Trusts of Land: Overview

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Trusts of Land and Appointment of Trustees Act 1996 (TOLATA)

• s.1(1)(a): trust of land: any trust of property which consists of or includes land
• s.1(2)(a): trust of land may be express, implied, resulting or constructive, including trust for sale & bare trust
• s.1(2)(b): includes trust created or arising before commencement of this Act
• s.2: no new strict settlement may be created but existing not converted
• s.4: provision for trust for sale to be expressly created, trustees under duty to sell immediately but implied power to postpone (must be exercised unanimously)

Trust of land: creation

• settlor expressly create / implied: co-ownership or deceased's assets vests in personal representative
• documents to create: vest legal estate in trustees & equitable interest for beneficiaries
• formalities under LPA 1925: transfer of legal estate by deed s.52(1) / equitable interest signed written document s.53(1) / maximum 4 trustees s.34(2)

Trustees' powers: general

• TOLATA s.6: T powers of absolute owner s.6(1) / T dispose of legal estate (transfer B absolutely entitled & end trust) s.6(2) / T buy land for s.8 purposes s.6(3) / T regard rights of B s.6(5) / T comply equity & law s.6(6)

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Trusts of Land: Overview

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Trustees' powers: specific

• TOLATA s.7: partition land between Bs (if sui juris & absolutely entitled to trust land in undivided shares) s.7(1) / T must obtain B's / execute partition: deed conveying part of land to Bs / B sole legal & beneficial owner of part & trust ends
• TOLATA s.9: delegate powers to attorney (attorney must be: full age & entitled to an interest in possession under the trust) s.9(1) / PoA made jointly Ts but revoked by 1 s.9(3) / attorney may sell but proceeds to Ts s.9(7) / settlor cannot exclude power

Trustees' powers: restrictions

• TOLATA s.11: Ts duty consult Bs (sui juris & interest in possession) & as far as consistent general interests trust comply wishes majority in value s.11(1) / settlor may exclude duty to consult s.11(2)(a) / duty to consult not apply trust made prior 1 January 1997 s.11(2)(b)
• TOLATA s.8: applies express trusts s.8(1) / settlor require consent for T exercise ss.6 & 7 powers s.8(2) / not apply charitable or public trusts s.8(3) / if settlor exclude courts cannot intervene (non-existent function)

Beneficiaries' occupation rights

• TOLATA: if B interest in possession & purpose trust making available for occupation / or land held so available for occupation s.12(1) / no right if unavailable or unsuitable s.12(2) / Ts may impose restriction including paying outgoings or expenses s.13

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Trusts of Land: Overview

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Dispute resolution

• TOLATA court intervention: application by T or B s.14(1) / order Ts exercise of functions (including relieving duty to consult) & declaring nature of person's interest s.14(2) / not order appointment or removal Ts s.14(3)
• court consider TOLATA s.15(1): (a) settlor's intentions / (b) purpose trust / (c) welfare minors / (d) interest secured creditor

Protection of a purchaser from trustees

• LPA 1925: to overreach P pay purchase price to all trustees (at least 2) s.27(1) / sole personal representative s.27(2)
• TOLATA: if trust deed requires Ts obtain consents P only check 2 consents s.10(1) / if B minor P not have check consnet s.10(2)
• TOLATA unregistered land: P not check Ts complied with duties s.16(1) / if P not catual notice breach conveyance not invalidated s.16(2)
• equitable interests: interests affecting a registered estate / bind P if protected by restriction on register / restriction warns P to overreach / overreaching can take free actual occupation rights
• LRA 2002 Sch.3 p.2: protects interest of person in actual occupation if: recognised interest in land (equitable interests under trusts & options to purchase) / occupation obvious on reasonable inspection or P knew of interest / P take free if asks occupier & occupier unreasonably fails to disclose
• actual occupation: overreaching detach beneficial interest from land to proceeds of sale London Building Society v Flegg
• LRA 2002 s.26: Ts (registered proprietors) powers of absolute owner (including sale) / TOLATA s.6: Ts powers of absolute owner subject equity & law / limits should be reflected by entry of restriction (proprietorship register)

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Trusts of Land: Overview

[Flash Card 4 of 4]

Ending a trust in land

• sale: proceeds (personalty) are only trust property remaining
• Saunders v Vautier: sui juris absolutely entitled B / request Ts release trust fund to him or new Ts
• TOLATA s.6(2): Ts may transfer property to Bs (sui juris & absolutely entitled)
• TOLATA s.7(1): Ts can partition land between Bs (sui juris & absolutely entitled in undivided shares)

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