Whose house is it really?
WORDS: Brendan Nyst - Nyst Legal PHOTOGRAPHY Supplied
Buying property in someone else’s name isn’t always the gift the recipient thinks it is.
I bought a house in my partner’s name, but now I want it back. What can I do?
Perhaps surprisingly to some, this is not an uncommon problem. People often – for one reason or another – buy real property in somebody else’s name. It’s usually someone they have some affection for and/or trust in, such as a family member, close friend, spouse or partner. Often it is because they want that person to get the benefit of the property, but not always. And while they officially buy the property in, or transfer it into, the donee’s name, they don’t necessarily consider the transaction an outright gift.
Sometimes, somewhere along the line, circumstances change and the donor wants to claw the property back, but the donee, whose name is now on the title deed, digs their toes in and refuses to budge.
In such cases, the common law recognises a concept called ‘presumption of a resulting trust’, meaning that where a property is paid for, either wholly or partially, by one person (the donor) but legally held in the name of another (the donee), the law presumes the property is actually held by the donee on trust for the donor.
So, even though the property is officially registered in the name of the donee, the person who originally paid for the asset is presumed at law to be the real beneficial owner. As such, they are entitled to exercise some control over the asset and will be entitled to the proceeds of its sale. For example, if you have purchased a house in the name of your de facto partner, they are presumed to hold it in trust for you, unless they can demonstrate otherwise, and at first blush, you remain the beneficial owner of the property.
To complicate matters, the law also recognises a concept called the ‘presumption of advancement’. That is a presumption which applies to property transfers from a husband to his wife (but strangely not the other way around), a male fiancé to his female fiancée and parents to their children. In respect of those transactions, the law automatically presumes that the transaction was a gift in favour of the recipient, who has thereby acquired full beneficial ownership of the property concerned. While it is still open to the donor to prove the transaction was not intended as an outright gift to the donee, the burden of proving that rests firmly at the donor’s feet.
Sadly, this is becoming an all-too-prevalent area of litigation between family members and former friends.
Ultimately, determining whether the party who shelled out the cash in the first place actually intended to simply gift the property to their donee, or intended to still maintain some beneficial ownership over the asset, will come down to the evidence called at a trial and a finding of fact by the court as to what they intended at the time of entering into the transaction.
That’s why ideally, any party proposing to pay out money on such a deal should make sure they carefully and clearly record their intentions in writing prior to proceeding with the transaction. That becomes even more important when it is a parent buying an asset for a child, or a husband transferring assets to his wife, because in those circumstances, the presumption of advancement applies.