Can a declaration of trust be challenged?
Our litigation solicitors explain how the law can help you resolve trust deed dispute if you need to prove the true beneficial interest in a property.
In this article we explain how a declaration of trust can be challenged. A declaration of trust, also known as a trust deed can be challenged in connection with beneficial interests in a property where you believe you have been a victim of misrepresentation or undue influence
Our recent blog post on “How to prove beneficial interest in a property” is a popular read. It details whether someone can claim beneficial interest on a property they have lived in or financially contributed to if their name is not on the Land Registry title deed. A related matter is can a declaration of trust be challenged when someone claims that they were the victim of misrepresentation and/or undue influence in respect of a declaration of trust which does not accurately state the beneficial interest they and other parties have in a property.
A declaration of trust may state what beneficial interest each party has in a property, and can protect them if someone else claims a beneficial interest in a property or if they try to deny the beneficial interest of someone else.
At Starck Uberoi, our litigation solicitors specialise in beneficial and equitable claims to property . We can protect you from others making claims against you or advance any claims you may have as a result of any improper processes.
Case Study – In this case study we illustrate how a declaration of trust can be challenged.
In a recent case, we represented a defendant in a claim brought against them by a claimant. The claimant said that while in the process of purchasing a property, her signature on the declaration of trust had been procured by the exercise of undue influence and/or misrepresentation upon her by the defendant. She argued it was unconscionable for the defendant to have sought her signature on the declaration of trust this way, and claimed she had an equitable right to set aside the declaration of trust.
Our client claimed that the claimant had willingly entered the declaration of trust. We identified that the claimant had passed financial examinations to work as an accountant, meaning she was not inexperienced in business matters. Plus, the claimant did not make any financial contribution to the purchase except taking out the mortgage and did not ask any questions seeking clarification, despite having numerous opportunities to do so. The claim was also barred by acquiescence and laches, due to the time that had elapsed between the claimant signing the declaration of trust and bringing the claim to court. Therefore, we helped our client achieve fairness.
What is a declaration of trust?
A declaration of trust, also known as a deed of trust, is a document which records all the financial interests of parties involved with the purchase of a property. It will detail how much each party contributed to the deposit for the property, how much each party will pay towards the mortgage, how the proceeds from the sale will be split if the property is sold and who owns what percentage of the property. For example, you may record in your trust deed if a family member contributed some money to help you pay the deposit on your property, and if you were joint owners with someone else, the amount you would separately pay towards the mortgage.
Why is a declaration of trust important?
It is important to make sure everyone mentioned in a declaration of trust has agreed to the financial arrangements listed in them and at the information regarding any financial input towards purchasing the property is correct. It protects the investments of everyone involved and states who can claim beneficial interest from the property.
However, these documents are often the source of contention, so it is strongly recommended to instruct a solicitor with experience in drafting and advising on the implications of a declaration of trust. This will help you avoid future litigation, which is time-consuming and costly for all involved.
Can declaration of trust be challenged? Yes, if misrepresentation took place.
What are the three types of misrepresentation?
If you have discovered that the information in the deed of trust you signed is false, you may have been a victim of misrepresentation. The three types of misrepresentation are:
- Fraudulent misrepresentationThis is when someone has intentionally misled you regarding the declaration of trust. For example, someone may have claimed you contributed less towards their deposit than you did so that you can claim less beneficial interest in their property
- Negligent misrepresentationNegligent misrepresentation means that the information in the trust deed is incorrect, but was caused by carelessness by the offending party. However, in which case the offending party is still responsible for the error as they have breached their duty to ensure the information is correct.
- Innocent misrepresentationThis means that the representation made is false, but not as a result of fraud or negligence.
What can I do if there has been a misrepresentation?
For fraudulent or negligent misrepresentation, you may claim both recession and damages. If there was an innocent misrepresentation, then the court may decide to award you damages instead of recession, but they cannot award both.
To find out if you may be able to claim misrepresentation, please call us on 020 8840 6640.
What is undue influence?
Undue influence is the term for someone using improper influence over someone else, such as a friend or family member, to pressure them to sign a contract. If it is proved that the person signing the document was acting under undue influence, it can invalidate it.
The two types of undue influence are:
- Actual undue influence To prove actual undue influence, the claimant must be able to prove that such influence was exerted over them and that no independent judgement on the transaction could be formed. It does not have to be proved that the transaction was manifestly disadvantageous to the claimant, only that they were under the influence of another party to consent to it.
- Presumed undue influencePresumed undue influence arises when one individual placed their trust and confidence in another party. This usually happens where a relationship with presumed trust and confidence already existed between the parties, such as between family members. If there was a pre-existing relationship between the parties, there is an irrebuttable presumption that one person had influence over the victim; in cases where there was not, the court may apply a rebuttable, lesser evidential presumption that the transaction was procured by that influence.
How we can help
A declaration of trust is one of the most important ways to record an interest in property. However, these documents are often the source of contention; therefore, it’s very important to instruct a solicitor with experience in drafting and advising on the implications of a declaration of trust to avoid future litigation which can be costly and time-consuming for all involved.
Our London-based team of litigation solicitors understand when a declaration of trust can be challenged. They will be able to assist you in drafting a good trust deed should you need it and will be able to advise you if you make a claim for misrepresentation and/or undue influence or have one brought against you. All of our solicitors are regulated by the Solicitor Regulation Authority (SRA), so you can rest assured that by instructing us, you will receive bespoke legal advice from our expert team.
How Starck Uberoi can help
For more information, please visit Equitable Interest in Property or to book an appointment please call 020 8840 6640.
We have solicitors in Brentford on the High Street in a grand three-story building, just a ten minute walk from Brentford Railway Station. Our solicitors in Richmond on Thames overlook the picturesque Richmond Green just a five 5 minute walk from Richmond train station. Our Belgravia solicitors are located in a prestige location in Grosvenor Gardens and our solicitors in Ealing Broadway are located close to the University of West London. Finally our Canterbury solicitors are located in the within the UNESCO World Heritage Site of Canterbury Cathedral.
can also provide a professional Notary Public service at all our offices. For an appointment at any of our offices, email us at solicitor@starckuberoi.co.uk or call 0208 840 6640.
