Land Unit 2 - Trusts Of Land And Co-Ownership

Front 1

Trustees of Land Powers

Back 1

TLATA 1996:
•S.6 (1) – trustees of land have in relation to the land subject to the trust all the powers of an absolute owner.
•S.6 (2) – gives trustees authority to exercise the power to dispose of the legal estate in a specified way.
•S.6 (3) – gives trustees power to buy a legal estate in England and Wales for the wide purposes set out in s.8 of Trustee Act.
•S.6 (5) –requires trustees to have regard to the rights of beneficiaries when exercising their powers.
•S.11 - when selling trust land trustees must consult with beneficiaries who are 18+ and who have an interest in possession and comply with the wishes of the majority in value.

Hint 1

Various powers of trustee, can refer to Act.

Front 2

Rights of Beneficiaries under a trust of land

Back 2

1) Right to be consulted (s.11)
2) Right to give permission before the trustees exercise their powers (s.8)
3) The right to occupy (ss 12 and 13) beneficiaries must:
a) be entitled to an interest in possession under the trust
b) the purposes of the trust must include making the land available for beneficiaries to occupy, or,
c) trustees must hold the land so that it is available for them to occupy

Front 3

Resolving Disputes with trustees

Back 3

Parties must apply for a court order to resolve under s.14.

Court must take into account the factors in s.15:
•Looking at the purpose of the trust
•The intention of the settlor
•The welfare of any minor who occupies/may occupy the land
•The interests of any secured creditor of a beneficiary

Front 4

Protection of purchasers

Back 4

Overreaching

s.10 TLATA (trust deed consent)

Front 5

Joint Tenants

Back 5

Single legal person, right of survivorship applies. If land held as joint tenants sold, joint tenants share the proceeds of sale equally.

Front 6

Tenants in Common

Back 6

Own distinct shares in the property which may be equal or unequal in size, no right of survivorship, interest can be sold or left in will.

Front 7

s. 1 (6) LPA

Back 7

Legal estate can only be held as joint tenants. Not possible to sever joint tenancy of legal estate into TIC (s.36 (2)).

Hint 7

(Co-owners can hold the equitable interest as joint tenants or TIC. If title registered and beneficiaries hold as TIC automatic restriction registered)

Front 8

s.36 (1) LPA

Back 8

Maximum of four trustees can own the legal estate in land. Trustees must be18+. Upon reaching 18 the trustee must be specifically appointed by the existing trustees to hold legal estate.

Front 9

Joint Tenants OR Tenants in Common?

Back 9

1) Four Unities – interest, title, time and possession. All four needed for joint.
2) Express Declaration – any express declaration in the deed is conclusive (Goodman v Gallant)
3) Words of Severance – word indicating co-owners intend to own separate or distinct shares, where words present co-owners TIC.
4) Presumption – equity will presume TIC if: partnership property, lenders, or unequal contributions.

Hint 9

If all four unities present, no express declaration, no words of severance and no equitable presumptions apply, then the co-owners will hold as joint tenants.

Front 10

Goodman v Gallant (1986)

Back 10

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

Hint 10

Testator left major asset to his mother, children argued that father had transferred property to mother to hold on trust for children. Held, express declaration property belonged to mother.

Front 11

Severance of Equitable Joint Tenancy

Back 11

1) By Notice
2) By Alienation
3) By Mutual Agreement/Course of Dealing
4) Homicide

Front 12

Severance by Notice

Back 12

(s.36(2)) LPA:
a) Notice must be given in writing
b) Notice must show correct intention (see. Harris v Goddard; Re Draper)
c)Notice must be correctly served (s.196) (see Kinch v Bullard; Re 88 Berkley)

Front 13

Harris v Goddard (1963)

Back 13

Notice must be drafted so that it shows an intention to bring about the wanted result immediately.

Hint 13

A prayer in a divorce petition not effective notice to sever joint tenancy. Held that it ‘did no more than invite the court to consider at some future time whether to exercise its jurisdiction.

Front 14

Kinch v Bullard (1999)

Back 14

s.196 (3) LPA; does not matter who left the notice of severance, could be left by sender or his agent, or by postman.

Hint 14

Mr and Mrs J both beneficial joint tenants, getting divorced. Mrs J sent letter to Mr J, he had heart attack before seeing it, she destroyed it, she then died a few months after him, was notice effective? Held, yes.

Front 15

Re Berekley Road (1971)

Back 15

Notice correctly served even though serving co-owner had signed on behalf of recipient to prove receipt.

Hint 15

Daughter and mothers friend, latter sent notice by recorded delivery and signed for it without showing daughter. Held, sufficient notice. Notice served when post in post-box for recorded post.

Front 16

Severance by Alienation

Back 16

When joint tenant sells, gives or mortgages his equitable interest to a third party. Must be in signed writing (s.53 (1) (c))
The joint tenant cannot transfer his interest in the legal estate (if he has one) at the same time, prohibited by s.36 (2). Bankruptcy automatically severs.

Front 17

Severance by Mutual Agreement/Course of Dealing

Back 17

Where the co-owners expressly agree to sever the joint tenancy, or where method of dealing would have the effect of severing. If there are two or more equitable joint tenants who all agree to sever all will become TIC with equal shares. (Burgess v Rawnsley).

Front 18

Burgess v Rawnsley (1975)

Back 18

Severance by mutual agreement when co-owner expressly agrees to sever joint tenancy in equity.

Hint 18

Mr H and Mrs R were joint tenants, agreed orally that Mrs R would sell her share for £750, and then changed her mind as she wanted more. Then Mr H died. Held, sufficient common intention for severance at £750.

Front 19

Effect of Severance

Back 19

After co-owners sever the joint tenancy in equity they should record this on the title to the property. Registered =memo on conveyance. Unregistered = restriction should be placed on proprietorship register.

Front 20

Resulting Trust

Back 20

Implied trust if party contributes all or part of the purchase money.
Size of non-legal owners share in proportion to size of contribution.

Front 21

Curley v Parkes (2004)

Back 21

Payment of all or part of purchase price would create a resulting trust. Not legal fees, removal costs, mortgage contributions etc.

Hint 21

Mortgage payments made after time of acquisition. Held, insufficient to qualify as a direct financial contribution.

Front 22

Lloyds Bank v Rosset (1991)

Back 22

Two situations where court could impose constructive trust:
1)Agreement/understanding
2) Common intention
Both need non-legal owner to act to their detriment.

Hint 22

Dispute over net proceeds of sale of home, no declaration of trust, but one of survivors could claim good receipt, both paid different amounts. Held, split 65:30

Front 23

Constructive Trust (by agreement)

Back 23

Specific statement about ownership must have been made to impose a constructive trust.

Front 24

Grant v Edwards

Back 24

It does not matter that the statement is deceitful. Non-legal owners must act to their detriment
Must be a causal link between agreement and detriment

Hint 24

Constructive trust by agreement

Front 25

Constructive Trust (by common intention)

Back 25

Direct contributions to the purchase price by a non-legal owner, whether initially or by payment of mortgage instalments would be sufficient conduct, doubtful whether anything less will do (Lloyds Bank v Rosset).

Front 26

Stack v Dowden (2007)

Back 26

In determining the share of a beneficiary under a constructive trust the courts should consider the whole course of dealing between the parties.

Hint 26

Mr and Mrs R bought farmhouse, house bought by Mr R and in his sole name. Husband mortgaged house and defaulted, Mrs R had supervised renovations. Held, Mrs R had no equitable interest which would bind the bank.

Front 27

Sale by Co-owners

Back 27

• By two or more co-owners- buyer pays the purchase price to both legal owners to get the whole estate, overreaches any equitable interests arising under the trust of land (ss2/27 LAP 1925).
• By sole surviving co-owner – if joint tenants can sell alone, if TIC purchaser needs to overreach any equitable interests.

Hint 27

• Unregistered – must show title deeds, purchaser may be able to rely on s.1 LPA (Joint Tenants) and assume joint tenancy not severed.
• Registered – restriction on proprietorship register will be apparent to purchaser, will need to overreach if interest under Sch 3, para2.