4.4 Co-Ownership and Trusts

Question 1

What is the maximum number of people that can hold the legal estate?

Answer 1

4

Question 2

A trust of land is imposed whenever land is purchased by

Answer 2

co-owners, a trust of land arises automatically whether or not the co-owners realise that it has arisen (statute - Section 34(2) of the Law of Property Act 1925 (LPA 1925), inserted by the Trusts of Land and
Appointment of Trustees Act 1996 (TLATA))

Question 3

What is it called when those holding the legal estate have no beneficial interest in the property?

Answer 3

the trustees are holding the legal estate on a bare trust for the benefit of the beneficiaries

Question 4

What does Trusts of Land and Appointment of Trustees Act 1996 (TLATA) impose?

Answer 4

It imposes a trust of land automatically whenever a co-ownership situation arises and
contains important provisions for resolving disputes between co-owners.
Shortened to TLATA

Question 5

What does section 53 of the LPA (Law of Property Act 1925) impose?

Answer 5

That an express trust must be in writing and signed by the parties. The document is called a declaration of trust or trust deed.

Question 6

Common law provides that the legal estate can only be held in a

Answer 6

Joint tenancy
Maximum number of trustees is four, they must be 18 or over and have full mental capacity

Question 7

The equitable interest of the property can be held as

Answer 7

Joint tenants or tenants in common

Question 8

For a joint tenancy to be created, what must be present?

Answer 8

• unity of possession
• unity of interest
• unity of time
• unity of title

if all of the unities are not present, this means that the equitable interest must be held as tenants in common

Question 9

What is a joint tenancy?

Answer 9

All co-owners have an equal entitled to the whole of the land. Rules of survivorship applies

Question 10

What is a tenancy in common?

Answer 10

Each beneficiary has an identifiable share ie. because they have purchased the property in different shares

Question 11

How is declaration of trust used in a tenancy in common situation?

Answer 11

Used to specify when the property is sold, each co-owner is entitled to a share

Question 12

What does the doctrine of survivorship apply to?

Answer 12

joint tenants
when one of them dies, they are survived by the other, their interest in the property passes automatically to the surviving tenant

Interest of the
deceased co-owner then passes automatically to the remaining joint tenant(s) by way of survivorship and not in accordance with the terms of their will or intestacy rules.

Question 13

Does a tenancy in common in equity have a doctrine of survivorship?

Answer 13

No - their shares in the property passes in accordance with their will or according to the intestacy rules

Question 14

How can a joint tenancy be converted to a tenancy in common?

Answer 14

through severance (LPA 1925 s36 (2))
only the equitable interest in a property can be severed, never the legal estate

Question 15

What constitutes severance under a joint tenancy?

Answer 15

Murder (or
assisting a suicide) severs the joint tenancy under the forfeiture rule (it would be against
public policy to allow the killer to benefit from the right of survivorship after murdering a co-joint tenant).

• a deliberate act
• a co-owner going bankrupt (involuntary alienation)

Would be converted to a tenancy in common and their share would not pass to the surviving co-owners on death

Question 16

How does a buyer defeat equitable interests in registered land?

Answer 16

s 40 restriction is entered on
the proprietorship register, the buyer must overreach (purchase to two or more trustees) or the interests of anyone in
occupation could be overriding.

Question 17

How does a buyer defeat equitable interests in unregistered land?

Answer 17

Beneficial interests are not registrable at the Land Charges Department
because they can be overreached. If they are not overreached, the buyer will not be bound
if they are equity’s darling (no notice of the charge).

Question 18

A solicitor must ensure that they appoint (when purchasing a property for a client)

Answer 18

The buyer’s solicitor must ensure that a second trustee is appointed to overreach
the beneficial interest.

Question 19

The legal estate can only be held as

Answer 19

a joint tenancy and cannot be severed

Question 19

Commercial situations a raise a presumption of (in terms of ownership of the property)

Answer 19

Tenants in common

Question 20

Domestic situations raise a presumption of (in terms of ownership of the property)

Answer 20

Joint tenants

Question 21

Methods of severance (overview)

Answer 21

o written notice
o an act operating on own share
o mutual agreement, and
o course of conduct.

Question 22

TLATA

Answer 22

Trusts of Land and Appointment of Trustees Act 1996

Question 23

What does section 14 of the TLATA do?

Answer 23

very widely applicable
apply to the court for an order relating to the trustee’s duties ie order to sell the property or consult with beneficiaries going forward

Question 24

How can a trustee be changed?

Answer 24

within the trust deed there is usually a mechanism for appointing new trustees - this permits the existing trustees to appoint new ones

or if all beneficiaries are willing and sui juris (of full age and mental capacity and absolutely entitled to the trust) they can give a written direction to appoint new trustees

Question 25

If co-owners cannot agree how or when to dispose of a property, there are wide powers under (which statute)

Answer 25

TLATA s14 to apply to the court - new trustee cannot be appointed under the act but this can be done by the beneficiaries if they are sui juris and mental capacity and absolutely entitled

Question 26

Four unities must be present for there to be

Answer 26

Joint tenancy