What are the rights that undivided owners enjoy and how has the enactment of the Trusts of Land and Appointment of Trustees Act 1996 affected those rights?

In the latter S2 the making of new settlement and conferring existing ones on TLATA enabled the duty of trustee to be more easily regulated. In keeping with the broad concept of a trust, the trustee duty is mainly administrative and managerial and the beneficial enjoyment has been reserved for those holding the equitable interest under the trust. Whilst the duty of the trustee contrast with the limited powers provided under strict settlement, their fiduciary duties compel them to ‘have regard to the rights if the beneficiary’ S6 (5) TLATA

Further the beneficiary has a right to be consulted and so far as consistent with the general interests of the trust, to give effect to the wishes of the beneficiary. Whilst the beneficiary appears privileged S11 (1) may reinforce exclusion of the beneficial interests, where in case of a dispute the trustee is to take the view of the majority, according to their combining interest. Effectively it is still possible for instances such as ,,, for the a majority number of beneficiaries to be disregarded in favour of the minority who had made the greatest contribution.

In any case the duty to sell has been replaced with a power to either sell or retain land.

This resulted from the abolition ‘sale of land’ where prior to TLATA, the 1925 Statute upheld the belief in equity that beneficial interest was in investment not realty. Therefore provided two trustees have given good title then so long as the purchaser or transferee pays the capital money, and the money is distributed amongst the beneficiary…the beneficiaries interest has been received. This was enforced by the trust for land which imposed “An immediate binding trust for sale.”

 

Prior to TLATA most concurrent and some successive interests took effect in co-ownership of legal or equitable estate, under a deliberate expressed trust for sale or ‘a trust for sale’ imposed by statute.

The theory still applied in relation to concurrent equitable interests but only exists under TLATA if expressed.

The changes also followed the abolition of conversion, where the belief that the beneficial interests are concerned with the monetary value of coowned property, and because the purpose for purchasing was investment, the beneficial interest was in the proceeds of a sale.

In BULL…the land was dealt with by the sole legal owner and in effect the land could not be sold without the beneficiaries consent.

Following common law like BULL it is difficult to know whether ‘Trust for sale’ was ever implemented. Thus the right to sell was disregarded in favour of the beneficial interest. Yet such a situation could be avoided by appointing another trustee when dealing with the land. However under TLATA sole trusteeship coupled with coownership in equity there arises in favour of the financial contributors, an implied trust of the legal title which entitles the tenant to a proportion to his own contribution. Thus complying with trust for land under TLATA. Because such trusts arise by implication the legal owner appears to be solely entitled in law and in equity. This often gives rise to disputes between residential interest of beneficial coowners behind a trust of the family home. Yet may be avoided under S34(2) LPA that a disposition of legal estate executed by two trustees are liable to have overreaching effect.

In such those situation where s..was complied with,  the rule could not protect the beneficiaries whose interest in the property was not for investment. In FLEGG the duty to sell was upheld as the land had been dealt with by two trustees. It was evident that the trustees duty was to give effect to the interest in the land, via a sale and therefore could deal with the land free from beneficial interests.

Such disputes which had not been anticipated by the draftsman of the 1925 legislation, were addressed by the courts who would give effect to the purpose by exercising right to postpone. It became increasingly unrealistic to order a trust for sale beneficiary to a mere monetary interest in a shared family home which had been purchased, and which was occupied by the beneficiary in question.

The beneficiary has right to the use and enjoyment of the land, but the trustee  only has this right if he is also a beneficiary.  

However in modern context the position has now changed, land is often purchased primarily for homes and investments is usually a secondary interest. The implementation of TLATA helped to accommodate this and therefore the trust for sale is now a trust of land and trustees’ duty to sell is now a power.

The trust for sale=

The advantage of tenancy in common is that as opposed to the four unities required for the joint tenancy it only requires unity of possession. Thus the tenant has a right not to be excluded. The effect of registration is that all interests will be on entered on the register and trustees’ decision to sell the property, will be subject to beneficial interest if the beneficiary is in occupation. However for unregistered land, trustees can sell free from beneficial interest to bona fide purchaser.

TLATA enhanced right to enjoyment through the S12 Right to occupation, whereby a sale may be refused if a person is in actual occupation. In making a judgement, the court must refer to S13. This takes into account the settlors intention etc. however the person must be actual occupation thus in….the claimant was not in actual occupation and so failed to enforce rights.

The courts are willing to make exceptions to the rule thus postpone a sale where party is sick and where the in the purpose is for the family home, the to occupy terminates once the children are grown, in… the sale was postponed till the children were grown. effectively just as children can be used to prevent a so can they be used as a reason to enforce it. Where in… the sale was granted because the children had left home.

The provision also provides for compensation for the person whose interest is not recognised.

In addition to the duty to consult the beneficiary prior to sell and the beneficiary has a right to give consent. S11 (1) (2)

However for in both registered and unregistered land, trustees can sell free from beneficial interest to bona fide purchaser.S16

However in …. The right was avoided under S11(3) Which gives the court the right to

Exclude the duty. And in this case S14 was utilised to promote the sale of land.

S11 only applies to interest under a trust, thus in…children are not in actual occupation under. S14 entitles anyone with an interest to apply S14(2) …upon making a decision the court must refer to S15 guidelines relating to the purpose.

Rights to uphold family home…children.

However the presence of children is not an automatic quasi-beneficiary right so where in …. the purpose was investment, the children’s presence could not provide a reason to postpone. Instead the purpose was seen to have ceased upon bankruptcy and a sale was ordered.

TLATA makes no direct provisions to deal with bankruptcy which still take place under the Insolvency ACT. However the trustee in bankruptcy is appointed may apply to court for S14 order for sale. In ..the S11(3) was revoked and the debtor took free of the property

The courts held that when there is a debt it must be paid immediately. Thus

The object of law reform is to improve the law, by making it clearer and/or more just. A steady stream of case law under the Trusts of Land and Appointment of Trustees Act 1996 section 15 makes it seem doubtful that the Act is achieving either of these objectives. The main practical application of the section has been in the field of resolution of disputes between co-owners of property as to when to sell it. While the machinery of the Act seems to give courts a wider jurisdiction as to how to resolve such disputes than it formerly had under of the Law of Property Act 1925 section 30, it does not appear to have done much to better the position of defendants in cases where the claimant is not the original, but a derivative co-owner: banks and other secured lenders seeking to enforce their security interests. Disputes of this kind are by far the most frequent (or most frequently reported) in practice. It is becoming increasingly difficult not to take a sceptical view of the impact of section 15.

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However The trustee duty is to ensure the beneficial interest is recognised and in effect S27LPA asserts that to acquire good title there must be a minimum of 2 beneficiaries, all of which must agree. Thus the onus on the purchaser was higher to deal with the land.

And because the trustees hold the proceeds of sale on trust for the beneficiary it is presumed that, once the money is received overreaching does not actually occur.

The trustee now has a duty to dispose of property subject to the rights of the beneficiary under S11,,, the duty of to consult. In addition the beneficiary is also privileged with the right to give consent.

However in the event of a conflict the trustee must take the decision of the majority- this being that of the majority shares in the land.

Such occurrences have be reduced by the phasing out of strict settlements under  S3 TLATA. Whilst those preceding the act may still exist S(2) Prohibits the enactment of new settlements. Here the trust is left to the tenant for life who obtains the same rights as a trustee, thus may sell and purchase land for investment without consulting the successive interest holders.

The presumption was that because the interest of the beneficiary is in the proceeds of a sale, their interest will be fulfilled once they acquire their equitable share on resulting trust. Thus an interest would never be overreached, however FLEGG clearly demonstrated that the beneficiaries did not always wish to sell.

This was particularly the case in relation to family situations.

TLATA abolished the doctrine of conversion and replaced the trust for sale with a trust for land now the duty to sell is a right to do so and therefore there is more scope for the refusal to sell land.

It could also be a successive interest, thus given to tenant for life and the remainder nay be distributed in equal shares. The constructive is the entitlements which arise from financially contributing to the property.

Equitable leases may arise where…a tenant under Walsh v Lonsdale lease in registered land holds a minor interest which should be registered. But if not will rank as an overriding interest binding on transferees of the landlords registered title.

The disposition of land held on trust

Bibliography

GRAY and GRAY

THOMPSON Modern land law 2006

Websites

Web Journal of Current Legal Issues

Re 88 Berkeley Rd (1971)

Kinch v Bullard (1999)

Williams v Hensman (1861)

Philpott v Dobinson (1829)

Cedar Holdings v Green (1980)

Re Palmer (1984); Re Dennis (1992)

Burgess v Rawnsley (1975)

Greenfield v Greenfield (1979)

Re Mayo (1943)

Jones v Challenger (1961)

Williams v Williams (1976)

Re Evers’ Trust (1980)

TSB Bank v Marshall (1998)

Bankruptcy

Re Citro (1991)

Abbey National Building Society v Moss (1994)

Bank of Baroda v Dhillon (1998)

Pritchard Englefield v Steinberg (2004)

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