📍
Co-ownership
The Relationship Between the Settlor, Trustee and
Beneficiary
📍 A trust is a relationship whereby property is held by one party (the trustee)
for the benefit of another (the beneficiary).
When two or more people buy a house together, a trust is automatically created.
The Settlor
The legal owner of the property.
Create the trust and transfer their property into it.
Choose a trustee to manage the trust.
Has a legal interest in the property
Can decide to be both the settlor and the trustee, known as a "self-declared trust".
In this case, they would keep the legal title to the property but give up the beneficial
ownership.
The Trustee
Holds legal title to the trust property once the settlor transfers it to them.
Can be a real person or an artificial entity, such as a company or a group of trustees.
Responsible for managing the trust on behalf of the beneficiary
Have a fiduciary duty to the beneficiaries; that is, they must act in their best interests.
Must operate within the trust rules and the laws governing trusts.
Must be at least 18 years old.
Legal estate is held by the “trustees”.
Co-ownership 1
, LPA provides — there can be a maximum of four trustees of the legal estate.
If more than four people are named in the transfer when they buy, the legal title will
held by the first four adults listed.
The Beneficiary
Receives the benefits of the trust.
Can be real people or artificial entities.
Equitable or beneficial interest is held by the “beneficiaries”.
There is no limit on the number of beneficiaries.
The arrangement between these parties is documented in a trust instrument or deed. This
document must specify details such as the property to be transferred, the identity of the
beneficiary, and the duties of the trustee.
Statutory Rules — TOLATA & LPA
📍 Whether the trust is express or implied, it will be governed by the Trusts of
Land and Appointment of Trustees Act 1996 (TOLATA).
TOLATA simplified trusts of land by introducing a single "trust of land" to replace
previous types (strict settlement and trust for sale). Since January 1, 1997, all new trusts
over land must take this form.
TOLATA contains provisions for both implied and express trusts, setting out the powers
and duties of the trustees and the rights of the beneficiaries whilst that trust subsists.
The trustees of land are in a strong position — They are the legal owners of the land and
manage it.
⚖️ The Law of Property Act also contains key statutory provisions related to
trusts, primarily in sections 2, 27, 34, and 36.
Powers of Trustees
Section 36 — LPA
Co-ownership 2
, Section 36 states that whenever you have a co-ownership of land you have a trust of land,
and the legal owners are the trustees.
So if all co-ownerships are trusts of land, then the Trusts of Land and Appointment of
Trustees Act must apply to them.
Section 6 — TOLATA
Section 6(1) gives trustees the powers of an absolute owner, meaning they can:
sell or mortgage the land
buy different land (either for the beneficiary to live in or just as an investment).
Section 6(2) & (3) TOLATA, sets out the circumstances in which the trustees are
authorised to sell the trust land.
6(2) — trustees have the power to dispose of the legal estate in a specified way.
I.e., transferring it to a beneficiary who is of full age, capacity, and absolutely
entitled to the land, thus ending the trust. This allows trustees to end the trust
even without beneficiaries' request.
6(3) — trustees have the power/permission to buy land in England and Wales
And… Section 8(1) of Trustee Act (TA) 2000 (which repealed Section 6(4)
TOLATA) sets out the circumstances in which trustees can acquire such land.
Where land is to be bought for occupation by a beneficiary, Section 6(3)
TOLATA and Section 8(2) of the TA 2000 only allows the trustees to buy a legal
estate and does not permit the purchase of an equitable interest in land.
6(5) — trustees must consider beneficiaries' rights and exercise general duty of care
(e.g., cannot use trust assets for buy things for themselves).
6(6) — requires the trustees not to exercise the powers they are given under s 6 ‘in
contravention of, or of any order made in pursuance of, any enactment or any rule of
law or equity’.
This limits the ways in which the trustees can exercise the wide powers they
have been given — Their powers have to be exercised to comply with general
rules of equity and law.
NB 6(5) and 6(6) were obligation that trustees already had to do under the general law.
Restrictions on Trustees
Section 1 — LPA
Co-ownership 3
Co-ownership
The Relationship Between the Settlor, Trustee and
Beneficiary
📍 A trust is a relationship whereby property is held by one party (the trustee)
for the benefit of another (the beneficiary).
When two or more people buy a house together, a trust is automatically created.
The Settlor
The legal owner of the property.
Create the trust and transfer their property into it.
Choose a trustee to manage the trust.
Has a legal interest in the property
Can decide to be both the settlor and the trustee, known as a "self-declared trust".
In this case, they would keep the legal title to the property but give up the beneficial
ownership.
The Trustee
Holds legal title to the trust property once the settlor transfers it to them.
Can be a real person or an artificial entity, such as a company or a group of trustees.
Responsible for managing the trust on behalf of the beneficiary
Have a fiduciary duty to the beneficiaries; that is, they must act in their best interests.
Must operate within the trust rules and the laws governing trusts.
Must be at least 18 years old.
Legal estate is held by the “trustees”.
Co-ownership 1
, LPA provides — there can be a maximum of four trustees of the legal estate.
If more than four people are named in the transfer when they buy, the legal title will
held by the first four adults listed.
The Beneficiary
Receives the benefits of the trust.
Can be real people or artificial entities.
Equitable or beneficial interest is held by the “beneficiaries”.
There is no limit on the number of beneficiaries.
The arrangement between these parties is documented in a trust instrument or deed. This
document must specify details such as the property to be transferred, the identity of the
beneficiary, and the duties of the trustee.
Statutory Rules — TOLATA & LPA
📍 Whether the trust is express or implied, it will be governed by the Trusts of
Land and Appointment of Trustees Act 1996 (TOLATA).
TOLATA simplified trusts of land by introducing a single "trust of land" to replace
previous types (strict settlement and trust for sale). Since January 1, 1997, all new trusts
over land must take this form.
TOLATA contains provisions for both implied and express trusts, setting out the powers
and duties of the trustees and the rights of the beneficiaries whilst that trust subsists.
The trustees of land are in a strong position — They are the legal owners of the land and
manage it.
⚖️ The Law of Property Act also contains key statutory provisions related to
trusts, primarily in sections 2, 27, 34, and 36.
Powers of Trustees
Section 36 — LPA
Co-ownership 2
, Section 36 states that whenever you have a co-ownership of land you have a trust of land,
and the legal owners are the trustees.
So if all co-ownerships are trusts of land, then the Trusts of Land and Appointment of
Trustees Act must apply to them.
Section 6 — TOLATA
Section 6(1) gives trustees the powers of an absolute owner, meaning they can:
sell or mortgage the land
buy different land (either for the beneficiary to live in or just as an investment).
Section 6(2) & (3) TOLATA, sets out the circumstances in which the trustees are
authorised to sell the trust land.
6(2) — trustees have the power to dispose of the legal estate in a specified way.
I.e., transferring it to a beneficiary who is of full age, capacity, and absolutely
entitled to the land, thus ending the trust. This allows trustees to end the trust
even without beneficiaries' request.
6(3) — trustees have the power/permission to buy land in England and Wales
And… Section 8(1) of Trustee Act (TA) 2000 (which repealed Section 6(4)
TOLATA) sets out the circumstances in which trustees can acquire such land.
Where land is to be bought for occupation by a beneficiary, Section 6(3)
TOLATA and Section 8(2) of the TA 2000 only allows the trustees to buy a legal
estate and does not permit the purchase of an equitable interest in land.
6(5) — trustees must consider beneficiaries' rights and exercise general duty of care
(e.g., cannot use trust assets for buy things for themselves).
6(6) — requires the trustees not to exercise the powers they are given under s 6 ‘in
contravention of, or of any order made in pursuance of, any enactment or any rule of
law or equity’.
This limits the ways in which the trustees can exercise the wide powers they
have been given — Their powers have to be exercised to comply with general
rules of equity and law.
NB 6(5) and 6(6) were obligation that trustees already had to do under the general law.
Restrictions on Trustees
Section 1 — LPA
Co-ownership 3
