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Acquiring property through a trust
By George Coucounis

People living together, either spouses or partners, share their life and through their work or money, they may acquire property, movable or immovable, deposits, business, stocks or other assets, independently on whose name these are registered. They do so by trusting each other, believing that the property belongs to both of them. This relation in case the co-habitation is terminated justifies the person on whose name the property wholly or partly was not registered to ask legally his share. The person on whose name the property is registered is holding it in trust for the other and therefore, he is called “trustee” and the other is called “beneficiary” based on a trust created between them during the acquisition of the property. In the event the trustee refuses to give to the other person the property, wholly or partly, the law of equity intervenes to restore the injustice against the beneficiary and does not allow him to be unlawfully enriched with an asset not belonging to him. Honesty and conscience do not permit the abuse of trust by the trustee against the beneficiary with an aim to keep the property for his own benefit.

Nowadays, the creation of trust is common and it is not limited only between married couples or partners. With regard to spouses, the law is now regulated in section 14 of the relevant law for resolving property disputes, 232/1991, and section 29 (1)(c) of the Courts Law, 14/1960. There are two main categories of trusts, those which are created by the acts of the parties called expressed or implied and those arising by the operation of law called constructive or resulting. A constructive trust does not depend on the intention of the parties but it arises by operation of the law for justice to be done according to the demands of a particular case. The principle is that no person can be allowed to hold a property which should have been held or enjoyed by another.

The evolution of the law aimed mainly at protecting the wife and the partner, acknowledging that both are entitled to have a property of their own. The existence of a trust between them depends on their intention at the time of the acquisition of the property or whenever spouses or couples in co-habitation have made a j oint contribution to the acquisition of the property for common use. According to case law, a trust is deemed to arise upon the coincidence of two things: (a) the pooling of resources and/or the exertion of efforts for the acquisition of immovable property, provided the contribution made by each is substantial, and (b) the existence of such a relationship as to justify the attribution of a common intention to enjoy the use of the property together.

During the past years when the property market was doing well, many people appear to have the legal ownership of a property; however, the property was not acquired by them but with the money and for the benefit of another. Moreover, couples living together purchased a house or an apartment and their relationship is terminated. The issue is that equity requires a fair apportionment according to the contribution of each to the acquisition of the property; whereas, if the apportionment is difficult to define, reference is made to the principle that equality is equity.

With regard to married couples getting a divorce, the law provides that each is entitled to his contribution in the making or the increase of the marital property. There is a presumption that the contribution of one spouse in the increase of the property of the other is 1/3, unless lower or higher contribution is proved. In the increase of the property of the spouses, they are not taken into account what they acquired by gift, inheritance or through any other act of donation.


George Coucounis is a lawyer and leading partner of George Coucounis LLC, a legal firm based in Larnaca -Cyprus
E-mail: coucounis.law@cytanet.com.cy  |  www.coucounislaw.com  | tel.:- 24818288.
 
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