28 June 2024 by Peter Thibault

What is a Resulting Trust?

A resulting trust arises when property is transferred to someone, but it is presumed that the transferee is not intended to be the beneficial owner. Instead, the beneficial interest, or the right to benefit from the property, is assumed to remain with the original owner or to be shared according to the contributors’ intentions.

For instance, if two people contribute to the purchase of a property but it is only registered in one person’s name, a resulting trust may be presumed, reflecting each person’s contribution to the purchase price.

Understanding Beneficial Interest

A beneficial interest in property signifies the right to benefit from the property, such as the right to live in it, rent it out, or receive proceeds from its sale. This is different from legal ownership, which is about who is listed as the owner on the property register.

Someone can have a beneficial interest in a property without being the legal owner. For example, if you financially contributed to buying a house, you might have a beneficial interest even if your name isn’t on the deed.

Section 14 of TOLATA 1996

The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) provides a mechanism for resolving disputes involving trusts of land. Section 14 of TOLATA is particularly relevant for those seeking to claim a beneficial interest in a property. This section allows any trustee or person with an interest in the property to apply to the court for an order determining how much of an interest in the property they have and how the property should be used.

Why Use Section 14?

Using Section 14 of TOLATA provides a clear legal route to assert your beneficial interest. It can help resolve disputes and ensure that your contributions and intentions are legally recognised. This process can be especially useful in scenarios where informal agreements about property ownership exist, or where one party refuses to acknowledge another’s beneficial interest.

A Recent Example

Lawyers in our Real Estate Disputes team have recently assisted a client resolve a dispute at mediation relating to a trust of land. The client had bought property jointly with a romantic partner historically before both their finances and relationship declined. The client was led to believe by the co-owner that the property had been repossessed by their lender, only discovering that it was still owned (and had been significantly refurbished) a decade later.

In this case, our team was able to help reach a settlement which resulted in the client recovering a significant amount of the equity (which had increased over the years) and a full recovery of legal costs incurred in the dispute. The Court had the power to look at the entire period of ownership by the parties and could have made an order to do what was felt to be fair, just and reasonable in the circumstances, thereby having a wide discretion. Ultimately, through settlement, the matter which had been ongoing for in excess of ten years was able to be resolved.

Conclusion

Understanding resulting trusts and the action you can take to secure your interest in land is crucial for anyone involved in property ownership with another person. Always consider seeking legal advice to navigate these complex issues and to strengthen your claim effectively.

If you want advice or assistance on any issues relating to property ownership, please contact our expert Real Estate Disputes team.

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