4.4 Co-Ownership and Trusts Flashcards
What is the maximum number of people that can hold the legal estate?
4
A trust of land is imposed whenever land is purchased by
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))
What is it called when those holding the legal estate have no beneficial interest in the property?
the trustees are holding the legal estate on a bare trust for the benefit of the beneficiaries
What does Trusts of Land and Appointment of Trustees Act 1996 (TLATA) impose?
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
What does section 53 of the LPA (Law of Property Act 1925) impose?
That an express trust must be in writing and signed by the parties. The document is called a declaration of trust or trust deed.
Common law provides that the legal estate can only be held in a
Joint tenancy
Maximum number of trustees is four, they must be 18 or over and have full mental capacity
The equitable interest of the property can be held as
Joint tenants or tenants in common
For a joint tenancy to be created, what must be present?
- 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
What is a joint tenancy?
All co-owners have an equal entitled to the whole of the land. Rules of survivorship applies
What is a tenancy in common?
Each beneficiary has an identifiable share ie. because they have purchased the property in different shares
How is declaration of trust used in a tenancy in common situation?
Used to specify when the property is sold, each co-owner is entitled to a share
What does the doctrine of survivorship apply to?
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.
Does a tenancy in common in equity have a doctrine of survivorship?
No - their shares in the property passes in accordance with their will or according to the intestacy rules
How can a joint tenancy be converted to a tenancy in common?
through severance (LPA 1925 s36 (2))
only the equitable interest in a property can be severed, never the legal estate
Tell me about severance and joint tenancies
Severance is the act of coverting a joint tenancy to a tenancy in common. The equitable/benefical interest in a joint tenancy cannot be assigned. So it must be converted to a tenancy in common to transfer the equitable interest. Note that this only applies to the equitable interest and the legal interest of a joint tenancy can never be severed.
How does a buyer defeat equitable interests in registered land?
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.
How does a buyer defeat equitable interests in unregistered land?
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).
A solicitor must ensure that they appoint (when purchasing a property for a client)
The buyer’s solicitor must ensure that a second trustee is appointed to overreach
the beneficial interest.
The legal estate can only be held as
a joint tenancy and cannot be severed
Commercial situations a raise a presumption of (in terms of ownership of the property)
Tenants in common
Domestic situations raise a presumption of (in terms of ownership of the property)
Joint tenants
Methods of severance (overview)
o written notice
o an act operating on own share
o mutual agreement, and
o course of conduct.
TLATA
Trusts of Land and Appointment of Trustees Act 1996
What does section 14 of the TLATA do?
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
How can a trustee be changed?
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
If co-owners cannot agree how or when to dispose of a property, there are wide powers under (which statute)
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
Four unities must be present for there to be
Joint tenancy
Tell me about the three main ways to sever a joint tenancy to a tenancy in common
- immediate notice on all co-owners by one of them stating that they wish to sever the joint tenancy
- through an act of alienation i.e.. divorce proceedings, bankruptcy, partial or complete alienation (relates to changes around mortgages)
- mutual agreement over the course of conduct, all parties agreeing to end the joint tenancy
- note that murder and assisted suicide also ends the joint tenancy. Would be against public policy to allow a party to stand to benefit from the right of survivorship
Right of survivorship denotes and think
Joint tenancy always. Cannot stand to benefit if murdered or assisted suicide.
