Determining the ownership of real property can be more complicated than you might think. This article covers four important concepts that assists in determining which party owns a property, and what type of ownership it might be. Yes, there are different types of ownership!


Concept 1: Legal Ownership

This is the concept that most people are familiar with when it comes to property ownership. The person who has legal title is the person whose name appears when a title search is conducted with the Land Titles Office.  This will be the buyer on the sale of land contract which was executed when the property was purchased.

Despite these documents showing someone is holding legal title, this may not be the full picture. It is only the starting point in determining ownership.


Concept 2: Beneficial Ownership

It is possible for a person to have a beneficial (as opposed to legal) interest in real property.  This will commonly be done by way of a trust.  For example, the person on the legal title may be the trustee of the trust, and someone else may be the beneficiary of the trust. The trustee in that scenario holds the property on trust for the other person.


Concept 3: Not All Trusts Are Express Trusts

Most people are familiar with the idea of a trust deed establishing a trust.  This would be an express trust.  This is not however the only way that a trust can be established!  The Court has a few presumptions that it considers, which can be overcome with the right evidence.

Resulting Trust

The Court may presume that a resulting trust exists if someone else contributed the purchase price of the property that the legal title holder holds.  For example, if person A pays for the property but chooses to put it into person B’s name, the Court may presume that person B holds the property on trust for person A, because person A is the one who actually paid for the property.

Presumption of Advancement

The presumption of advancement is when the Court presumes that the property has been gifted by person A to person B because of the special relationship between those two people (such as husband and wife, for example).

Constructive Trust

The Court may declare a constructive trust exists in circumstances where it would be inequitable for a party to retain a benefit.  For example, if person B retained the full ownership of the property even though person A paid for it, that may be considered inequitable and to remedy the situation the Court may declare that there is a constructive trust.  This is why a constructive trust is said to be a remedy – it is not about the intentions of the parties, but rather it is about how to do equity.


Concept 4: You may need to go to Court to sort out your ownership issues

It is not uncommon for the owners of a piece of real property to get into a dispute about who owns what, or a dispute about whether a property can be sold.  For example, in New South Wales it is common for parties to commence proceedings pursuant to section 66G of the Conveyancing Act 1919 (NSW).  Section 66G allows the Court to appoint trustee(s) to handle a sale of the property so that the various interests can be separated.  The Court determines the proportions of the interests in the property in question, and then appoints trustee(s) to sell the property.  This is commonly utilised by bankruptcy trustees to sell the family home in circumstances where the husband and wife are in a dispute about their proportionate interests or who the true owner of the property really is.


Takeaways

Property ownership can be more complicated than simply determining what is on the legal title.  The above concepts can be difficult to apply in practice, and often parties will own unequal proportions of property.  If you have received a letter from a bankruptcy trustee or solicitor regarding property interests, or are in a dispute with someone about ownership, you will need the correct advice.