Successive Estates

Family Settlements

Life estates and future interests were a common feature of landed estates. The landed estate itself was typically “settled” and resettled, generation after generation so that the current owner typically held it for life with subsequent interests vested in his children. Widows were commonly granted life estates in their deceased husband’s property with the remainder (future interest) vesting in the eldest son or children of the marriage.

Under family settlements, there was commonly provision for other family members, by way of pin money or jointure. Pin money provided the wife with an independent income. After the death of her husband, a provision would be made for the widow by way of jointures, being charges on the estate, secured by rent charges. Younger family members might be given lump-sums called portions, raised by the trustees from cash and /or by a mortgage.

Classically, the process was repeated successively. When the grandson reached the age of majority (but had not yet inherited the land), he might in return for an annuity charged on the land,  agree to bar the entail thereby producing a fee-simple. There followed a new settlement by which he and his father would take life estates, with a contingent further entail to the grandson’s unborn son. This would tie the land for another generation.

Development of Settlements

This process, which was common amongst landed families both in England and Ireland, tied up the land. The current owner held a life estate only. It was difficult to raise money as the only security that could be granted, was limited to his life rather than the fee-simple. A more chronic problem was often the accumulation of portions, jointure, rent charges and other debts on the property, charged to meet obligations to various family members.

Over time, some settlements gave increased powers to the life tenants. The tenant for life or trustees might also be given the power to charge land and grant leases. The trustees, or tenants for life with their consent, might be given the power to sell the fee-simple, overreaching the rights of future and contingent owners. The rights of the latter instead attached to the proceeds of the sale.

Limits; Perpetuities

There was a tension between the desire of landowners to keep land in the family and the public policy of allowing land to be saleable. Attempts were commonly made by the current generation to resettle land on terms that restricted their successor from sale, at least without the consent of future generations.

The rules against perpetuities limited the extent to which future interests could be created. The existence of future interests practically guaranteed against the possibility that the current life owners, even together with their immediate successors, could sell the settled property. Attempts were made to avoid these restrictions. Certain legal fictions were used in order to destroy contingent remainder interests. The current owner undertook a conveyance to another on trust for himself or to his own use.

Attempts to undermine future contingent remainders were countered by the device of creating a trust to preserve contingent remainders. Ultimately the Real Property Act 1845 prevent the destruction of contingent remainders.

Land could be restricted for lives of being plus 21 years, effectively until a grandson of the current life tenant and remainderman  (the future interest holder; usually his son) attained the age of 21 years. The father would typically have a life estate, his son a remainder interest, which contingent remainders for the next generation contingent on reaching the age of majority. The rules have been abolished by the 2009 Act.

Early Reform

Private Acts of Parliament and ultimately more general Acts were enacted, in order to allow owners of land settled in this way to give greater control and economic power to the current tenant for life.

In Ireland, much land was sold under the Encumbered Estates Act by a special court established by the act. The court itself undertook the sale, free from encumbrances The various rights interests and other encumbrances, attached to the proceeds of the sale.

The Settled Estates Act 1856, 1857, which was ultimately consolidated in 1877, allowed the tenant for life to sell with the consent of the court. Various other parties’ consents might be required, depending on the circumstances.

Ultimately, the Settled Land Acts 1882 to 1890 were passed in order to provide a general mechanism to make it possible to deal with and sell settled estates. The Acts applied to legal settlements with successive legal interests such as life estates, remainders and future contingent interest.

Settled Land Acts

The Settled Land Act and the powers it granted, applied once there were successive legal or beneficial interests in land. It covered the classic life estate, with a remainder (future interest). It also applied to more complex settlements, with all multiple present and future interests, vested or contingent.

The Settled Land Acts applied to interests under trusts, where the land was held on trust for persons successively. It also applied where land was vested in a minor, irrespective of whether there was any “settlement”.

The Acts did not apply to other types of trust. They did not apply to fee farm grants or leases for lives renewable for ever in themselves, notwithstanding that in one sense, there was a succession of successive interests. Rights of residence and equivalent rights, were outside the legislation, as they did not confer an interest in land.

Powers to Deal

The Settled Land Acts conferred its principal powers on the tenant for life. The tenant for life was defined and was typically the current principal owner/life tenant or the beneficiary for life under a trust. In some cases, the consent of the so-called trustees of the settlement was required for the exercise of the powers. In most cases, the capital proceeds were required to be lodged with them.

The Settled Land Act gave the life tenant the right to sell the land by private treaty or auction at the best price reasonably obtainable. He could not buy the land himself. The life tenant could grant leases up to 35 years and building leases for up to 99 years. He was given the power to create mortgages which were binding on later owners.

In the case of a sale or equivalent transaction, the money received had to be treated as capital money and paid to the trustees. The power of mortgage could be exercised to pay off other encumbrances. Capital money would be spent for the purpose of effecting improvements. This could include the purchase of other lands.

Limits on Powers

The consent of the trustees of the settlement was required for the sale of the principal mansion house. Alternatively, a court order was acquired. Heirlooms could not be sold, without an order of the court.

The tenant for life was required to have regard to the interests of all parties with an interest in the land.  He was deemed a trustee in relation to the exercise of the powers but was not so deemed generally.

The powers under the Acts could not be contracted away. Clauses in settlements which purported to restrict the statutory powers were invalidated. Greater powers could be granted provided they did not conflict with the provisions of the act.

As long as the settled land was sold or value, the courts would not generally question the motive for the sale. A notice was required to the trustees when exercising any of the key powers including that of sale, leasing or mortgaging. If there were no trustees in existence, an application was required to court.

The life tenant had the power to give directions to the trustees in relation to how the capital monies were to be invested. This included reinvestment in substituted assets. This ran contrary to the basic principle that a beneficiary would not generally have the power to direct trustees.

Trustees of Settlement

The Act required that there be trustees of the settlement. It set out a number of tests and mechanisms to determine who was deemed trustees of the settlement. Persons specifically so appointed were, of course, trustees of the settlement. However, where none such were appointed or where the settlement pre-dated legislation, other persons were deemed to be trustees of the settlement.

• persons who were appointed trustees with the power of sale or power to consent to an exercise of the power of sale were deemed trustees; these persons were deemed trustees in priority to persons declared to be trustees of the settlement;
• persons who were trustees under the settlement with power or trusts for sale of other lands in the settlement or power to consent to the exercise of such power;
• persons with future trust or power of sale or power to consent to the exercise of such a power.

If there were no persons falling into the above categories, an application to court was required for the appointment of trustees.

Role of Trustees

The purpose and role of the trustees of the settlement were to protect the interests of the holders of future owners. Upon sale, the capital money had to be paid to two trustees, unless the settlement otherwise permitted.

Their consent was required for the sale of the principal mansion. Capital money from a sale or remortgage had to be paid to them. Although rent on leases was payable to the tenant for life, capital sums received were required to be paid to the trustees of the settlement. The trustees of the settlement could be given additional powers.

On a sale by the tenant for life with the consent of the trustees, the purchaser took title free from all interest created under the settlement. The beneficiaries’ rights attached to the proceeds of the sale. Their right continues to subsist in relation to the purchase monies. They were not deemed converted so were treated as real property.

Trust for Sale

The legislation as originally passed in 1882 applied to trusts for the sale of land. This was particularly surprising and anomalous as a trust for sale was designed to give the trustees the power of sale of the land. The legislation applied to the trust for sale whether there is a trust for persons in succession.

There are no problems of alienability, which was the difficulty which the Acts themselves sought to remedy. The effect of the legislation would have been to give greater control to the tenant for life in place of the trustees for sale who had been specifically appointed by the settlor for such purpose.

The Settled Land Acts were therefore amended, in order to provide that the trustees for sale retained their powers, unless a tenant for life obtained a court order, providing to the contrary. The life tenant enjoyed no powers of leasing or mortgage unless the trust for sale expressly allowed it.

Converted to Trusts of Land

The Land and Conveyancing Law Reform Act converted settlements into trusts of land under that Act. It deemed certain persons to be the trustees of a trust of land in the case of a settlement. It applies where land is held by persons successively without the interposition of a trust.

Where the settlement existed at the commencement of the Act in 2009, the trustees are the tenant for life together with any trustees of the settlement for the purposes of the 1882 Act. Where a settlement is purported to be created after the commencement of the Act, the trustees are the following persons

• any trustee nominated by the trust instrument, but, if there is no such person, then,
• any person on whom the trust instrument confers a present or future power of sale of the land, or power of consent to or approval of the exercise of such a power of sale, but, if there is no such person, then,
• any person who, under either the trust instrument or the general law of trusts, has the power to appoint a trustee of the land, but, if there is no such person, then,
• the settlor or, in the case of a trust created by will, the testator’s personal representative or representatives,

Special Statutory Powers

Trustees of land are given the power to sell the land and reinvest the proceeds in either land for occupation or use by a beneficiary, or otherwise.  The land purchase may be outside the State.  The trustees of land are subject to the duties applicable to trustees generally.

The powers conferred on trustees by statute may be supplemented, amended or restricted.  Provision may be made imposing conditions on the exercise of powers.

The major innovation of the 2009 Act is that it allows overreaching of equitable interests in a much broader and systematic way, than had previously applied under the Settled Land Act.  Certain conveyances by the trustees to a purchaser of the legal estate or of a legal interest in land, overreaches any equitable interest.  The interest ceases to affect the estate or interest whether or not the purchaser had notice of it.

Power of Sale

The 2009 provisions permit overreaching of any estate or interest in land, whether or not subject to a settlement or trust, which would have been subject to the Settled Land Act.

A “purchaser” from trustees of land, includes any mortgagee, lessee or assignee. He or she must acquire the land for valuable consideration.  This need not be full value, but may not be a  voluntary transfer or gift.

The principle of notice has been greatly eroded by the 2009 Act provisions. Overreaching may occur, whether or not the purchaser has actual or constructive notice of an equitable interest.  The purchaser or other person acquiring the interest takes it free from the equitable interests, which attach to the proceeds of the sale.

The principle does not apply where the conveyance is for fraudulent purposes, of which the purchaser has actual knowledge.  A sale by trustees, who patently do not intend to account to the beneficiaries is likely to fall into this category.

A continuing exception to the principle is the possibility of the creation of mortgages by deposit in the case of unregistered title land.  The purchaser will continue to be bound by notice of the fact that key deeds on the chain of title are missing.  However, such mortgages are likely to become less common as lands become compulsory registrable and must accordingly be the subject of a charge, registered in the Land Registry.

Conveyance by Two Trustees and Overreaching

Where the conveyance is of land held by persons in succession, under a trust for sale or settlement or where lands are vested in a minor, a conveyance by two trustees or a trust corporation overreaches equitable interests. This category covers those who would have been subject to the Settled Land Acts.

This is subject to exceptions

• any conveyance made for fraudulent purposes of which the purchaser has actual knowledge at the date of the conveyance or to which the purchaser is a party, or
• rights protected in the conveyance
• mortgages by deposit
• Family Home Protection Act rights.

Sale by Single Trustee

In the case of a sale by a legal owner or a single trustee of any other trust of land, the following interests and  rights are not overreached;

• rights which are protected by registration prior to the date of the conveyance or

• the rights of persons in actual occupation or the lands or rents of the land, save where, upon enquiry made of such person, the rights are not disclosed

In the case of a conveyance by two or more trustees or by a trust corporation, the above rights may be overreached.

 

References and Sources

Primary Texts

Wylie on Irish Land Law Wylie 6th Edition 2020

Land Law In Ireland -Lyall 4th Edition 2018

Principles Of Irish Property Law de Londras 2nd Edition 2011

Equity and the Law of Trusts in Ireland- Keane 3rd Edition

Land Law Kenna & Murphy 2019

Land Law Pearce & Mee 3rd Edition 2011

Other Irish Sources

The Land and Conveyancing Law Reform Act 2009: Annotations and Commentary -Wylie 2nd Edition 2017

Property Legislation 2009 2011 Cannon, Clancy, Kenna 2012

Irish Land Law – A Casebook: Adanan Maddox 2020

A Casebook on Equity and Trusts in Ireland – Wylie

 

Shorter Guides

Land Law Nutshell Cannon 2020

 

UK Textbooks

Land law C. Bevan 2nd ed.2020

Land Law: Text, Cases and Materials B McFarlane, N Hopkins and S Nield, (4th ed. OUP 2018)

Property Law R Smith(10th ed., Pearson, 2020)

Cheshire and Burn’s Modern Law of Real Property by Burn, E. H. 2011

Modern Land Law Dixon 2018

Elements of Land Law Gray, 2009

Property law: cases and materials Smith 2015

Land law Cooke 2015