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Equitable interest in property

Equitable interest in land is the money that a legal owner, joint owner, or non-legal owner is entitled to from a sale of the property.

This content applies to England & Wales

What is equitable interest?

An equitable interest is a financial benefit arising out of property ownership. It is the right to any equity. The equity in a property is the amount that would be left over upon sale after any mortgages and charges have been paid.

The starting point for equitable interest is that sole owners own all of it, joint owners share it, and non-owners are not entitled to any of it. Some people's financial affairs do not reflect that starting point, meaning other rules might apply.

People need to understand their rights to the equitable interest when they:

  • sell a property and split the proceeds with another owner

  • separate or get divorced from the other owner

  • apply for bankruptcy or a debt relief order

  • have a charging order or bankruptcy order made against them

Divorce is covered by family law, which means the family courts have wider powers to distribute assets belonging to the married couple. A family solicitor can advise about the division of assets in a divorce.

Beneficial interest

A beneficial interest is an equitable interest that is separate from the legal ownership of the property. It occurs when someone who is not named on the property deeds has a financial stake in it.

Joint owners' equitable interests

Two or more legal owners can hold the equitable interest in equal shares or unequal shares, or one can own all of it and the other none.

The starting position for joint legal owners is that they are entitled to equal shares of the equitable interest. Joint owners who do not indicate they want to split the equity are beneficial joint tenants. If the joint owners intend to hold unequal shares, they should indicate that they want to be tenants in common at the outset.

In this context, tenant means the type of joint ownership, not a rental arrangement.

Beneficial joint tenants

Most joint owners are beneficial joint tenants unless they opted to be tenants in common when they purchased the property together.

Beneficial joint tenants each own all the equity. They hold it on trust for themselves and the other joint owner(s). If something happens that means the equity must be severed, for example the bankruptcy of one owner, the presumption is that they own equal shares.[1]

A beneficial joint tenant who wants to argue they are entitled to more than an equal share of the equity must prove that both parties agreed to that at the time. They cannot decide it was unfair later, even if they contributed more to the purchase price or the mortgage payment.

When one beneficial joint owner dies, their share of the property automatically passes to the surviving joint owner(s). They do not need to set it out in a will and it does not form part of the deceased person's estate. This is called survivorship.

Tenants in common

Tenants in common usually hold identifiable shares of equity from the outset. The owners can tell their solicitor or conveyancer how they want the equity to be divided when they buy the property.

In other cases, a tenancy in common arises because a beneficial joint tenancy is severed due to another event occurring.

Tenants in common do not have survivorship. That means they do not automatically inherit the other owner's share of the property. It is subject to any will or, if there is no will, intestacy rules. It forms part of the deceased person's estate.

Severance of a beneficial joint tenancy

When a beneficial joint tenancy is severed, the joint owners become tenants in common. Events that can sever a beneficial joint tenancy include a:

  • charging order against one joint owner

  • bankruptcy order against an owner

  • application by one owner to the land registry

A charging order made in joint names against both or all joint owners does not sever a beneficial joint tenancy.

Because the parties started out as beneficial joint tenants, the split of the equity is presumed to be equal shares.

Consequences of joint tenancy severance

The severance of a beneficial joint tenancy means the owners will not be able to rely on survivorship. Joint owners who are affected by one of the events that sever beneficial joint ownership should get advice about what will happen when they die. A probate solicitor can advise them about any action they can take to protect joint assets.

How a beneficial interest is created

A beneficial interest is created when someone who is not named as a legal owner has a right to some or all of the equity in a property.

Express and implied trusts

A beneficial interest can be an express trust or an implied trust.

An express trust is one that is written down. It is often executed as a deed. They are normally straightforward unless one person disputes what is contained in the document. The courts will always enforce what is written in the trust unless there is evidence of mistake, fraud, or undue influence.[2]

An implied trust is not written down. It arises as a result of the conduct of the people involved. For example, if a non-owner pays for home improvements on the assurance the other person would pay them back from any sale proceeds. Implied trusts can be difficult to prove because of the lack of written evidence.

Types of implied trust

A beneficial interest by implied trust could take the form of a:

  • constructive trust

  • resulting trust

  • proprietary estoppel

The most common implied trust is a constructive trust. These are normally formed due to a common intention between the legal owner and the non-owner.

Constructive trust

A constructive trust occurs when the conduct of the parties involved demonstrates that they intended to create a trust.

The courts have set out a test for establishing when the parties have entered into a constructive trust:[3]

  1. There must have been a common intention that each party would have a particular interest in the property.

  2. There must be evidence of discussions about the common intention.

  3. The person claiming the existence of the trust must have acted to their detriment by relying on the common intention that they would have a beneficial interest.

The same test applies whether the parties are in a relationship, married, business associates, or friends.[4] The onus is on the person claiming there is a trust to provide the evidence to satisfy the courts.

Financial contributions alone, including investing money and conducting repairs, are not enough to create a constructive trust.[5]

Resulting trust

A resulting trust can be created by the conduct of the parties involved. A common example of a resulting trust is where one person contributes to the purchase of a property but is not named on the legal title. This can occur if one person is not able to get a mortgage due to poor credit or other factors.

Proprietary estoppel

Proprietary estoppel arises when someone relies on a promise made by the legal owner and suffers detriment as a result. For example, a live-in caretaker who accepts that they will be left money in a will rather than being paid.[6] It often arises on the death of a property owner, when relatives and associates claim they have been promised something and not received it.

Proprietary estoppel is a very complex area of law. Anyone hoping to pursue a claim needs legal advice and representation. It is likely to involve expensive court proceedings. Successful claims for proprietary estoppel are rare.

Equitable interests in insolvency

Whether someone has an equitable interest in a property affects their options to deal with a debt situation. Bankruptcy, debt relief orders, and IVAs are all impacted by equity in property.

Debt relief orders

To be eligible for a debt relief order (DRO), the debtor's assets must be below £2000 in total.[7]

The asset limit applies to the gross value of the asset. Someone who owns a property, whether jointly or solely, is very unlikely to qualify.

A beneficial interest in a property the debtor does not own is an asset. For this purpose, a beneficial interest exists if it is contained in an express declaration of trust or if it has been determined by the court. If the value of the trust is more than £2000 the debtor is not eligible for a DRO.

In cases where there is no express trust or court order, the non owner might have a claim. The onus is on the non-owner to prove they have a beneficial interest.

Read more about assets in a debt relief order on Shelter Legal.


In bankruptcy, the trustee can realise the equity in a jointly owned property by applying to court for an order for sale.

If the bankrupt has a beneficial interest in a property they do not own, the onus is on the trustee to prove it. In the absence of an express declaration of trust or a court order, this could be very difficult.

A beneficial interest vests in the trustee. The trustee can take steps to realise it, such as selling it to a third party. They could apply to court for an order to sell the property.

Read more about orders for sale in bankruptcy on Shelter Legal.

Individual voluntary arrangement

An individual voluntary arrangement (IVA) can include a term that requires the debtor to release 85 percent of their share of equity in a property.

The IVA protocol provisions for dealing with equity in a property apply to beneficial interest in the same way as they apply to legal owners. It states that the debtor is not required to release equity if their share is worth £5000 or less.

Advising on equitable interest

Equitable and beneficial interests can be complex to advise on in cases where the person states their position differs from the starting point.

In the case of a dispute, only a court can decide whether a:

  • non owner is entitled to a beneficial interest

  • beneficial joint owner is entitled to a larger than equal share

  • tenant in common is entitled to a larger share than previously agreed

In complex cases, advisers might need to signpost to a property or trusts lawyer for in-depth advice, particularly if the trust has a high value.

Advice for debt relief order intermediaries

The Insolvency Service has provided a list of questions to help debt advisers determine if a person has a potential beneficial interest.

Find the questions for DRO intermediaries on

A debt relief order intermediary can proceed with a debt relief order application without listing a beneficial interest if the debtor says they do not wish to pursue a claim.

The debtor should consider whether they might want to make a claim in the future. By submitting a debt relief order stating they have no assets, the debtor is publicly declaring that they have no beneficial interest. It is likely that such a declaration would hinder a claim for a beneficial interest based on a constructive trust, resulting trust, or proprietary estoppel.

Last updated: 28 September 2023


  • [1]

    Stack v Dowden [2007] UKHL 17.

  • [2]

    Goodman v Gallant [1985] EWCA Civ 15.

  • [3]

    Lloyds Bank plc v Rosset [1990] UKHL 14; Crossley v Crossley [2005] EWCA Civ 1581; Insol Funding Ltd v (1) Cowlam (2) Cowey (3) Insol Funding Ltd [2017] EWHC 1822 (Ch).

  • [4]

    Gallarotti v Sebastianelli [2012] EWCA Civ 865.

  • [5]

    Williams v Lawrence [2011] EWHC 2001 (Ch).

  • [6]

    see for example Jennings v Rice [2002] EWCA Civ 159.

  • [7]

    para 8(1) sch 4ZA Insolvency Act 1986.