgage bubble, the borders under agreed, effective that joint tenancy being seven. The default position is separates creates a Tennessee comedy. She has that the parties might agree in event of joints tendency being seven, that there will be a Tennessee common in unequal shares. Also, if you have buy to let purchases are having the buying a property, they have the right to reach a an agreement or declaration us to that beneficial interest in the equity one about the shares of the Red for property on. I think that conveyances who had always recommend that their clients speak to their accountant, disclosed to the accountant their greed shares in the equitable interest of the property so the council can advise them as to the appropriate shares they should each have in the event. Lincoln Rights of Preemption rights preemptive very briefly. This is a scenario which abilities where one person has the right to say to the other party, I require you to buy my shadow out right on that situation. I, the party who wishes to sell of interest, will offer it to the other party in the event of the other party is willing or unable. So you by out there share our open market value. There will be a mechanism, often to determine the market value, for example, of surveyor, um reached that determination on the other party does not have indicated intention to buy out. Come over, that there will be a provision then for the property to then be sold on the open market. So we've covered a range of issues in the short. According at some of them relate to declaration to trust someone to come out of shit. I do hope that this session has been used to yourselves. Andi, thank you for joining me on. This is the end of presentation. I'm not signing off. Thank you very much.
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