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Question 1

Any land subject to co-ownership is held on trust - according to what statute? And who are the trustees?

Answer 1

Law of Property Act 1925, ss 34 and 36, as amended by TLATA 1996).

The trustees are legal owners.

The trust is a ‘trust of land’ governed by the Trusts of Land and Appointment of Trustees Act (TLATA) 1996.

Question 2

s 1(6) of LPA 1925 states that a legal estate can only be held by way of…

Answer 2

…a joint tenancy.

Question 3

Joint tenants means they own the whole of the legal estate – not separate parts of it. Accordingly, when one joint tenant dies, his or her interest passes…

Answer 3

…automatically to the surviving joint tenant which is known a the right to survivorship.

Question 4

s 36(2) of the 1925 Act states that it is not possible to sever a joint tenancy of the *** estate.

Answer 4

***legal.

Question 5

A maximum of ** trustees can own the legal estate in the land.

Answer 5

***four. There is no restriction on the number of beneficiaries under the trust of land.

Question 6

Trustees must be of * age to qualify under s 34.

Answer 6

**‘full age

Question 7

If a trustee of the legal estate dies and another owner reaches the age of 18, does he/she automatically become a trustee?

Answer 7

Other owners will not automatically become a trustee upon attaining the age of 18. He would have to be specifically appointed by the existing trustees.

Question 8

How do you establish how the equitable or beneficial interest is held? What tests are used?

Answer 8

4 unities
If so … an express statement (prevails over all else).
Words of severance
Implied tenancy in common

Question 9

What are the 4 unities?

Answer 9

Unity of possession - The co-owners must be equally entitled to use and occupy the whole premises.
Unity of interest - This unity requires that all co-owners have exactly the same interest in the property.
Unity of title - Under this unity, all of the co-owners must receive their interest in the land under the same document.
Unity of time - The unity of time means that each of our co-owners must have acquired their interest in the property at the same time.

Question 10

Where the deed in favour of the co-owners contains an express declaration of how the co-owners should hold the equitable interest in the land, that declaration is…

Answer 10

…conclusive (Goodman vGallant [1986].

Question 11

Words of severance in the conveyance or transfer would be…

Answer 11

Words of severance include

‘to A and B equally’ ‘to A and B in equal shares’ ‘between A and B’ ‘half to A, half to B’ ‘among A and B.

Question 12

When does equity presume a tenancy in common?

Answer 12

The three situations where equity will presume a tenancy in common are:
where co-owners buy the land as partnership property;

lend money on mortgage;

or make unequal contributions towards the purchase price.

Question 13

Finally, if all four unities are present, there is no express declaration as to how the equitable interest is held, no words of severance and none of the equitable presumptions apply, the co-owners will hold as …..

Answer 13

…joint tenants.

Question 14

The legal estate will pass by survivorship on death, but cannot ….

Answer 14

…be severed.

Question 15

It is important to remember that severance may occur only while a joint tenant is alive; it is not possible to sever via …

Answer 15

…a will.

Question 16

M is a tenant in common. What happens on her death?

Answer 16

Her share of the land falls to her estate and passes under the terms of her will (or if she left no will, under the intestacy rules).

Question 17

How can the beneficial interest be severed?

Answer 17

The equitable interest can be severed by:
– written notice (LPA 1925, s 36(2))
– alienation (selling/giving away/mortgaging equitable interest and bankruptcy)
– mutual agreement or a course of dealing
– homicide.

Question 18

When a beneficial joint tenancy severs – it severs ***

Answer 18

***equally. The ‘new’ tenants in common will acquire equal shares in the land, regardless of the proportions of their contributions to the original purchase price

Question 19

What are the three requirements of written notice?

Answer 19

S36(2) LPA 1925 - notice must be in writing, and

show the correct intention to sever immediately (Harris v Goddard) and

be correctly served (s196 LPA 1925).
Note that the notice need not be signed (contrast to alienation).

Question 20

How is a joint tenancy severed by alienation?

Answer 20

To be effective, the gift, sale or mortgage must be in signed writing (Law of Property Act 1925, s 53(1)(c)).

Question 21

A buyer will not be bound as long as the buyer makes sure that L’s interest is overreached. How is this done?

Answer 21

i.e. the buyer insists that seller appoints a second trustee to join in the sale. This would allow the purchaser to take the property free of the trust (as happened in CLBS v Flegg). If the buyer did not do this and paid the money to the seller alone, then the danger is that the buyer will take the property subject to the person’s beneficial interest.

Question 22

If someone’s beneficial interest is not overreached and the seller sells alone then the buyer risks taking the property subject to L’s beneficial interest if L’s interest overrides under Sch 3 para 2. What are the conditions?

Answer 22

Overriding interest if

• the person with the beneficial interest has to have a to have a proprietary interest
• they are in actual occupation
• if the buyer knew about her interest or if the occupation was obvious on a reasonably careful inspection.
• If the buyer asked the person whether she had any interest in HC and she failed to disclose it – when she could reasonably be expected to do so – then she won’t be able to claim that her trust interest overrides and binds a buyer so her interest would lose its overriding status.

Even if L is in actual occupation and trust interest is over-riding on Sch 3 para 2 – if the buyer insists that M appoints a second trustee – then her over-riding interest will be over-reached.

Question 23

Another protection where there is an express trust is provided to purchasers in s 10 of the 1996 Act. What is it?

Answer 23

Section 10(1) of the 1996 Act provides that where a trust deed requires the trustees to obtain consents before exercising any function such as sale and the purchaser has knowledge of that requirement, a purchaser need only check that two consents have been obtained.

Where one of the persons whose consent is needed to a particular disposition is not of full age, purchasers do not have to ensure that this consent is obtained (s 10(3)).

Question 24

Section 6(1) of the 1996 Act sets out the general powers of the trustees of land and provides that: ‘For the purposes of exercising their functions as trustees, the trustees of land have in relation to the land subject to the trust all of the powers of an **

Answer 24

***absolute owner.

Question 25

Section 6(3) gives the trustees power, ie permission, to buy land - where?

Answer 25

In England and Wales

Question 26

s 6(3) of the 1996 Act (and s 8(2) of the Trustee Act 2000) only allows the trustees to buy a legal estate and does not permit the purchase of an ***

Answer 26

**equitable interest in land.

Question 27

Section 6(5) requires the trustees to ‘have regard to the rights of whom?

Answer 27

To have regard to the rights of the beneficiaries’ when exercising their powers.

Question 28

When selling trust land, the trustees under s 11 of the 1996 Act must consult with the beneficiaries who are of full age (18 or over) and who have an interest in possession (entitled to an immediate interest in the land), and comply with….

Answer 28

…comply (as far as is consistent with the general interests of the trust) with the wishes of the majority in value.

Question 29

Section 8 allows settlors of an express private trust to place restrictions on the power of the trustees contained in …

Answer 29

..s 6 (giving trustees all of the powers of an absolute owner).

Question 30

Under Section 11, beneficiaries have the right to be..

Answer 30

…consulted (under s 11 of the 1996 Act).

Question 31

Under Section 12, beneficiaries have the right to occupy under what conditions?

Answer 31

The beneficiaries must be entitled to an interest in possession under the trust,

the purposes of the trust must include making the land available for the beneficiaries to occupy,

or the trustees must hold the land so that it is available for them to occupy.

Under s 13 of the 1996 Act, where the trustees do allow the beneficiary to occupy, they can attach conditions to that occupation.

Question 32

Applications to go to court to resolve a dispute can be made under…

Answer 32

…section 14 by beneficiaries or trustees.

Question 33

When the court makes an order under s 14, it has to take into account factors including those listed in s 15. What are they?

Answer 33

These include looking at the purpose of the trust, the intention of the settlor when creating the trust, the welfare of any minor who occupies or may occupy the trust land, and the interests of any secured creditor of a beneficiary. The list in s 15 is not exhaustive and the court can take into account any other relevant factors.