topic 4 - Trusts of Land and Appointment of Trustees Act (TOLATA)[1996]

What did the law on trusts of land look like before TOLATA 1996?

• It was governed by the Law of Property Act 1925, especially s30, which allowed any interested person to apply for a court-ordered sale of land held on trust

• This system strongly favoured creditors and treated homes as saleable assets

What was the "trust for sale"?

A legal fiction where trustees were expected to sell the land and distribute the proceeds rather than hold it as a home. It prioritized asset value over human interests

What is Lorna Fox’s main argument in Conceptualising the Home (2007)?

She critiques the asset-focused view of property and argues courts are moving toward recognising homes as spaces of identity, belonging, comfort, etc., rather than just financial assets.

According to Fox, what makes the home more than an asset?

The home represents:

1. Identity (e.g., Duke, Monarch)

2. Belonging

3. Comfort

4. Area

5. History

What reform does TOLATA 1996 introduce?

proposed by Law Commission (Transfer of Land: Trusts of Land, 1989) and implemented by s1 TOLATA 1996

• Replaces trusts for sale with trusts of land, giving trustees more flexibility and reducing the automatic compulsion to sell

• whenever duty of care owed by trustee, he must exercise such care and skill as is reasonable in circumstances

• has professional expertise if he acts as trustee in course of business or profession, to any special knowledge or experience that’s reasonable to expect of person acting in course of business or profession

What powers do trustees have under TOLATA s6?

Trustees have all powers of an absolute owner, including power to:

• Sell land

• Invest in land

• Postpone sale

Can trustees delegate their powers?

Yes, under s9 TOLATA, trustees can delegate power to beneficiaries, but are still subject to a duty of care (Trustee Act 2000, s1).

Do beneficiaries have a right to occupy trust property?

Yes, under s12 TOLATA, unless excluded by the trust.

Who decides which beneficiary occupies if there’s a dispute (case)?

Trustees can decide under s13, but courts intervene if necessary (Chan v Leung [2002]) to avoid self-interest

How does overreaching affect beneficiaries?

Under LPA 1925, s2(1), if two trustees sell land, beneficial interests are overreached (converted into money), removing rights of occupation

What is TOLATA s14?

Allows any trustee or person with an interest to apply to court for an order regarding trustee functions, including sale

What factors does court consider under s15 TOLATA?

1. Intention of trust creators

2. Purpose of property

3. Welfare of minor occupants

4. Interests of any secured creditor

Has s15 shifted power away from creditors?

It attempts to balance interests more equitably, but courts still often favor creditors, especially in bankruptcy.

What section of the Insolvency Act 1986 governs bankruptcy & sale of home?

s335A — prioritises creditor interests, but also considers:

• Needs of spouse/children

• Conduct contributing to bankruptcy

• Other circumstances (excluding bankrupt’s needs)

Does s335A favor forced sale (case)?

Yes — especially after 12 months, court must order sale unless exceptional circumstances (Re Citro).

What case looked at purposes of trusts in relation to divorce? (pre-TOLATA)

Jones v Challenger [1961]

Sale allowed after divorce, as purpose of trust (matrimonial home) had ended.

what case looks at the courts softening approach before TOLATA?

Abbey National v Moss [1994]

Courts began recognising personal hardship and refused sale

what case showed creditor dominated approach under LPA s30? (pre-TOLATA)

Re Citro (1991)

Sale was allowed despite hardship

What was a land mark case that limited creditor dominance? (post-TOLATA)

The Mortgage Corporation v Shaire [2001]

Court refused sale, emphasized s15 factors, and considered the fraud behind debt

what case looked at an exception due to age?

Bank of Ireland v Bell [2001]

Sale was allowed as child was nearly 18 as emotional difficulties were more minor than debt owed

what case looked at banks impatience?

First National Bank v Achampong [2003]?

Sale allowed — court won’t let bank be “condemned to wait.”

What case took a sympathetic approach?

Edwards v Bank of Scotland [2010]?

Sale refused, husband had £600k, elderly, and judge saw this as sufficient

Did TOLATA reduce likelihood of forced sales?

Yes, especially in non-bankruptcy cases — courts now weigh broader interests via s15.

In bankruptcy, does s335A of the Insolvency Act still enable forced sales?

Yes — creditor interest still dominates after 12 months unless exceptional hardship (Re Citro).

Is overreaching a threat to beneficiary rights?

Yes — converts interest in land to money, meaning even if trust protects rights, sale by two trustees bypasses them.

what did Hopkins comment on TOLATA?

TOLATA changed trustee power but failed to protect beneficiary occupation fully.

What did Martyn comment on TOLATA?

Practical difficulties remain, especially where beneficiaries clash.

what did Clements comment?

TOLATA shifts focus from trust as investment tool to human experience.

what did Bright suggest?

TOLATA reflects welfare more than strict property logic.

what case looks at the limitations of investment in relation to family home?

Re Power [1947]

• not authorised to purchase freehold land as an investment as buying house to live in was not an investment

what section applies to over reaching?

• s16 - purchaser doesn’t have to worry about rights of beneficiaries/consultation means overreaching can take place

what sections applies to consent?

s8 (2)

• trust sales explicitly require beneficiary’s consent

s10 (2)

• if there are a group of beneficiaries, trustees only need consent of 2