Constructive trust

Constructive trust

A trust which arises in cases involving land to prevent a person who has acted fraudulently, inequitably (unfairly) or in breach of trust from benefiting even though he legally is entitled to do this.

Case example: Bannister v Bannister (1948)

A sister sold two cottages to her brother, relying on his spoken agreement that she could go on living in them until her death. Once he became the owner, he tried to evict her, arguing that he was not bound by the agreement because it was not in writing as required by the Law of Property Act 1925. It was held that a constructive trust had been created, the brother was the legal owner of the property but he held it for the benefit of his sister so that she could go on living in it.

Constructive trusts often arise where a house is owned by one person but someone else makes contributions towards the mortgage payments, showing that they both see themselves as owners of the property.


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