Trusts of Land

Trusts of land.

There is a statutory trust of land when the ownership of land is

• vested in persons in succession (e.g. present and future interests) without there being a trust in the instrument
• held, either with or without other property, on a trust
• vested in a minor (under 18 years).

The first category covers most cases where ownership is split over time, and there are not one or more absolute owners. It does not apply to co-owners. The second category covers all kinds of trust, express, implied, resulting, constructive and bare trust and a trust for sale.

Trustees of Land

The following persons are deemed the trustees of a trust of land.

Where land is owned in succession, it is the tenant for life under the Settled Land Act 1882, together with any trustees of the settlement under that  Act. See the section on redundant legal interest in relation to the Settled Land Act.

In the case of a trust of land created expressly, the trustees are those nominated by the trust deed. If  there is no such person, then it is

• any person on whom the trust deed 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 deed 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 (person creating the deed) or, in the case of a trust created by will, the testator’s personal representative or representatives,

In the case of land vested in a minor or purporting so to vest it is the above persons in order.

In the case of land, the subject of an implied, resulting, constructive or bare trust, the person in whom the legal title to the land is vested is the trustee of land.

Powers of Trustees of Land

Subject to—

• the duties of a trustee, and
• any restrictions imposed by any statutory provision (including this Act) or the general law of trusts or by any instrument or court order relating to the land,

a trustee of land has the full power of an owner to convey or otherwise deal with it.

The power of a trustee includes the power to—

• permit a beneficiary to occupy or otherwise use the land on such terms as the trustee thinks fit,
• sell the land and to re-invest the proceeds, in whole or in part, in the purchase of land, whether or not situated in the State, for such occupation or use.

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 purchased 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 the 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, overreach 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 provision permits 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, she or it 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 sale.

Exceptions

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 compulsorily registrable and must accordingly be the subject of a charge, registered in the Land Registry.

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.

Resolution of disputes.

Any person having an interest in a trust of land, or a person acting on behalf of such a person, may apply to the court in a summary manner for an order to resolve a dispute between the—

• trustees themselves, or
• beneficiaries themselves, or
• trustees and beneficiaries, or
• trustees or beneficiaries and other persons interested,

The application may relate to any matter concerning the—

• performance of their functions by the trustees, or
• nature or extent of any beneficial or other interest in the land, or
• other operation of the trust.

The court may make whatever order and direct whatever inquiries it thinks fit in the circumstances of the case. In considering an application, the court shall have regard to the interests of the beneficiaries as a whole and, subject to these, to—

• the purposes which the trust of land is intended to achieve,
• the interests of any minor or other beneficiary subjects to any incapacity,
• the interests of any secured creditor of any beneficiary,
• any other matter which the court considers relevant.

Applications may also be made by a mortgagee or other secured creditor, a judgment mortgagee or a trustee.