United Kingdom has diverse laws pertaining to land and its ownership.
Trusts are legal arrangements wherein more than one individual is made a ‘trustee’ i.e. legal guardian of the given property. The trust of land is governed by the Trust of Land and Appointment of 1996. The trustee essentially deals with the property in a particular manner to safeguard the interest of the ‘beneficiaries’. Beneficiaries are entrusted with co-ownership rights of the land. Thus even tough trustees are the legal holders of the property; the beneficiaries remain the actual owners.
According to the UK land laws, trusts can be created in many different ways as follows:
Implied Trusts
When co-ownership of a land is granted to a person whose name is not recorded as trustees or under the title, it is called as implied trust. This usually happens when someone buys the land or pays for improvement of the property, thereby acquiring an interest on it. Implied trusts are of two different types.
1. Resulting Trust
A resulting trust arises when the property is not properly disposed of. The legal title maybe in the name of the original trustee but the equitable title is with the settlor. A resulting trust usually arises due to the failure in creation of an express trust.
2. Constructive Trusts
A passive arrangement wherein the law imposes the defendant to look after the property as an equitable remedy due to unreasonable acquiring by wrongdoing is called a constructive trust. In good conscience the law cannot allow the land owner to benefit from it. Thus the property is held as constructive trust.
Overreaching
Overreaching happens when there is a trust and the property is sold. It happens when the buyer pays money to at least two trustees. Those who occupy the property then lose their interest on the property because two or more trustees have essentially brought an end to the right to occupation, through the sale.
Co-ownership
Joint tenancy and tenancy in common are the two different types of co-ownership. Joint tenancy allows you to hold a legal estate, but it is not possible under tenancy in common. The beneficiaries, however, can hold it under either type of co-ownership.
According to the Law of Property Act 1925, any property may be owned by up to four people at the same time. People who have a beneficial interest on the property are referred to as tenants here; bear in mind that this reference has no bearing to the usual landlord-tenant terminology. In most cases, there are only two owners. They hold the property either under joint tenancy or tenancy in common.
In joint tenancy, both of them own the property together. Under tenancy in common, there is a distinct division in ownership.
The best example of a joint tenancy is a husband and wife both owning the property together. They want both to be owners of regardless of who pays for the property or bears the mortgage. This type of ownership may make sense for a husband and wife, but consider a situation where a group of friends or family members want to buy a house together. Here, each member will want his or her distinct slice of ownership. This is a situation where tenancy in common becomes applicable.
Joint tenancy can be severed and converted to tenancy in common. The right of survivorship does not apply when this happens. Severance can be effected by written notice, bankruptcy, and selling or charging the beneficial interest.
Bear in mind that a legal estate cannot be held under tenancy in common. So regardless of severance, legal estate will always remain under joint tenancy.
