When is a handshake deal about property legally binding?

Disputes over family property often arise because arrangements are made informally and not properly recorded. A recent High Court decision, Uddin v Uddin [2026] EWHC 150 (Ch), highlights the risks of relying on verbal agreements – even where both parties believe they have reached a clear understanding.

The background

The case involved two brothers who had an interest in a family home.

The property was originally purchased in one brother’s name only, but both brothers understood that it was intended to be shared equally. That understanding was later formalised when the property was transferred into their joint names.

Over time, tensions developed between them, including disagreements about money spent on the property.

At a later family meeting, it was said that the brothers reached a new agreement under which:

• one brother would give up his interest in the property
• in return, the other would not pursue a financial claim relating to past contributions.

The court at first instance accepted that this arrangement had changed the ownership of the property, effectively making one brother the sole beneficial owner.

What the High Court decided

The High Court overturned that decision.

The central question was whether a verbal agreement of this kind could actually change beneficial ownership in the property.

As a starting point, the law requires that any transfer or disposal of a beneficial interest in land be set out in writing and signed (under section 53(1)(c) of the Law of Property Act 1925).

There is an important exception to this rule. In some circumstances, the court can recognise what is known as a constructive trust, even where nothing has been documented in writing. However, the conditions for this are strict.

Why the agreement was not enough

The court made clear that simply proving that an agreement existed is not sufficient.

To succeed in asserting a constructive trust, a party must also show that they relied on that agreement in a way that caused them real disadvantage. This is known as detrimental reliance.

In this case, the alleged “detriment” was the bargain itself:

• one brother agreed to give up his share
• the other agreed not to pursue a financial claim.

The High Court held that this did not amount to reliance; it was simply the bargain that each party had agreed to make.

There was no evidence that either party then took further steps – or refrained from acting – in a way that left them materially worse off because of the agreement.

In the court’s words, something more is required: a party must show how they actually acted on the agreement to their detriment.

Because that had not been established, the earlier decision could not stand. The case was therefore sent back to the lower court for the question of detrimental reliance to be considered.

The importance of detrimental reliance

A key takeaway from the case is the distinction between what the parties agreed and what they did as a result of that agreement.

For a constructive trust to arise, there must be evidence that the agreement was acted upon and that action (or inaction) caused a real and substantial disadvantage.

It is this element that makes it unfair – or legally “unconscionable” – for one party to go back on the agreement.

Without it, the courts are unlikely to enforce informal arrangements.

Practical lessons for property owners

The case is a clear warning about relying on informal or “handshake” deals when it comes to property ownership.

In particular:

• verbal agreements alone will not usually change ownership rights
• constructive trusts require clear evidence that an agreement was relied on to a party’s detriment
• simply agreeing to give something up as part of the agreement itself is not enough
• without proper evidence, ownership will generally be determined by the legal position on the title.

The Birketts view

Uddin v Uddin reinforces a familiar but important message: the courts will not step in simply because parties believed they had reached an agreement.

If you intend to change ownership arrangements in a property, you should: record the agreement properly in writing or ensure there is clear evidence of reliance if you intend to rely on it later.

Otherwise, you may find that what felt like a settled agreement carries little weight if the matter comes before the court.

The Birketts home ownership disputes team specialises in resolving property disputes between co-owners and constructive trust claims. For more information about the topics covered in this article, please contact Laura Tanguay or another member of the home ownership disputes team.