Land Law: Trusts of Land (Workshop #7)

Question Sheet

  1. when land is sold/mortgaged the process in which beneficial interests are lifted from the trust property and placed onto the money paid to trustees

  2. The Law of Property Act 1925 s 2 & 27 

  3. the land must be the subject of a trust, there must be a transaction and the purchase of mortgage money must be paid to at least 2 trustees/ a trust corporation 

  4. the trust property will be bound to the beneficiaries interests

Wiiliams & Glyn’s Bank Ltd v Boland [1981] AC 487

Facts

  • Mr & Mrs Boland bought a house together, however, the legal title was only put in Mr Boland’s name

  • Mr Boland took out a loan from William & Glyn’s Bank for his business

  • the business subsequently failed

  • the bank attempted to repossess the house in order to pay back the loan

  • Mrs Boland argued that wasn’t possible due to her living there

Legal Question

  • did Williams & Glyn’s Bank pay money to 2 trustees?

Outcome

Ratio Decidendi

  • Williams & Glyn’s Bank hadn’t paid money to 2 trustees meaning that overreaching hadn’t occured

  • this meant that Mrs Boland’s interest in the property was maintaine dincluding her right to live there

City of London Building Society v Flegg [1988] AC 54

Facts

  • Mr and Mrs Flegg lived with their child and their spouse (the Maxwell-Brown’s)

  • the bought a house together with all of them contributing money to its purchase

  • the legal title was put in the name of the younger couple Mr and Mrs Maxwell-Brown

  • the Maxwell-Brown’s stopped paying their mortgage and went into default

  • the City of London Building Society wanted to repossess the property

Legal Issue

Outcome

Ratio Decidendi

  • s 2 and 27 of the Law of Property Act 1925 was complied with

  • City of London Building Society could repossess the property

Activity 2: Problem Scenario

In order to advise Asha,

the status of legal title

whether a trust has arisen in her favour (what type?).

whether Asha has any interests in the property and how they should be protected

how the Trusts and Appointment of Trustees Act 1996 ss 14 & 15 may apply

Main Body

Oakham House is a registered title, as indicated by the problem question, and a freehold estate under the Law of Property Act 1925 s 1(1)(a). The title is freehold absolute under Law of Property Act 1826 s 9(2) with Mavi as the sole legal owner of the property. This allows him to sell the property under s 23(1).

This would be a trust of land under the Trusts of Land and Appointment of Trustees Act (TLATA) 1996, s.1(1)(a). For this to be a valid express trust, Mavi must have the trust written and signed under Law of Property Act 1925 s 53(1)(b). There is no evidence of him doing soin the problem question. Therefore, it is unlikely that such a trust was created. An implied trust may arise, nonetheless, according to Stack v Dowden (2007) - due to the domestic nature of the relationship between Mavi and Asha as well as their purpose for purchasing Oakham House (to live there) a constructive trust may have been formed. To confirm such a trust has been formed, intention and detriment must be determined. There are 2 types of intention: common and inferred. Common intention, according to, Lloyds Bank v Rosset (1989) are ‘express discussions’…agreement, arrangement or understanding’. The problem question, however, suggests no such discussions took place. Asha may still have inferred intention. According to Lloyds Bank v Rosset (1989) inferred intention is a ‘contribution to the purchase price or mortgage installments’.

Because Asha and Mavi are unmarreid, Asha doesn’t have Home Rights under the Family Act 1997 s 30(2).

Beneficial interest are protected by restrictions under the Land Registration Act 40(1).

Asha also has overring interest due to her living at the property (interests of people in actual occupation)

The test for ‘actual occupation’ requires physical presence according to Lord Wilberforce in the case of Willam’s and Glyn’s Bank v Boland.

In order to make this interest binding against Rizen Loans Company, she had to have been in actual occupation when the loan was made against Oakham House. There is nothing to suggest that she wasn’t present in the house at that time.

The mortage payment has only been given to a single trustee (Mavi), therefore the TLATA 1996 s 2 and 27 hasn’t been complied with

s6 of TLATA similar to those of the legal owner

s 11 states that beneficiaires have the right to consultation

s 12 gives her occupational rights

Conclusion

As identified, in the foregoing advise…

  • reiterate advise