Lysaght v Edwards
Once a specifically enforceable contract for the sale of land is made, the seller holds the land on constructive trust for the buyer.
Facts
Mr Edwards agreed to sell land to Mr Lysaght, but died before the sale was completed. Under his will, his real property passed to devisees on trust, and his personal property to other people. The question was whether the land passed under the will as real property, or whether, because of the contract, the land was treated as already belonging to the buyer, so that the right to the purchase money passed as personal property.
Legal principle
Jessel MR held that, once the contract was made, the seller became a trustee of the land for the buyer, and the buyer became a trustee of the purchase money for the seller. Equity treats as done that which ought to be done, so the buyer became the beneficial owner of the land as soon as the contract was made, and the seller's interest became a right to the purchase money. The devisees therefore held the legal title on trust to complete the sale, and the purchase money passed as personal property. The seller remains entitled to possession and rents until completion.
Related cases on constructive trusts
- Ashburn Anstalt v Arnold [1989] Ch 1
- Banner Homes Group plc v Luff Developments Ltd [2000] Ch 372
- Bannister v Bannister [1948] 2 All ER 133
- Binions v Evans [1972] Ch 359
- Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105
- Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147
- Crossco No 4 Unlimited v Jolan Ltd [2011] EWCA Civ 1619
- Gissing v Gissing [1971] AC 886
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