Summary: Ws4 Co-Ownership

Read the summary and the most important questions on WS4 Co-ownership

• 1 STEP 1: Introductory points

• When two or more people buy a house together, when is the trust created (s.34(2) LPA 1925)?

  Whenever land is co-owned a trust is imposed by statute (s.34(2) LOA 1925). This is known as a trust of land, which separates the legal and equitable title to the land (Trusts of Land and Appointment of Trustees Act 1996 (TLATA).

• 1.2 STEP 3: Trustees of Land and their Powers

• What provisions does the 1996 Act set out in relation to trustees and beneficiaries?

  Sets out the powers of the trustees and the rights of the beneficiaries during the trust.

• 1.2.1 Trustees' powers generally

• Explain the definition of trustees powers under section 6(1) TLATA? Are the trustees able to perform the sale without regarding the rights of the beneficiaries under s6(5) of TLATA?

  Section 6(1) TLATA trustees have the power of sale (sell or mortgage trust land) as if they were absolute owners. However, the trustees must regard the rights of the beneficiaries and consult them s6(5) TLATA.

• Under section 6(2) TLATA, are the trustees able to convey the legal estate to the beneficiary even if they haven't been required to do so? What are the main requirements for this?

  The trustee can dispose of the legal estate by transferring it to the beneficiaries who are of full age and 'absolutely entitled to the land'. This allows the trustee to end the trust even if the beneficiaries did not request it. 

• Under section 6(3) the trustees have permission to do what in relation to the trust land?

  Trustees have the power to buy land (legal estate - leasehold or freehold and not an equitable interest in land such as an equitable lease) in England and Wales subject to s 8 of the Trustee Act 2000 which sets out that the land bought must be for the occupation of the beneficiaries or another reason.

• How does section 6(6) ensure that trustees are not exercising their power in a negative way?

  Trustees' power should not contravene any rule of law or equity.

• 1.2.2.1 Duty to consult beneficiaries

• Is it important for the trustees to consult with the beneficiaries under s 11 of TLATA?

  The trustees must give effect to the wishes of the majority of the beneficiaries that are of full age and absolutely entitled to the land unless the settlor excluded this requirement in the trust deed.

• 1.2.2.2 Settlors creating restrictions on the trustees powers under section 8 of the 1996 Act

• Explain how the settlor is able to restrict the trustee's powers under section 8 of the 1996 Act?

  The trustees' power can be restricted if the terms of the trust include obtaining consent from the beneficiaries before selling trust land.

• 1.3 The Rights of Beneficiaries

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• What conditions need to be satisfied under s 12 of the 1996 Act in order for the beneficiary to have the right to occupy?

  • Entitled to an interest in possession in land 
  • The trust includes making land available for the beneficiaries to occupy 
    
  • the trustees must make trust land available for occupation 

• Explain how s 12(2) of the 1996 Act prevent the beneficiaries from having the right to occupy?

  A beneficiary does not have a right to occupy the land if it is either unavailable or unsuitable for occupation. For example, if the house is subject to a lease, the tenant can occupy the land, thus the land is unavailable for occupation by the beneficiaries. If the beneficiary is a wheelchair user, the house might be unsuitable for occupation and the trustees can refuse him occupation.