Land III Trusts of Land and Co-ownership

Question 1

In an unregistered system, What must the seller show to the buyer

Answer 1

A seller must deduce title to the buyer. The seller must prove that they have a good root title and demonstrate an unbroken chain of ownership of the land

Question 2

The meaning of a defective title

Answer 2

for example; if a document is not properly signed, or does not have the correct amount of stamp duty (property tax) paid

Question 3

What is a conveyance on sale

Answer 3

A conveyance on sale documents the transfer of ownership from the seller to buyer in exchange for money ( known as ‘valuable consideration’)

if there is no consideration involved, a deed of gift must be shown.

Question 4

What is a mortgage deed?

Answer 4

A mortgage deed evidences the fact that a lender has lent money to the current owner and has taken a charge over the land as security for the loan.

Question 5

What is an assent?

Answer 5

Am assent is the document that transfers the land from the personal representative (the person who takes control of a deceased owner’s estate) to the correct beneficiary of the land

Question 6

What is the root of title and its requirements?

Answer 6

The root is often a conveyance. The be a good root the document must:

Be at least 15 years old at the date of the contract;

Deal with the whole legal and equitable interest in the property;

Contain an adequate description of the property

Do nothing to cast doubt on the title

Question 7

What is the epitome of title (same as disclosure)

Answer 7

it is a chronological list of the title deeds with a copy of each title deed attached to the epitome. on completion, the original will be passed to the buyers

Question 8

Meaning of requisitions

Answer 8

Any queries about the title are known as requisitions. The buyer’s solicitor should not proceed to exchange of contracts until all requisitions on title have been answered to their satisfaction.

Question 9

Deadline of registration of title

Answer 9

within two months of completion

Question 10

Describe joint tenancy

Answer 10

Co-owners have identical interests in the property, their interests being of non–defined portions.

Under a joint tenancy, if one of the co-owners dies, their interest in the property passes to the survivor/s automatically by virtue of the doctrine of survivorship.

The share cannot be disposed of on death. the survivor of joint tenants automatically acquires the deceased’s interest.

Question 11

Maximum number of trustees in land

Answer 11

The legal estate may be held by a maximum of 4 trustees.

Question 12

Describe tenancy in common

Answer 12

Friends who buy an investment property together, or partner in a trade or business, may not want their interest in a property to vest automatically in their co-owners, and instead might want to have their interest pass to their spouse family.

A tenant in common is entitled to a specific share of the property which can be disposed of or left by will or on the intestacy.

Question 13

When would a tenancy in common be appropriate

Answer 13

Clearly intend to hold as tenants in common and do not wish survivorship to apply;

Contributed in unequal portions to the purchase prices; or

Entered into a commercial transaction where a joint tenancy would be inappropriate.

Question 14

What is a declaration of trust for the purpose of tenancy in common

Answer 14

A declaration of trust sets out the agreement between co-owners as to how their beneficial interest is to be held. A declaration of trust is conclusive as to the agreement between co-owners.

Question 15

Martin and Daphne bought a house together and they contributed in unequal shares to the purchase price. As a result of this they held the beneficial interest as tenants in common and a Form A restriction was placed on the register. Daphne died.

What will happen and what must Martin do if he wants to dispose of the assets?

Answer 15

A Form A restriction does not allow a sole proprietor (unless a trust corporation) to dispose of the asset.

Martin will inherit the whole of the asset from Daphne through survivorship. However, the From A restriction will remain on the proprietorship register. The buyer from Martin will need to ensure that a second trustee is appointed to overreach the beneficial interest. The appointment of the second trustee can either be by a separate trust deed or, more typically in a conveyancing transaction, the second trustee will be appointed by adding an extra clause to that effect.

Question 16

hints pointing to tenants in common

4

Answer 16

Unmarried couple
Business enterprise
Unequal contribution to purchase price
Desire to leave share to someone other than co-owners

Question 17

Section 14 of Trusts of Land & Appointment of Trustees Act 1996 (TLATA 1996)

Answer 17

Section 14 of TLATA 1996 is widely drawn in allowing a trustee or any other person with an interest in property subject to trust to apply to the courts for an order relating to:

an order to sell;

an order to relieve the trustee of the duty to obtain the beneficiaries’ consent;

an order to consult with beneficiaries regarding the exercise of the trustee’s functions;

declaring the nature or extent of a person’s interest in the property

Question 18

Factors considered by the court when applying section 14 of Trusts of Land & Appointment of Trustees Act 1996 (TLATA 1996)

Answer 18

the criteria for determining an application for an order under section 14:

The intentions of the person or persons who created the trust;

The purposes for which the property subject to the trust is held;

The welfare of any minor who occupies or might reasonably be expected to occupy any land subject to trust as his home;

The interests of any secured creditor of any beneficiary

Question 19

How may the court order the division of property when a relationship breaks down

Answer 19

1) the court will check if there is an express declaration of trust. This will be a piece of conclusive evidence. ex: if the property was transferred to the parties jointly, it will be presumed that a legal and equitable joint tenancy was intended
2) different common intentions can be shown to have existed, it can be inferred from the conduct of the parties.
ex: if the parties did not initially set out their relative interests: party a paid 75% of the purchase price and most of the expenses of the upkeep, the court may decide that party A is entitled to 80% value of the home

Question 20

First four-part threshold test to determine whether the equitable interest is held as joint tenancy or tenancy in common

Answer 20

four unities test

unity of time - did the co-owners acquire the interests at the same time
of title - under the same document
of interest - of the same nature and duration
of possession - are the co-owners each equally entitled to use and occupy the whole premises

if all the unities are present - the equitable interest may be held as a joint tenancy after passing further tests

Question 21

Explain express statement test, severance test and equity test.

Answer 21

does the transfer document contain an express statement as to how the equitable interest is held (Goodman v Gallant)? this will be conclusive

Are there any world of severance in the transfer document (equally/in equal shares) if so, tenancy in common (Robertson v Fraser)

Can equity assist? if buyers each contributed different amounts to the purchase price (Lake v Gibson) or
the property was bought on behalf of a business.

if still unclear - JOINT TENANCY (equity follows the law)

Question 22

Can there be severance on a legal title?

Answer 22

Legal title must be held as a joint tenancy and severance is prohibited (s.36(2) LPA 1925)

Under the right of survivorship, on the death of a trustee, legal title passes to the other co-trustees.

Question 23

Can there be severance on an equitable interest? if yes, how?

Answer 23

Yes

by notice
by alienation (sale, gift, mortgage or bankruptcy).
by mutual agreement/course of dealings
by Homicide (Re K)

Question 24

Describes the requirements for notice to be correctly served for severance to take effect

Answer 24

s.36(2) LPA
must be in writing, showing correct intention and be correctly served.

Service will be deemed correct if only notice is sent at the last known abode/place of business of person to be served. The address does not actually have to receive the notice for it to take effect (Kinch v Bullard)

notice is sent by registered post to person to be served, provided the letter is not sent back undelivered. (Re 88 Berkeley Road NW9)

for it to take effect, the notice must be served to all joint tenants

Question 25

How may a severance be made by

mutual agreement or

a course of dealings

Answer 25

mutual agreement: where joint tenants expressly agree to sever the equitable interest

Oral agreement is sufficient to prove common intention (Burgess v Rawnsley). It must be declared to ALL the joint tenants.

The intention must be immediate severance

The course of dealings: where the property was bought for business (Morley v Bird). There must be mutual confirmation of that intention.

Question 26

When severance occurs, does all the equitable interest owners hold the interests as tenancy in common?

Answer 26

No. Only the owner of the severed part will hold a tenancy in common basis, all others remain joint tenants of the remainder.

Question 27

Under S.6(1) of Trusts of Land & Appointment of Trustees Act 1996 (TLATA 1996), when trustees of land exercise their powers, they must

Answer 27

Trustees have all the powers as the absolute power of the land, in the exercise of these powers, trustees must

have regard to the rights of beneficiaries (s.6(5)); and

consult beneficiaries and, so far as consistent with the general interest of the trust, give effect to the majority wishes (s.11(1))

Question 28

Under s.12 of Trusts of Land & Appointment of Trustees Act 1996 (TLATA 1996), the beneficiaries have rights to:

Answer 28

Beneficiaries are entitled to occupy the land at any time provided (a) the purpose of the trust are to make land available for his occupation and (b) land is held by the trustees as to be so available

Trustees may impose reasonable conditions on a beneficiary in relation to this entitlement to occupy the land

Question 29

If there is only one sole surviving co-owner selling to the buyer, how the buyer takes the property free of the interests if the land is REGISTERED?

Answer 29

A restriction can be registered on the proprietorship register

if there is a restriction - must overreach
if no restriction - buyer may assume land was previously held as a JT in equity so safe to buy

if there is a overriding interest, it still has to be overreached

Question 30

If there is only one sole surviving co-owner selling to the buyer, how the buyer takes the property free of the interests if the land is UNREGISTERED?

Answer 30

Trust interests are not registrable land charges, and thus cannot be registered on the Land Charges Register. To take the land free of equitable interests, the buyer must either overreach or be equity’s darling

Question 31

Even there is unequal contributions towards the purchase price with an express declaration that the title is to be held as joint tenant, what is the tenure of the equitable interests?

Answer 31

the equitable interests will be held as joint tenancy. as long as PITT and possession are met and tenure as joint tenancy is possible, the equity will follows the law - express declaration is conclusive.

Question 32

The effect of a mortgage on equitable interests held as joint tenancy

Answer 32

mortgage is an alienation (s.36(2) LPA 1925) and it will break the part being held as security as Tenancy in common. when the mortgage is discharged and the share return to the mortgagor, the mortgagor will remain tenancy in common unless there is a renewed process to make him otherwise.

Question 33

For a dispute between the legal estate owner and the equitable owner, discuss the relevant statutes and route to resolution

Answer 33

There will be a trust of land governed by TLATA 2007.

s. 6 the trustee has a power to sell
s. 11 unless expressed excluded, trustees must so far as practicable to consult with beneficiaries with an interest in possession.

In irreconcilable disagreement:

s. 12 beneficiaries have an interest in possession
s. 14 beneficiaries can apply to the court for order to sale or order to prevent the sale. (regards should be given to the intention of the settlor, and purpose for which the property is being held)