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Co Ownership Regulation Notes Notes

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Co-ownership Regulation Notes

What are the basic aspects of co-ownership of land?
Whenever land is co-owned, whether co-ownership arises in relation to the legal title, the beneficial interests, or both, the land is held on trust. All co-ownership trusts are considered to be 'trusts of land' and are governed by the Trusts of Land and Appointment of
Trustees Act 1996 (TOLATA 1996).
How does the TOLATA statutory scheme work?
The Trust of Land
(a) Section 1 - A 'trust for land' means any trust of property which consists of or includes land
Functions of Trustees of Land
(a) Section 6 - establishes the general powers of trustees a. s6(1) - for the purpose of exercising their functions as trustees, trustees of land have all the powers of the absolute owner b. s6(2) - the powers conferred upon them include the power to convey the land to the beneficiaries even though not required to do so by the beneficiaries c. s6(9) - the duty of care under s1 of the Trustee Act 2000 applies to trustees of land when exercising powers conferred by this section
(b) Section 8 - establishes the exclusion and restriction of powers a. s8(1) - s6 and can be disapplied where the trust of land is created by a disposition and that disposition stipulates those sections will not operate in relation to that trust b. s8(2) - where the trust of land is created by a disposition, the settlor may make the exercise of the powers in s6 subject to the beneficiaries' consent
(c) Section 11 - consultation with beneficiaries a. s11(1) - Trustees must, in any exercise of any function relating to land subject to the trust:
i. s11(1)(a) - So far as is predictable, consult beneficiaries of full age and beneficially entitled to interest an interest in possession; and ii. s11(1)(b) - So far as consistent with the general interest of the trust,
give effect to the wishes of those beneficiaries

1. Where there is a dispute between multiple beneficiaries,
effect should be given to the wishes of the majority b. s11(2) - the effect of this section can be disapplied where the trust is made either by a will or a disposition and the will or disposition so provides
Right of the Beneficiaries to Occupy the Trust Land (a) Section 12 - the beneficiary's right to occupy a. s12(1) - a beneficiary with a beneficial interest in the possession of land will be entitled to so occupy where:
i. s12(1)(a) - the purpose of the trust includes making the land available for their occupation ii. s12(1)(b) - the land is held by the trustees so as to be available b. s12(2) - subsection (1) does not confer a right to occupy on the beneficiary if the land is either unavailable or unsuitable for occupation by him i. This section becomes relevant where one of the co-owners becomes bankrupt and the trustee administering the bankruptcy would not be able to occupy with the remaining co-owner

1. As such s13 will not apply - any occupational rent or other equitable compensation then falls to be considered under the old common law rules of equitable accounting (see Davis v
Jackson below)
The application of s12 is subject to the application of:
(b) Section 13 - exclusion and restriction of the right to occupy a. s13(1) - Where 2 or more beneficiaries are entitled under s12 to occupy land,
the trustees can exclude or restrict the entitlement of any one or more (but not all) of them b. s13(2) - However the trustees may not:
i. Unreasonably exclude a beneficiary's entitlement to occupy land; or ii. Restrict any entitlement to an unreasonable extent c. s13(3) - From time to time, trustees can impose reasonable conditions on any beneficiary in relation to his occupation of the land i. s13(5) - such conditions include:

1. payment of outgoings or expenses in relation to the land

2. assuming another obligation in relation to the land or any activity proposed d. s13(4) - Trustees must have regard to the following matters in exercising their powers:
i. the intentions of the person who created the trust ii. the purposes for which the land is held iii. the circumstances and wishes of each of the beneficiaries who is entitled to occupy e. s13(6) - Where a beneficiary is excluded under s13(1), the following conditions may be imposed on the beneficiaries who remain in possession:
i. Payment of compensation to the excluded/restricted beneficiary ii. Forgo payments that the beneficiary is entitled to under the trust so as to benefit the excluded/restricted beneficiary

1. NOTE: the wording of s13(6) suggests that there must have been an affirmative decision by the trustees to exclude the beneficiary

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