How can I prove that I own a share in a property?
2 March 2023
There are two ways of owning a property: legally and beneficially. The legal owners are the people named on the title deeds. The beneficial owners are the people entitled to a share in the sale proceeds when the property is sold.
The law assumes that the beneficial owners are the same as the legal owners. So, if you are not on the title deeds, the burden is on you to prove that you have a share in the property. There are several ways in which you may be able to do this.
Declarations of trust
If your interest in the property is recorded in a declaration of trust which complies with the statutory formalities, it should be relatively straightforward for you to prove your beneficial interest. Complying with the statutory formalities means that the legal owner has said (in writing, in a document that they have signed) that the non-legal owner has a beneficial interest. There is no need for this to be a formal document; even an email with an email signature might be enough (as indicated by the recent Court of Appeal case of Hudson v Hathway).
Declarations of trust are discussed in our previous article: ‘I am a joint owner of a property and there is an express declaration of trust. Is it legally binding?’
Common intention constructive trust (“CICT”)
If no declaration of trust exists, you may be able to prove that you have a beneficial interest in the property under a CICT. A CICT does not require any specific formalities – it occurs automatically in the right circumstances.
First of all, a CICT requires an arrangement or understanding between you and the legal owner that you were to have a beneficial interest in the property. This does not need to be in writing – it could have just been a conversation, or the necessary intention could be inferred from the parties’ conduct. Secondly, it requires that you acted in reliance upon that arrangement/understanding to your detriment (for example, by contributing towards the mortgage or renovations).
In situations where there is no written evidence of the arrangement/understanding, you can support your case by writing a witness statement explaining what the understanding was and how it arose. Similarly, you can show how you relied on the understanding to your detriment, for instance, through bank statements or receipts.
This might make it seem easy to prove the existence of a CICT. However, the court will scrutinise your evidence and consider other evidence or documents that might contradict your statement.
This was illustrated in February 2023 in the High Court case of Re Smith  EWHC 255 (Comm), 2023 WL 01871577, in which the defendants claimed there was a CICT but the judge ruled that there was not.
Example: Ruling that a CICT did not apply in Re Smith 2023
The case of Re Smith concerned a property owned by a notorious fraudster named Dr Gerald Smith. In a previous criminal case in 2006, he had pleaded guilty to misappropriating over £34 million in funds from Izodia Plc. He was sentenced to eight years’ imprisonment. He was also issued with a confiscation order of over £40 million, the largest ever in criminal proceedings at the time. (The purpose of a confiscation order is to deprive a criminal of the proceeds of their crime.)
By 2023, money was still owed under the confiscation order. The High Court had to determine whether a property in Ascot belonged to Dr Smith, and therefore could be used to pay the confiscation order. Dr Smith’s name was on the title deeds. His family tried to argue that the property was beneficially owned by his late mother, under a CICT, which would keep it safe from the confiscation order.
There was no written record whatsoever of the alleged trust arrangement, and the judge found this hard to believe given the circumstances. There were also many documents that were inconsistent with the family’s case. For example, Dr Smith’s mortgage application to Halifax did not mention the alleged trust arrangement. Similarly, subsequent correspondence from Halifax was addressed to Dr Smith, not to his mother.
Finally, although Dr Smith’s mother had written a witness statement before her death, claiming that she had been paying the mortgage for the property, the judge did not consider this evidence to be credible. The mortgage would have been just under £900 each month, and the mortgage statement provided by Halifax showed very substantial repayments being made on certain occasions (for example £2,200 on 2 September 1986, £2,500 on 6 January 1987, and £3,000 on 5 February 1987). As her only source of income was her state pension, it was hard to see how she could have afforded to pay the mortgage. The method of payment was also unclear. Her family asserted that she had made the payments in cash. The judge thought it unlikely that Dr Smith would have allowed his mother, given her age, to transport such large amounts of cash on a regular basis.
The Birketts view: it is better to act before the problem arises
If you own a share in a property that is not documented in a declaration of trust, you should document it as soon as possible. Your position could become very vulnerable in a variety of unfortunate, but not improbable, circumstances. If you do not document your interest in the property, ultimately you may face difficult and time-consuming litigation.
Birketts is well placed to assist you with drawing up a legally sound declaration of trust, or to help you through the litigation process if this is required.
For more information about the topics covered in this article, please contact Stephanie Butler. Law covered as at March 2023.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2023.