LARRY wishes to invest in real estate, but when consulting his bank is told his income is not sufficient to obtain a loan.
He asks sister Elizabeth if she is willing to help him purchase property and she agrees.
After signing a purchase contract for $260,000 in his sole name, Larry pays the deposit of $26,000 but puts the loan in joint names and pays the stamp duty.
At settlement, the amount available under the loan is not sufficient to pay the purchase price so a further $30,000 is paid by the parties and settlement proceeds.
The property is then tenanted and the rent is used to pay the mortgage.
When the mortgage is repaid years later, Larry moves into the property and pays all rates and outgoings.
Twenty years after the initial purchase, Larry decides to sell the property now worth $1.2million.
Elizabeth lodges a caveat claiming she has equitable interest in the property and the matter proceeds to a court hearing.
The court states because Larry is the registered proprietor, there is a legal presumption he is the beneficial owner.
However, this presumption may be rebutted if he did not pay the whole of the purchase price.
The evidence indicates Elizabeth paid the $30,000 shortfall at settlement and also made a $10,000 contribution towards the mortgage during the term of the loan.
The court finds that Larry holds the property on trust for himself and his sister in the proportions that they contributed to the purchase price which is found to be roughly equal.
Therefore, Elizabeth is ultimately entitled to half of the proceeds of sale but must reimburse Larry for half of the rates and outgoings.
Larry must pay Elizabeth an occupation fee for the time he lived in the property.
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