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Legal and Equitable Rights to Property

Issue

In this case, involving Angelina, Brad, Charles, Jennifer, Erica and Angelina and Brad’s children, each party is faced with different circumstances relating to the right to the property which is the subject matter in this particular case.

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Angelina and Brad are joint legal owners as both their names appear on the land registry. Jennifer was cohabiting with the deceased prior to his death, and the will bequeaths the property to her and Brad’s children. Charles contributed a substantive amount for the purchase of the property and as a matter of facts his contribution was used as the deposit for the purchase of the property and on her part, Erica was made to sell her house by Angelina and Brad, so she can come live with them and help them with the taking care of the children. Several issues arise out of this situation, and it is important to identify each of them.

The first issue is, what rights does Angelina have against the property given that she did not contribute directly but had been living with Brad, and the property was registered in both their names What? would have been the case if, the property had not been registered jointly but, in Brad’s name, would the situation have been different?

Does Jenifer have any right to the property, given that she was cohabiting with the deceased and having been bequeathed with the property by the will? Does the will have any effect in this particular case? If the will is valid, can she force a sale of the property?

The other issue is whether Charles has any legal or equitable right to the property having contributed to its purchase.

Finally, is Erica entitled to any form of compensation as she can now end up being homeless after selling her property due to representation made by Brad and Angelina?

Rule

The Law of Property in England is governed by the Registered Land Act of 2002. Section 27 of the Registered Land Act requires that any disposition that relate to transferring, leasing of land, registered estate or charge, must be registered.

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Section 58 of the Land Registration Act 2002 provides that, an estate will be deemed to be vested in the person to whom the title is registered as the proprietor of a legal estate. Section 59 on its part provides that a beneficiary to an estate must be registered.1

Under section 116 of the Registered Land Act 2002, both equity by estoppel and mere equities are binding on successors.

Upon the death of one of the joint owners, the inheritance of the property will be affected by the type of joint ownership. However, during the life of the joint owners each joint owner has the right to stay in the house owned jointly and can only be changed by a court order.2 It’s important to note that there are two types of joint ownership;

  1. Tenants in common
  2. Joint tenants

Joint tenants

This types of tenancy depend on whether the owners in a joint ownership are married or not and has nothing to do with renting of the property. Joint tenants of a property have equal rights to the property as opposed to specific shares. Married couples, long term partners or civil partners who own property jointly own the property as joint tenants. If one of the joint owners of a property dies, the property automatically reverts to the other owner regardless of what the will says.

Tenants in common

On its part, tenancy in common means that the parties that own a property have specific shares and do not necessarily mean that they have equal shares. Friends and couples in new relationships often than not own property under common tenancy.The case of Stack v Dowden illuminates this area appropriately; the court granted Mr. Stack equal shares in the house which was held upon trust by him and his partner as tenants in common, even though Ms Dowden had contributed more in the purchase of the property.

In Fowler v Barron [2008] EWCA Civ 377, the Court of Appeal held that, a property owned jointly is assumed to be held equally even if one of the parties contributed extra to procure the property. The party claiming that the property is not owned equally has the responsibility of rebutting the presumption.

The facts of this case were that, the parties had bought property and jointly registered the property. The man had paid the mortgage deposit and the installments. On her part, the woman had catered for other expenses in the house like the children’s clothing, food and other smaller things. The court held that unless proven otherwise joint tenants are presumed as joint legal and mutual beneficial owners.

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However, the law doesn’t acknowledge indirect contribution as illustrated in the case of Lloyd Bank v Rosset [1991] 1 AC 107. According to this case, running the house does not in itself create constructive interest in the property. In this case, property was used from funds set up by Mr.Rosset, and the property conveyed in Mr.Rosset’s name. He later took a loan using the property as security and did not inform his wife. When he defaulted in repaying the loan, Lloyd Bank sought to take the property. These made Mrs. Rosset to assert her benefit in the property by claiming that she had an overriding interest in the property. The court disagreed with her and upheld the appeal which was raised by Mr. and Mrs.Rosset. It concluded that the Mr. and Mrs.Rosset had not expressly agreed on creating beneficial interest, and that Mrs.Rosset’s contribution to the property was insufficient for an inference on beneficial interest to be created. The court of appeal further agreed with the bank, by stating that Mrs.Rosset’s contribution to the property in the form of renovation the properties were minimal and insufficient to support the claim of constructive trust that she was seeking in the absence of written agreements that satisfy Section 51 of Law of Property Act 1925.

This case established the rule that, for there to be equity in a property arising out of indirect contribution; the cohabitants must have discussed and come to an agreement or understanding on the ownership of the subject matter, and the claimant must have relied on the representation or understanding to his detriment. Once the court has established the existence of both common intention and detrimental reliance, then equitable interest by dint of proprietary estoppel or constructive trust must be established.

Proprietary estoppel has for a long time been used to provide rights to partners or family members who have been unable to prove resulting or constructive trust. This doctrine is based upon the principle that it is inequitable to deny a right to a title holder. The two doctrines of proprietary estoppel and constructive trust that result in equitable rights can be as a result of a direct or indirect assurance, in Pascoe v Turner [1979] 1 W.L.R. 431, Mrs. Turner had been cohabiting with Mr. Pascoe for ten years after she had worked for him as a house keeper. He eventually left her and moved in with another woman. Mr. Pascoe informed her before a witness that she could keep the house and everything in it; the court held that she had an equitable right to the property.

In some instances, the court may be required to imply on an assurance depending on the circumstance of the case, factors, particulars, extend of detriment, respective housing needs, public policy constrains and the nature of the relationship. In Warnes v Hedley (1984), a mother bought a house for her son and daughter in law prior to the birth of their baby. The mother remained silent on the basis to which the couples were occupying the house. The court held that the intention of the mother was to bequeath the house to her son and daughter in law.

The recent cases of Thorner v Major [2009] 1 WLR 776 and Yeoman Row Management Ltd v Cobbe [2008] UKHL 55, in Yeoman Row Management v Cobbe [2008] UKHL 55, the court took a restrictive approach to proprietary estoppel; the House of Lords ruled that the defendant’s unconscionable behavior does not give rise to constructive trust or proprietary estoppel in favor of the claimant. In the above case, the defendant and the claimant entered into an oral agreement for the redevelopment of their property. Once the planning permission had been granted the defendant withdrew from the agreement. In Thorner v Major, the proprietary estoppels claim of a farmer was upheld by the House of Lords. The farmer had worked without pay on the oblique assurances from his cousin who represented to him that he would inherit the property. Thorner appears to retreat from the restrictive approach taken in Yeoman.

On its part, constructive trust is a fabrication of the courts to handle situations where the defendant has dealt in an unconscionable conduct with the property. Constructive trust relating to property rights may arise out of many factors like profiting from illegal ventures, dealing with property unconsciously and a fiduciary benefiting from unauthorized profits.

Lord Hope in the case of, Stack v Dowden [2007] UKHL 17 deviated from Loyd Bank plc v Rosset by deciding that, making improvements, direct or indirect contribution or completely pooling of resources whether monitory or in time during a relationship contributed significantly in deciding whether a constructive trust exists.

In the more recent case of Jones v Kernott [2011] UKSC 53, the court awarded Ms Jones 90 % of shares in a property that she owned jointly with Mr. Kernott. The property in question had been bought jointly by the parties but Ms Jones had contributed more towards the purchase. Over the years they both contributed to paying for the bills and child maintenance. However, they separated and Mr. Kernott ceased to pay the bills and maintenance of the children. The court held that the proper test to apply was the “fair and just” test. The court concluded that even though the even though the property was owned jointly circumstances had changed significantly since the split and thus Ms Jones was entitled to 90% of the shares in the property.

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Analysis

The property was registered in both Angelina and Brad hence they own the property jointly. In addition to that, Angelina and Brad have been cohabiting for a very long time prior to their separation, and therefore they own the property under joint tenancy. This case is factually similar to Fowler v Barron [2008] EWCA Civ 377, in both cases the parties did not contribute equal payment for the house, but the fact that they registered the property jointly portrayed their desire to own the equally own the property. This is reinforced by the fact they had been living in the house together for a very long time prior to their separation. However, in Fowler v Barron [2008] EWCA Civ 377, the parties had a mutual joint will, as opposed to this particular case where one of the parties had indicated his intention to give his share of the house to Jennifer and his children.

In a situation where the property was solely registered in Brad’s name, and Angelina had not contributed directly to the purchase of the house, but had taken care of the children. The circumstances would have had to be weighed subject to the rules established in the case of Lloyd Bank v Rosset [1991] 1 AC 107. The first rule to be established is whether there was an agreement or understanding between Angelina and Brad, after the first rule has been established it is upon Angelina to prove that she relied on the agreement to her detriment. Once the two factors have been established Angelina would have the right to seek equitable rights for her contribution to the property.

Conclusion

Angelina is the co-owner of the property registered in her and Brad’s and now that Brad is deceased the property solely belongs to her according to the law. If the property had been registered under Brad’s name, then Angelina would not have had the right to the property as no agreement or understanding exists to satisfy the rule set out in Lloyd Bank v Rosset [1991] 1 AC 107. She would fail in seeking the equitable remedy of proprietary estoppel or constructive trust, unless she satisfies the rule set in Lloyd v Rosset [1991] 1 AC 107. Section 116 requires that for the equitable remedies of estoppel or constructive trust to apply they must be subject to rules on disposition as per the Registered Land Act 2002.The property will revert to Angelina for she is legally entitled to the whole property after the death of the other joint owner.

Jennifer on her part does not have any right to the property since the will does not have any effect on the title of the property; whether equitable or legal. Her appointment as the beneficiary of Brad’s estate has not been registered under the Registered Land Act and does not meet the requirements of Section 59; she, thus, lacks legal backing to claim the property under the Act. In relation to the equitable claim or constructive trust, Jennifer did not contribute to the improvement of the house. In addition, she doesn’t satisfy the formula set out in Lloyd Bank v Rosset [1991] 1 AC 107 on how to determine whether a mistress has a legal title to property of the person she was cohabiting with. Jennifer cannot force a sale as she does not have any right whatsoever and the will in relation to this particular title is null and void.

Charles situation can be compared to that of Pettit v Pettit [1970] AC 777, even though the facts slightly differ as he was not married to either parties, his contribution to the purchase of the property was substantive enough for him to claim a part of the property.12 He has a right to be compensated for the amount that he lent his son. The court will have to order Angelina to pay Charles the sum of his contribution.

Erica was a tenant in common she does not have an equal share in the property as Angelina and Brad, but the fact that she was living with them after she sold her property gives her the right to own property in common tenancy. In addition, she contributed indirectly by taking care of the children. She is entitled to the remedy of proprietary estoppel, even though the property is not in her name, and she cannot directly assert her claim to the property. The onus is on her to show the court that she suffered detriment, after being made to sell her property to come and live with the deceased and Angelina. Once she proves that she was directly or indirectly assured of a place to stay, she will be entitled the right of occupancy.

References

Burn, E. and Virgo, G.Maudsley and Burn’s Trusts and Trustees Cases and Materials,(7th ed. Oxford: OUP,2008). Chap E., Proprietary Estoppels,(London: QXP 2007).

Fowler v Barron,Family Law Week, 2012. Web.

Gray, K. and Gray, S.F. Elements of Land Law,( 5th ed. Oxford: OUP,2009).

Hayton, D.J. and Marshall, C.Hayton and Marshall: Commentary and Cases on the Law of Trusts and Equitable Remedies, (12th ed. London: Sweet & Maxwell,2005).

Lawson, F.H. and Rudden, B.The Law of Property, (3rd edn, Oxford: OUP 2002)135.

Shelter,Joint Ownership,Shelter England, 2012. Web.

Partrick O’Hagan,Indirect Contribution to the Purchase Of Property(Modern Law Review Limited ,1993).

Pearce, R. and Stevens, J. The Law of Trusts and Equitable Obligations,(4th ed. Oxford: OUP,2006).

Table of Cases

  • Fowler v Barron [2008] EWCA Civ 377
  • Jones v Kernott [2011] UKSC 53
  • Lloyd Bank v Rosset [1991] 1 AC 107
  • Pascoe v Turner [1979] 1 W.L.R. 431
  • Pettit v Pettit [1970] AC 777
  • Stack v Dowden [2007] UKHL 17
  • Warnes v Hedley (1984) 2 All ER 384
  • Thorner v Major [2009] 1 WLR 776
  • Yeoman Row Management Ltd v Cobbe [2008] UKHL 55

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