A detailed study of the official copies of entries in the Register and the title deeds are likely to reveal any problems. The following article considers these problems and the manner in which they can be solved.
While studying the official copies or the abstract or epitome, transactions of past sellers and buyers are revealed. The solicitor assisting his client in the conveyancing process should study them carefully and look for problem areas and raise them without delay to the seller. Such issues can be raised on registered as well as unregistered land.
Trustees of land:
Registered land
When the land is registered, a restriction entered in the proprietorship register may indicate the steps to be taken by the buyer to overreach the beneficiaries’ interests. Once the terms of the restrictions are met, the buyer can get a good title. Any disposition must be made by all trustees (at least two in number) or a trust corporation.
Unregistered land
Unless the trust deed requires consent, trustees of land have the same power of disposition that a sole beneficial owner would possess. And if the trust deed states that consent from the trustees should be obtained, a buyer need not enquire that the consent was obtained from two more trustees, nor is he required to enquire into the mental capacity of the consenting person. But if the person whose consent is required is a minor, consent from his parents or guardian should be obtained.
However, the buyer should have paid to all trustees or at least two of them, or a trust corporation in order to free the interest in the land from the beneficiaries. The above provisions are applicable since 1st January 1997. The sale of land under a trust prior to the 1st of January 1997 is also subject to similar provisions, but provisions of S26- 28 under LPA 1925 should be checked in transactions other than sale or when consent is required.
Appointing a further trustee
If there is only one trustee, the buyer should insist that a second trustee be appointed so that the interest of the beneficiaries can be overreached. The trust deed can either make provisions for the appointment of the other trustee or the survivor should appoint one. Such an appointment can be made just before the contract of sale is made. The new trustee shall be made a party to the contract and will be bound by the terms of the contract. Such an appointment is particularly helpful when the new trustee is in occupation of the property. The sole trustee can also enter into a contract, but he will have to appoint a new trustee before completion of transaction in order to receive the amount and to ensure that the deed is overreached. While the seller is obligated to include another trustee in order to claim a good title, the same can be included in the contract documents.
Conveyance by trustees to themselves
Sometimes when a disposition is made by the trustees to one of themselves, the buyer should enquire into the circumstances that led to this. This is because such a conveyance is in breach of trust and is voidable by the beneficiaries. Following are the situations where such a disposition is acceptable:
a) There is ample proof by way of a pre-existing contract that favours the trustee or a personal representative.
b) The beneficiary or the personal representative has received the benefit under a will or a testament,
c) The consent of all legally competent beneficiaries was obtained for such a transfer,
d) The conveyance was made by order of a court.
The conveyance was sanctioned by the trust instrument.
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