CG65429 - Constructive trusts: other types of constructive trust

TCGA92/S225

Most claims for TCGA92/S225 relief that rely on a constructive trust involve provision for a family member. These should be dealt with in accordance with the guidance on common intention constructive trusts. A key feature of such trusts is that the occupier has acted to their detriment in reliance on a common intention that they would have an interest in the property. A third party who acquires the property will not have been a party to this common intention, their conscience will not have been affected by it and they will not acquire the property as constructive trustee. So, for example, a constructive trust established by the actions of a deceased person when they were alive will not be binding on his or her will trustees.

Similarly a contractual licence confers a personal interest on the licensee and doesn’t bind any successor to the transferor. A third party acquiring the land does not acquire it subject to a constructive trust. A contractual licence is a licence, a permission to enter land for an agreed purpose, granted under the terms of a contract. The terms of the contract will restrict the licensor’s right to revoke the licence.

The third party will be a constructive trustee in relation to the property only if they have taken on some new liability or to have acted in such a way that their conscience was affected. For example, if the property sold was subject to some prior interest such as a contractual licence and the price was reduced because the purchaser was expected to give effect to the relevant interest.