Co-Ownership 2 PDF

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Co-Ownership 2...

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CO-OWNERSHIP (2)

TRUSTS OF LAND AND APPOINTMENT OF TRUSTEES ACT 1996 • Objectives • Describe the historical background to the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”) • Explain the term Trust of Land • Describe the duties and powers of trustees under TOLATA • Understand how disputes are resolved under TOLATA • Explain how a Trust of Land comes to an end • The trust • Classification of trusts – The ‘old’ law • Before 1996 - three types of trust: – bare trust – settlement – trust for sale • Strict settlement – successive interests • (No new settlements can be created (s2 TLATA 1996)) • •

The Trust for Sale Statutory trust LPA 1925

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Trust for sale - imposed a duty to sell, but power to postpone sale

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Interests under a trust for sale were regarded as personal, not real, property

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Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”) Since 1996, statutory trust of land imposed in the case of joint tenancies and tenancies in common s1(1) TLATA 1996 provides a definition of trust of land – “Trust of land means… any trust of property which consists of or includes land” A bare trust falls within the definition in s1 The trust of land includes express, implied, resulting or constructive trusts (s1(2) TLATA) excludes existing settled land

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• Powers of trustees under TOLATA Section 4 Trustees have a power either to sell or to retain the land Section 6 They have all the powers of an absolute owner although these may be excluded in the trust instrument - s8

Powers include to convey land to beneficiaries s6(2) to purchase a legal estate for investment or for occupation of any beneficiary - s6 TLATA 1996, which directs to s8 Trustee Act 2000 •

Powers of trustees Partition and delegation Partition s7 • Trustees may partition the land between beneficiaries if they: – are of full age; – are absolutely entitled; and – consent. (may be excluded in trust instrument - s8) Delegation s9 • Trustees may delegate any of their functions to any beneficiary if they: – are of full age – beneficially entitled to an interest in possession (may not be excluded in trust instrument) • Duty of care under s1 Trustee Act 2000 applies - s9A • Powers of trustees Consents and consultations Consent s10 • May be required if creator of trust of land requires it • If more than two beneficiaries, the consent of any two of them to the exercise of any function relating to the land is sufficient in favour of a purchaser s10(1) …but… • Express provision in the trust instrument may be protected by a restriction on the registered title s40(2) LRA 2002 Consultation s11 • Trustees should consult beneficiaries as far as is practicable and consistent with the general interest of the trust • In case of dispute, wishes of majority prevail • • •

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Occupation of trust land Trustees may not unreasonably exclude any beneficiary from the land s12 TLATA 1996 allows a beneficiary to occupy the land (except where land is unavailable for occupation) – Chhokar v Chhokar [1984] The trustees may exclude or restrict entitlement to occupy land but such exclusion/restriction must be reasonable s13 Trustees to have regard to – intentions of the creator of the trust – purposes of the trust – circumstances and wishes of beneficiaries - s13(4) – Rodway v Landy [2001]

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Resolving disputes Section 14 “Any person who is a trustee of land or has an interest in property subject to a trust of land may make an application to the court for an order under this section.”

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Exercise by trustees of functions s14(2)(a)

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Nature/extent of person’s interest s14(2)(b)

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Factors to be considered Section 15 In determining whether the trust property should be sold, case law under s30 LPA 1925 are of assistance

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In all cases s15(1): (Not an exhaustive list) – Intention of settlor (creator) – Purpose for which property is held • Re Buchanan-Wollaston’s Conveyance (1939) • Jones v Challenger [1961] • Bedson v Bedson [1965] – Welfare of minor who may occupy • Re Evers’ Trust [1980] – Interests of secured creditor of any beneficiary • Mortgage Corp v Shaire and others [2001]

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Factors to be considered Section 15 In all cases except vesting land in beneficiaries s15(2) & (3): – Circumstances of beneficiaries – Wishes of beneficiaries

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Separate provisions for an application made by a trustee in bankruptcy (Insolvency Act 1986) • Application by a trustee in bankruptcy S335A Insolvency Act 1986 Such order as just and reasonable, having regard to: • Interests of bankrupt’s creditors • When land includes home of bankrupt/bankrupt’s spouse or former spouse: – Conduct of spouse/former spouse towards bankruptcy (and civil partner) – Needs and financial resources of spouse/former spouse (and civil partner – Needs of any children s335A(3) Insolvency Act 1986 After one year, interests of creditors outweigh all other considerations (unless exceptional circumstances)

• Application by a trustee in bankruptcy Re Citro (Domenico) (a bankrupt) [1991] ‘usual melancholy consequenses’ of bankruptcy Barca v Mears [2005] Re Holliday [1981] • • • • • • • • • • •

Termination of a trust of land Transfer of the legal estate to person who takes free of the trust (overreaching) For a bare trust – conveyance at direction of the beneficiary to the beneficiary himself Partition of co-owned land (s7(1)) Operation of survivorship Objectives Describe the historical background to the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”) Explain the term Trust of Land Describe the duties and powers of trustees under TOLATA Understand how disputes are resolved under TOLATA Explain how a Trust of Land comes to an end...