SQE1 constructive trusts: what you must know and how it is tested

SQE1 constructive trusts questions test when the law imposes a trust to prevent unconscionable conduct, most often over the family home and over a fiduciary's secret profits. Constructive trusts need no formalities (s53(2) LPA 1925). Read it with the wider Trusts Law guide.

SubjectTrusts Law (FLK2)

Key lawStack v Dowden; Jones v Kernott; Boardman v Phipps

Question typeSingle best answer, five options

The rules to apply

Family home: the common intention constructive trust. Where a home is in one person's sole name, the other must show a common intention that they should share the beneficial interest, shown by an express discussion or inferred from conduct such as direct contributions to the purchase price, and that they relied on it to their detriment (Lloyds Bank v Rosset). Where the home is in joint names, the presumption is that the beneficial interests follow the legal title, and equal shares are presumed. A party who claims otherwise must show a different common intention, looking at the whole course of dealing (Stack v Dowden). In sole name cases, the same approach to quantification applies (Jones v Kernott): the court looks for the parties' actual intention, which can be inferred, and if not, imputes what is fair.

A claimant who contributed directly to the price may also argue a purchase price resulting trust, with shares in proportion to the contribution. A beneficial interest can bind a buyer or mortgagee if the claimant is in actual occupation in registered land (Williams & Glyn's Bank v Boland), but overreaching applies where capital money is paid to two trustees (City of London Building Society v Flegg). Disputes about sale are decided under ss14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996.

Fiduciaries. A fiduciary, such as a trustee, director or agent, who makes a profit from their position without informed consent holds it on constructive trust for the beneficiary, even if the principal lost nothing (Boardman v Phipps). A fiduciary who takes a bribe holds it on constructive trust (FHR European Ventures v Cedar Capital).

Third parties. A stranger who dishonestly assists a breach of trust is personally liable (Royal Brunei Airlines v Tan), and the test of dishonesty is objective, based on the person's knowledge or belief of the facts (Ivey v Genting). A recipient of trust property with knowledge that makes retaining it unconscionable is liable in knowing receipt (BCCI v Akindele).

Traps examiners use

Using the Rosset test where the home is in joint names.
Awarding shares by contribution when the parties intended otherwise.
Forgetting that the principal need not have lost money for a fiduciary to hold the profit on trust.
Missing the overreaching rule where two trustees receive the money.
Using a subjective test for dishonesty.

Worked question 1

Cora and Dev live together and are unmarried. The house is in Dev's sole name. Cora paid £15,000 towards the deposit after Dev said 'it will be ours.' Which statement is correct?

A. Cora has no interest, because her name is not on the title.
B. Cora may establish a common intention constructive trust, and the court will decide her share by looking at the parties' whole course of dealing.
C. Cora has a half share, because they are a couple.
D. Cora has only a licence.
E. Cora's interest depends on whether she signed a deed.

Answer: B. Dev's words and Cora's contribution support a common intention to share and detrimental reliance. Her share is not automatically half; the court infers it from the whole course of dealing, or imputes what is fair (Jones v Kernott). A and E wrongly require formalities, which are not needed (s53(2)).

Worked question 2

Greg is a trustee of a family trust. Using information he gained as a trustee, he buys a business opportunity for himself and makes a £40,000 profit. The trust suffered no loss and the beneficiaries did not consent. Which is correct?

A. Greg may keep the profit because the trust lost nothing.
B. Greg holds the profit on constructive trust for the beneficiaries.
C. Greg must pay damages only if the trustees were negligent.
D. Greg may keep half of the profit.
E. Greg is liable only if he acted dishonestly.

Answer: B. A fiduciary must not profit from the position without informed consent, and gains are held on constructive trust whether or not the trust lost anything (Boardman v Phipps). Honesty is irrelevant to the liability. A, D and E are wrong, and C confuses breach of the duty of care.

Checklist before you move on

Sole or joint legal title?
Express or inferred common intention?
Detrimental reliance, contributions, whole course of dealing?
Quantification: actual, inferred or imputed share.
Fiduciary profit or bribe?
Third party: assistance or receipt?

Test yourself on more original questions in our SQE1 practice questions.

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Questions

What is a common intention constructive trust?

A trust over the family home, arising where the parties shared an intention that both should own a beneficial interest, usually shown by words or conduct such as contributions.

Do constructive trusts of land need writing?

No. Section 53(2) of the Law of Property Act 1925 exempts constructive, resulting and implied trusts from the writing requirement.

What happens to a trustee's unauthorised profit?

It is held on constructive trust for the beneficiaries, even if the trust lost nothing.

Sources: SRA: SQE1 Assessment Specification (from 1 September 2026); Trusts of Land and Appointment of Trustees Act 1996; Law of Property Act 1925. Checked 10 November 2026.