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Beneficial ownership – reminder of key points

Practitioners who advise co-owners on the acquisition of property will find a recent article reviewing the case law on beneficial ownership very useful. The key points are:
 
  • The presumption of equality in joint ownership cases is based on the fundamental premise that the parties make a deliberate choice to put the family home into joint names with a clear and informed understanding of the legal consequences of doing so. The reality however may be very different.
  • The parties may not always be given proper legal advice before embarking on a joint purchase of the home. The result may operate unfairly on the party who has contributed significantly more to the purchase price at the time of acquisition.
  • The potential unfairness may be compounded if the other party (who has contributed less to the initial purchase price) subsequently pays for an improvement to the property which enlarges their share substantially beyond the joint share notionally ascribed to the parties on joint acquisition.
  • Such an outcome may, however, be moderated in circumstances where both parties have made a significant financial outlay to the property post-acquisition so that their equal beneficial ownership remains unaltered despite the change of circumstances.
  • In the absence of any discussions evidencing the parties’ shared intentions at the relevant time, the default position is to readjust the parties to beneficial entitlement by reference to a yardstick of fairness to fill the gap.
  • Where the parties have entered into a formal declaration of trust addressing their respective beneficial shares, neither party will be at risk of having their share reduced by reason of a change in circumstances of the purchase of the property. The parties will be able to rely on the apparent conclusiveness of their equitable shares as declared under the terms of their express trust in the absence of some vitiating factor permitting a party to rescind or rectify the trust.
Unsurprisingly practitioners are reminded that much of this difficulty can be avoided if proper, comprehensive co-ownership advice is given at the time of purchase, while at all times keeping the potential conflict of interest in mind. Source: [2019] 375 Property Law Journal 18.
 

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