topic 3- distribution of trust property

Question 1

what are the proper roles of the trustee

Answer 1

• fiduciary
• decision-making - management

Question 2

what is the nature of the beneficiarys rights

Answer 2

the use and enjoyment of the property

Question 3

what are the types of co-ownerships

Answer 3

• successive
• concurrent
• key point: where two or more people co-own real property, there will always be a trust either express or implied

Question 4

what are the two forms of co-ownership

Answer 4

1. joint tenancy; and
2. tenancy in common

note: ‘tenancy’ in this contexr describes how the parties hold the property together

Question 5

what is meant by joint tenancies

Answer 5

• joint tenancies (JTs) own together the whole esate or interest
• none own a specific share - so each owns ‘nothing’, individually - but all own ‘everything’ together
• four unities - possession, interest, title, time
• ‘right of survivorship’ (ius accrescendi)

Question 6

Tenancy in common (TIC)

Answer 6

TICs treated as co-ownerns of seperate shares in the property
↓
TICs hold ‘undivided shares’
↓
only unity needed is possession
↓
TICs can have shares of unequal size
↓
Right of survivorship does not apply

Question 7

whats the difference between law and equity

Answer 7

law
↳can only be held jointly

equity
↳can be held either as joint tenancy (“as one”) or as tenants in common (distinct shares)
↳if joint tenants, the interest can be severed

Question 8

Section 34, LPA 1925

Answer 8

(2) where, after the commencement of this act, land is expressed to be conveyed to any persons in undivided shares and those person are full age, the conveyance shall (notwithstanding anything to the contrary in this act) operate as if the land had been expressed to be conveyed to the garntees, or, if there are more than four grantees, to the first four named in the conveyenace, as joint tenants in trust for the persons interested in the land

Question 9

creation: knowing the difference

it is critical t know whether the beneficial or equitable interest is he

Answer 9

why?
- the significance of the right of survivorship
- the right of survivorship does not operate with T-in-C

how do you know?
- any reference to “shares”
- if no reference to “shares”, presumption is joint tenancy (unless business relationship)

even if a & b put equal amounts in to the property, if the conveyance to them is expressed in shares, they take as T-in-C

Question 10

3 rules of severing a joint tenancy

Answer 10

rule 1: a joint tenancy at law cannot be severed [s. 36 (2), LPA

“no severance of a joint tenancy of a legal estate, so as to create a tenancy in common land, shall be permissible, whether by operation of law or otherwise”

so.. a joint tenancy only can be severed in equity

rule 2: severance means that the co-owners hold shares in the peoperty. therefore:
a tenancy in common cannot be severed (because the co-owners have shares)

rule 3: there are FOUR main methods of severing a joint tenancy in equity
1. an act operating on the share
2. mutual agreement
3. course of dealing
4. notice in writing

Question 11

methods of severance 1: act operating on the share

Answer 11

a unilateral act by one of the joint tenants
must be specifically enforceable agreement
NB- a gift by will does NOT sever a joint tenancy (right of surviorship applies)

eg
A & B are joint tenants in equity

A contracts to sell or contracts to mortgage their interest to C

the specifically enforceable contract is an act operating on the share

Question 12

Methods of severance 2: mutual agreement

Answer 12

must be between ALL joint tenants
Burgess v Rawnsley [1975] ch 429

facts: C offered D 750 pounds
↳ D initially accepted but later increased asking price to 1K

issue: was thete mutual agreement?
yes.

key point: what matters is not whether the agreement is binding but whether it indicates a common intention to sever

Question 13

methods of severance 3: course of dealing

Answer 13

‘severance by any course of dealing sufficent to intimate that the interests of all were mutually treated as constituting a tenancy in common’: williams v Hensman

may occur without agreement: burgess v rawnsley [1975] ch 429

Lord denning MR: ‘sufficent if both parties enter on a course of dealing which envinces an intention by both… that their shares shall henceforth be held in common and not jointly’

sir john pennycuick: ‘where one tenant negotiates with another for some re-arangemnt of interest, it may be possible to infer from the particulat facts a common intention to sever even though the negotiations break down’

• but: “one could not asscribe to joint tenants an intention to sever merely because one offers to buy out the other fpr Xpounds and the other makes a counter offer of Y pounds. there has to be something more concrete in the way of negotiations.”

course of dealing by unilateral declaration? lord denning MR’s view in burgess; but the other judges disagreed

Question 14

method of severance 4: notice in writing

Answer 14

s. 36(2): ‘where a legal estate… is vested in joint tenancy in equity, he shall give to the other joint tenants notice in writing of such desire’

NB- ‘vested in joint tenants beneficially’ - suggests method can be used only when same persons are the JTs both at law and in equity (but mught be interpreted broadly)

no format required
postal rule
some court documents can constitute a “notice in writing”
BUT the notice must evince a desire to sever the JT immediately

Question 15

notice in writing: court proceedings

Answer 15

could a divorce petition consitute a notice in writing? harris v Goddard [1983] 1 WLR 1 203
- the prayer requests the court to distribute assests as it sees fit
- did not demonstrate an intention to sever immediately

could an application to the court for an order for sale constitute a notice in writing? Re Drapers Conveyance [1969] ch 486
- in combination with a witness statment requesting division of proceeds of sale according to parties’ shares and declaration that one party was entitled to hald share
- did demonstrate an intention to sever imeediately

Question 16

explain overreaching
↳meaning and effect
↳types of interest affected
↳process

Answer 16

meaning and effect
↳overreaching = a process by which an interest in land os converted into an interest in money
↳once an interest is overreached, it is not durable
-interest holder’s sole claim is against the legal owner in damages

types of intetest affected
↳ a beneficial interest behinf a trust of land: s 2, LPA
↳ certain other interests
↳easments

process
notwithstanding anuthing to the contrary in the instrument (if any) creating a trust of land or in any trust affecting the net proceeds of sale of the land if it is sold, the proceeds of sale or other capita; money shall not be paid to or applied by the direction of fewer tha two persons as trustees, except where the trustee is a trust sirporation, but this subsection does not affect the right of a sole personal representative as such to give valid receipts for, or direct the application of, proceeds of sale or other capital money, nor, except where capital money arisies on the transaction, render it necessary to have more than one trustee. s 27 (2), LPA

Question 17

who is property law for?

Answer 17

security
↳protection of the buyer
↳facilitating the flow of transactions

beneficial interest holder
↳personal remedy
↳no property right

Question 18

trusts of land an appointment of trustees act 1996 (TLATA)

Answer 18

• under TLATA legal co-owners (joint tenants) hold the legal estate as trustees of land
• “trust of land” (1996 TLATA, s. 1 (2)) is defined as any trust “whether express, implied, resulting or constructive”
• TLATA introduced to reflect societal changes & abolished doctrine of conversion

Question 19

general powers of trustees

Answer 19

(1) for the purpose of exercising their functions as trusteed, the trustees of the land have in relation to the land subject to the trust all the powers of an absolute owner

(5) in exercising the powers conferred by this section trustees shall have regard to the rights of the beneficiaries

(6) the powers conferred by this section shall not be exercised in contravention of … any rule of law or equity

Question 20

11. – consultation with beneficiaries

Answer 20

(1) the trustees of land shall in the exercise of any function relating to land subject to the trust–
(a) so far as practicable, consult the beneficiaries of full age and beneficially entitled to an interest on possession in the land, and
(b) so far as consistent with the general interest of the trust, give effect to the wishes of those beneficiaries, or (in case of dispute) of the majority (according to the value of their combined interests)

Question 21

what are the rights of beneficiaries

Answer 21

↳ beneficiaries have interest in the property both in terms of value and use
↳ right to occupy if “beneficially entitled to an interest in posession”, 1996 TOLTA, s. 12(1) if available and suitable for occupation (s. 12(1)(a)&(2) and s. 13)
↳ right to appoint or remove trustees (1996 TOLATA, s. 19 (2) & s. 2 (1)-(2)
↳ right to be consulted (s.11(1))

Question 22

the right to occupy

Answer 22

(1) a beneficiary who is beneficially entitled to an interest in possession in land subject to a trust of land is entitled by reason of his interest to occupy the land at any time if at that time-

(a) the purposes of the trust include making the land available for his occupation (for for the occupation of beneficiaries of a class of which he is a member or of beneficiaries in general), or

(b) the land is held by the trustees so as to be available

(2) subsection (1) does not confer on a beneficiary a right to occupy land if it is either unaviable or unsuitable for occupation by him

Question 23

13. • exclusion and restriction of right to occupy

Answer 23

(1) where two or more beneficiaries are (or apart from this subsection would be) entitled under section 12 to occupy land, the trustees of land may exclude or restrict the entitlement of any one or more (but not all) of them

(2) trustees may not under subsection (1)-
(a) unreasonably exclude any beneficiary entitlemnt to occupy land, or
(b) restrict any such entitlemnt to an unreasonable extent

(3) the trustees of land may from time to time impose reasonable conditions on any beneficiary in relation to his occupation of land by reason of his entitlement under section 12.