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A trust imposed on a person who holds the title to the property against his intention.
A constructive trust arises when, although there is no express trust affecting specific property, equity considers that the legal owner should be treated as a trustee of an interest in it for another. This happens, for example, where one who is already a trustee takes advantage of his position to obtain a new legal interest in the property, as where a trustee of a leasehold takes a new lease in his own name, or acquires the freehold reversion. A constructive trust attaches by law to specific property which is neither expressly subject to any trusts nor subject to a resulting trust but which is held by a person in circumstances where it would be inequitable to allow him to assert full beneficial ownership of the property. Such a person will often hold other property in a fiduciary capacity and it will be by virtue of his ownership of or dealings with that fiduciary property that he acquired the specific property subject to the
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Trust disputes—table of cases Existence and validity of trusts Topic Case name Summary Author Jurisdiction Existence and validity of trusts Provincial Equity Finance Ltd v Dines (née Breda) [2023] EWHC 103 (Ch) News Analysis: ‘By prosperous voyages I often made…And the great care of goods at random left’—resulting trust and the dominion of express trusts (Provincial Equity Finance Ltd v Dines and a Tragedy of Errors)This case demonstrates the practical difficulty of establishing a claim for resulting trust where a chaotic deceased used bank accounts for mixed purposes and establishes that an express trust may supplant the presumption of resulting trust even where the party advancing funds is not a party to the express trust. Nicholas Holland, McDermott Will & Emery UK LLP England & Wales Existence and validity of trusts Attorney General v Zedra Fiduciary Services (UK) Ltd and others [2022] EWHC 102 (Ch) News Analysis: Cy près scheme approved for £600m charitable trust to be applied to reduce the National Debt (Attorney General v Zedra Fiduciary Services (UK)...
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Nature of trustsThe trust conceptTypically, the settlor is the original owner of property and creates a trust by conveying it to one or more trustees and manifesting an intention that it is to be held on trust for one or more beneficiaries or for the accomplishment of a particular purpose. The trustees become owners at common law and hold the property or rights in trust for the beneficiaries (cestuis que trust) or that purpose. The trustees come under an equitable obligation enforceable by the beneficiaries. No trust is created, whatever the intention of the settlor, unless legal title is vested in the trustee (this is known as constituting the trust).DefinitionWhile the trust concept is recognisable, a definition is not so easy.The definition set out in The Law of Trusts and Trustees 10th edition by Underhill and Hayton was adopted by the Court of Appeal in Green v Russell per Romer LJ: 'A trust is an equitable obligation, binding a person (who is called a trustee) to deal with property over...
Express lifetime declarationsWhere a trust is created by an express lifetime declaration, the settlor simply declares that they hold the trust property on trust for the specified person or object absolutely. The settlor must be unequivocal in their declaration and should communicate the terms of the trust to the beneficiaries. The following must be present:•there must be property capable of being subjected to a trust•the trust must meet the requirements for formal validity•the terms of the trust must be sufficiently certain (essential validity)•the purpose of the trust must not be unlawfulEvidential requirements—personaltyProvided the conditions for the essential validity of the trust are fulfilled, a declaration of trust in respect of personalty (other than an equitable interest) may be declared:•in writing•orally or•(in exceptional cases) by conductThere are no legal requirements as to the form of a declaration of trust of personalty. However, it is good practice to ensure that all the terms of such a trust are contained in a written instrument in order to establish the terms of the trust...
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Loan note instrument—private M&A—share purchase This Instrument is dated [insert date] 20[insert year] Parties 1 [Insert name of issuing company] incorporated in England and Wales under number [insert company number] whose registered office is at [insert address] (Issuer) Background: The Issuer has resolved to create up to a maximum nominal amount of £[insert value] [insert rate]% [subordinated] redeemable loan notes to be constituted as set out in this document. It is agreed as follows: 1 Definitions and Interpretation 1.1 In this Instrument, unless the context otherwise requires the following expressions shall have the following meanings: Business Day • means a day, other than a Saturday, Sunday or public holiday, on which clearing banks are open for non-automated commercial business in the City of London; Certificate • means the certificate in the form set out in Schedule 3; Conditions • means the conditions set out in Schedule 1 as amended from time to time in accordance with this document; Default Event • means any of the events specified in clause...
Equity warrant instrument—private limited company This Warrant Instrument is dated [insert date] Parties 1 [Name of Issuer], incorporated in England and Wales under number [company number] whose registered office is at [address] (Company) Background The board of directors of the Company has by resolution passed on [insert date] authorised the creation of warrants giving their holders the right to subscribe for new shares in the capital of the Company at a subscription price and on the terms set out in this Instrument. THIS INSTRUMENT PROVIDES: 1 Definitions and interpretation 1.1 In this Instrument, unless the context otherwise requires the following expressions shall have the following meanings: Adjustment Event • has the meaning set out in paragraph 3 of Schedule 4; Articles • means the articles of association of the Company for the time being; Business Day • means a day, other than a Saturday, Sunday or public holiday, on which clearing banks are open for non-automated commercial business in the City of London; Certificate • means...
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T left a life interest in T's share of a property to T's spouse, S. S's new partner, P now resides in the property with S. What rights does P have in the property as a result of P's occupation? As a life tenant of a share of the property, S is entitled to occupy the property, so long as the purposes of the trust include making the property available for their occupation, the property is available and suitable for occupation under section 12 of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996). If S holds the remaining interest in the property, no one else will hold a right to reside there, although it is conceivable that there are other owners of the remaining share(s) of the property who also have a right of occupation under TOLATA 1996, s 12. TOLATA 1996, s 13 governs where there are more than one person with the right to occupy a property. Without any beneficial interest in the property,...
A property is registered in the sole name of one cohabitant party (A) and the other cohabitant party (B) asserts that they have a beneficial interest. Both parties have vacated (B with the parties' child) and A is renting the property out. Does B have a claim in respect of any rental profit received? Where a property is held by one legal owner (party A) but another person (party B) claims to be entitled to a beneficial interest in the property, party B’s interest will usually arise as a result of either a resulting or a constructive trust. The basis for a resulting trust is the presumed intention of the parties. It will arise where land is conveyed to one person such as party A, but the purchase money is provided in whole or in party by another, party B. A constructive trust will be imposed in a number of situations, however, two are most material for present purposes. Firstly, a constructive trust will be imposed where it would be...
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This week's edition of Property weekly highlights includes: progress of the Renters’ Rights Bill, the first reported decision on the interpretation of the Renting Homes (Wales) Act 2016 (specifically the obligation to provide an electrical condition report) and cases on the statutory right of pre-emption, assertion of a third party beneficial interest in mortgage possession proceedings and defining a transaction defrauding creditors.
This week's edition of Property Disputes weekly highlights includes: the Ministry of Housing, Communities and Local Government’s announcement that the Renters’ Rights Bill has progressed to its report and third reading stage in Parliament, further analysis of the High Court decision on the impact on Welsh landlords of failing to provide Electrical Condition Reports to contract holders, and the Civil Procedure Rule Committee’s proposed amendments to rule 52.12(3) of the Civil Procedure Rules. It also includes High Court decisions on the test for locus standi where a claimant relies on 'associational standing' in an application to judicially review implementation of licensing schemes under the Housing Act 2004, mortgagee possession claims, the definition of a building under the Landlord and Tenant Act 1987, and on transactions defrauding creditors.
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