Trusts of Land and Third-Party Rights

Vocabulary flashcards covering the creation of trusts of land, co-ownership, the doctrine of overreaching, restrictions, and the priority rules governing beneficial interests under the LPA 1925 and LRA 2002.

Trust

A situation in which the legal owner of property ('trustee') is obliged to hold that property ('trust property') for the benefit of another ('beneficiary') to the exclusion of any personal interest.

Express Trust

A trust that the owner of a freehold estate in land intends to create, which must be manifested and proved by signed writing under LPA 1925 s53(1)(b) and is conclusive as to the beneficial interests of its beneficiaries.

Common Intention Constructive Trust

A trust imposed by law without formality requirements under LPA s.53(2), arising when the freeholder and claimant share a common intention (express or inferred) that the claimant owns a share of the property, and this intention is detrimentally relied on by the claimant.

Imputation of Intention

The judicial determination of the claimant's percentage share of beneficial interest under a common intention constructive trust when no express or inferred common intention can be deduced.

Resulting Trust

A trust imposed by law without formalities when a claimant makes a financial contribution to a property's purchase price, establishing beneficial interests quantified in accordance with respective financial contributions.

Stack v Dowden and Jones v Kernott

Authorities establishing that a resulting trust cannot be used to establish beneficial interests in a family home.

Laksar v Laksar

Authority establishing that a resulting trust can establish beneficial interests in a commercial context.

Statutory Trust

A trust of land imposed by statute (specifically LPA 1925 ss.34, 36) whenever legal co-ownership exists, under which co-owners serve as both trustees and beneficiaries.

LPA 1925 s.1(6)

The statutory provision mandating that co-owners of the legal freehold estate must hold that estate as joint tenants.

Land Registry Form JO

A form or deed of conveyance in which co-owners under a statutory trust may optionally declare how they hold their beneficial interests, giving rise to an express trust if valid under LPA 1925 s.53(1)(b).

Beneficial Interest Under Trust (BIUT)

The right held by a beneficiary of a trust, which constitutes a necessarily equitable right in rem.

Overreaching

A doctrine that detaches an equitable right in rem from the estate it burdens immediately before a disposition and transfers it to the purchase money received from a third party, preventing the right from binding that third party.

Overreachable Dispositions

Dispositions on which overreaching can occur under LPA 1925 s.2(1)(ii), specifically the transfer of the legal freehold estate or the grant of a legal leasehold estate.

Two-Trustee Rule

The requirement under LPA s.2(2) and s.27(2) that consideration for a disposition must be paid to two or more trustees (proprietors of the legal freehold estate) for overreaching to occur.

Restriction

An entry in the register regulating the circumstances in which a disposition may be the subject of an entry in the register (LRA 2002 s.40(1)), limiting the owner's ability to deal with the land.

Disposition

Any transaction where a person creates, transfers, or extinguishes a legal or beneficial interest in a property.

LRA 2002 s.42(1)(b)

The provision permitting a restriction to be entered to ensure that interests capable of being overreached on a disposition are overreached.

LRA 2002 s.29 Priority Rule

A rule applying to a registrable disposition of a registered estate made for valuable consideration and completed by registration, providing that a third party is bound by pre-existing rights in rem that are registered or fall within Schedule 3.

LRA 2002 s.33(a)(i)

The statutory provision establishing that beneficial interests under a trust (BIUTs) cannot be registered.

Schedule 3, Paragraph 2 (LRA 2002)

The provision through which an un-overreached beneficial interest under a trust (BIUT) can bind a third party if the beneficiary is in actual occupation at the time the sale completes.