Trusts of Land: Introduction

Question 1

What does the Trusts of Land and Appointment of Trustees Act 1996 (the 1996 Act) signify?

Answer 1

It introduced the trust of land with limited case law, guiding how provisions of the statute apply to various factual situations.

Question 2

How does joint ownership relate to trusts of land?

Answer 2

When two or more people buy a house together, a trust is automatically created, significant in dispute resolution among joint owners.

Question 3

What happens to jointly owned land when one owner dies?

Answer 3

The deceased’s share does not necessarily pass under their will but may automatically transfer to the surviving joint owner(s).

Question 4

What are implied trusts of land?

Answer 4

They imply co-ownership, allowing someone to acquire an equitable interest in land legally owned by another, entitling them to a share in sale proceeds.

Question 5

How do implied trusts affect unmarried couples?

Answer 5

They play a crucial role in resolving disputes, especially since there’s no ‘common law’ partner recognition in English law.

Question 6

What myth exists about common law partners and property interest?

Answer 6

The myth that common law marriage grants property rights; in truth, unmarried partners may need to claim interest under an implied trust.

Question 7

What was the Law Commission’s stance on relationship breakdown in 2007?

Answer 7

It called for legal reform on financial consequences post-relationship breakdown, though plans to change the law were eventually dropped.

Question 8

How does implied trust law differ for married vs. unmarried couples?

Answer 8

Implied trusts are crucial for unmarried couples, while married couples might see disputes resolved through ‘property adjustment orders’ in divorce courts.

Question 9

How does the Civil Partnership Act 2004 affect same-sex couples?

Answer 9

It allows same-sex couples to register their partnership, granting courts power to make property adjustment orders upon relationship breakdown, similar to divorce.

Question 10

What major change did the Trusts of Land and Appointment of Trustees Act 1996 introduce to trusts of land?

Answer 10

It replaced the strict settlement and the trust for sale with a single trust model called a trust of land for all land held under trust.

Question 11

What is the significance of the date 1 January 1997 regarding trusts of land?

Answer 11

Any new trust created over land after this date can only take the form of a trust of land, marking the end of strict settlements and trusts for sale.

Also the date the Spice Girls reached number 1 in the UK with their hit single, ‘2 Become 1’. This is no coincidence.

Question 12

What types of trusts of land exist post-1996 Act?

Answer 12

There are:-
1. express trusts,
2. implied trusts, and
3. those automatically created by joint ownership.

Question 13

How is an expressly created trust of land defined?

Answer 13

A trust explicitly formed by a landowner assigning their land to trustees for the benefit of others, with trustees holding the legal estate and beneficiaries holding the equitable interest.

Question 14

What characterises an automatic trust created by joint ownership?

Answer 14

When land is jointly purchased, a trust of land is automatically formed, with the joint owners serving as both trustees and beneficiaries.

Question 15

What leads to the creation of an implied trust in the context of land ownership?

Answer 15

An implied trust is formed when someone who is not the legal owner (e.g., not listed on the deed) contributes financially to the purchase, creating equitable ownership alongside the legal owner.

Question 16

What is the foundational section in TOLATA for the general powers of trustees of land?

Answer 16

Section 6 of TOLATA sets the general framework for trustees’ powers, serving as the foundational point for understanding their authority over trust land.

Question 17

What are the key powers granted to trustees under s. 6(1) of TOLATA?

Answer 17

Under s. 6(1) of TOLATA, trustees have all the powers of an absolute owner for the purpose of exercising their functions as trustees of land.

Question 18

How does s. 6(2) of TOLATA affect the trustees’ power to convey land?

Answer 18

S. 6(2) of TOLATA allows trustees to convey land to beneficiaries of full age and capacity who are absolutely entitled, without the beneficiaries’ request, emphasizing the trustees’ wide-ranging authority.

Question 19

What does s. 8 of the Trustee Act 2000 allow trustees to do?

Answer 19

S. 8 of the TA empowers trustees to acquire freehold or leasehold land in the UK for investment, occupation by a beneficiary, or other reasons, granting them all the powers of an absolute owner in relation to the land.

Question 20

How do s. 6(2),(3) TOLATA and s. 8 TA expand trustees’ powers regarding land transactions?

Answer 20

These sections provide new powers for trustees to sell trust land (s. 6(2),(3) TOLATA) and to acquire land (s. 8 TA), significantly expanding their operational scope beyond traditional limitations.

Question 21

What legal obligation applies to trustees of land when exercising powers under s. 6 TOLATA?

Answer 21

The duty of care under section 1 of the Trustee Act 2000 applies, requiring trustees to act with care, skill, and caution as would be expected of a prudent person managing another’s affairs.

Question 22

Describe the trustees’ obligation to consider beneficiaries’ rights under s. 6(5) of TOLATA

Answer 22

S. 6(5) of TOLATA mandates trustees to regard the rights of beneficiaries when exercising their powers, reinforcing the principle that trustees’ actions must align with the beneficiaries’ best interests.

Question 23

What requirement is outlined in s. 6(6) of TOLATA for trustees exercising their powers?

Answer 23

Section 6(6) of TOLATA requires trustees not to exercise their powers in contravention of, or any order made pursuant to, any enactment or rule of law or equity.

This ensures that trustees’ actions must always align with legal and equitable principles, reinforcing their obligation to act within the boundaries of the law and ethical standards.

Question 24

What does s. 11 of TOLATA specify about trustees’ duty to consult beneficiaries?

Answer 24

S. 11 mandates trustees to consult beneficiaries of full age and beneficial interest in possession before exercising functions related to the land, aiming to reflect beneficiaries’ wishes as far as practicable and consistent with the trust’s general interest.

Question 25

Under what conditions does s. 11(1) of TOLATA not apply to the duty to consult beneficiaries?

Answer 25

S 11(2) states that s 11(1) doesn’t apply to:-

1. Trusts created by a disposition with specific non-application provisions,
2. Trusts under wills made before TOLATA’s commencement, or
3. in the exercise of the power mentioned in s. 6(2).

Question 26

How does s. 11 of TOLATA impact the trustees’ power to sell trust land?

Answer 26

Trustees must consult beneficiaries with an interest in possession and of full age. While they should consider the beneficiaries’ majority wishes, they retain final decision-making power, especially if selling aligns with the trust’s best interests.

Question 27

Can settlors exclude the duty to consult beneficiaries in the trust deed according to TOLATA?

Answer 27

Yes, settlors can specify in the trust deed that trustees are not required to consult beneficiaries, effectively modifying or excluding the application of s. 11’s provisions.

Question 28

How does s. 11 of TOLATA apply when trustees of land hold it for beneficiaries with unequal shares?

Answer 28

Trustees are duty-bound to consult all beneficiaries of full age and with an interest in possession.

The wishes of the majority by value, such as a beneficiary with a larger share, should be given considerable weight as far as practicable.

Question 29

What is the role of s. 8 in TOLATA regarding settlor-imposed restrictions?

Answer 29

S. 8 permits settlors to impose restrictions on trustees’ powers when creating a trust of land, potentially limiting actions like selling the land without specific consents, thereby ensuring trustees’ actions align with the settlor’s intentions.

Question 30

Give an example of how a settlor-imposed restriction under s. 8 of TOLATA may affect a trustees’ powers?

Answer 30

Restrictions can limit the trustees’ ability to exercise their powers under s. 6, such as requiring consent from a named individual before selling the land. Acting without

Question 31

What are the primary rights of beneficiaries under a trust of land?

Answer 31

Beneficiaries have
1. the right to be consulted (s. 11 TOLATA),
2. to give permission for trustees to exercise certain powers (s. 8 TOLATA), and
3. the right to occupy trust land (ss. 12 & 13 TOLATA).

Question 32

What does s. 11 of TOLATA specify about the right to be consulted?

Answer 32

S. 11 mandates trustees to consult with beneficiaries of full age and beneficial interest in possession before making decisions affecting the trust land, reflecting the beneficiaries’ wishes as much as possible.

Question 33

How does s. 12 of TOLATA define a beneficiary’s right to occupy trust land?

Answer 33

S. 12 grants beneficiaries with an interest in possession the right to occupy trust land, provided the trust’s purposes include making the land available for their occupation or if the land is held for such availability.

Question 34

What are the limitations and conditions under s. 13 of TOLATA on the right to occupy?

Answer 34

S. 13 allows trustees to
1. exclude or restrict the occupancy rights of some beneficiaries,
2. impose reasonable conditions on occupancy, and
3. consider the trust’s intentions, purposes, and the beneficiaries’ circumstances and wishes.

Question 35

Can all beneficiaries occupy trust land according to TOLATA?

Answer 35

Not all beneficiaries are entitled to occupy trust land. Only those with an interest in possession and where the trust’s purposes or trustees’ holdings make the land available for their occupation can exercise this right.

Question 36

Under what conditions might a beneficiary be refused the right to occupy trust land?

Answer 36

Beneficiaries might be refused occupancy if the land is leased to others, making it unavailable, or if the land is unsuitable for their needs, such as being inaccessible to a wheelchair user.

Question 37

Can trustees impose conditions on a beneficiary’s right to occupy?

Answer 37

Yes, under s. 13, trustees can impose reasonable conditions on a beneficiary’s occupation, such as requiring the payment of outgoings or assuming obligations related to the land or activities conducted there.

Question 38

What triggers the need for dispute resolution under TOLATA?

Answer 38

Dispute resolution under ss. 14-15 of TOLATA is necessary when trustees disagree on exercising a power or when disputes arise between trustees and beneficiaries, such as occupancy rights.

Question 39

What is the primary method for resolving disputes under TOLATA?

Answer 39

S. 14 provides that parties must apply to court for an order to resolve disputes regarding the exercise of trustees’ powers or beneficiaries’ rights.

Question 40

What are the circumstances under s. 14(2)(a) TOLATA that might lead to a court application?

Answer 40

An application under s. 14(2)(a) may be necessary when trustees need consent from a named person for actions like selling land but the person cannot be found or refuses permission, prompting a court application to relieve trustees of this obligation.

Question 41

Who can apply to the court under s. 14 TOLATA?

Answer 41

Both trustees of land and anyone with an interest in the property subject to a trust of land can apply to the court for an order under s. 14.

Question 42

What are the court’s powers under s. 14 TOLATA?

Answer 42

The court can make any order it sees fit regarding the exercise of trustees’ functions or declaring the nature or extent of a person’s interest in the property, excluding orders on the appointment or removal of trustees.

Question 43

What factors must the court consider under s. 15 TOLATA when determining applications?

Answer 43

The court must consider
1. the trust’s intentions, purposes,
2. the welfare of minors occupying the land,
3. interests of secured creditors, and,
4. for occupancy-related applications, the beneficiaries’ circumstances and wishes.

Question 44

How does s. 15 TOLATA affect applications related to occupancy rights under s. 13?

Answer 44

For applications concerning s. 13, the court must also regard the circumstances and wishes of beneficiaries entitled to occupy the land under s. 12.

Question 45

Can beneficiaries influence court applications regarding trustee powers and their interests?

Answer 45

Yes, beneficiaries of full age with an interest in possession can influence applications not related to s. 6(2), as the court will consider their circumstances and majority wishes.

Question 46

How does the mechanism of overreaching protect a purchaser of trust land?

Answer 46

Overreaching protects purchasers by ensuring they acquire the land free of the equitable interests of beneficiaries, provided the purchase is made in accordance with specific legal requirements.

Question 47

What protection does s. 10 of TOLATA offer to purchasers from express trusts?

Answer 47

S. 10 provides that if a trust deed requires consents for trustees to exercise certain functions, the consent of any two trustees is sufficient in favor of a purchaser, simplifying the consent process.

Question 48

Does s. 10 of TOLATA apply to beneficiaries not of full age?

Answer 48

S. 10(3) states that if a beneficiary’s consent is required but they are not of full age, their consent is not required in favor of a purchaser. Instead, consent from a parent or guardian suffices.

Question 49

How does s. 10(1) of TOLATA affect the requirement for beneficiary consents in a sale?

Answer 49

Under s. 10(1), a purchaser is protected if only two of the required consents are obtained for the sale, rather than needing consent from all beneficiaries specified in the trust deed.

Question 50

Does s. 10 of TOLATA differentiate between registered and unregistered land titles?

Answer 50

No, s. 10 applies equally to both registered and unregistered land titles, providing uniform protection to purchasers of trust land.