SQE1 Land Law

Land Law · Legal estates and interests

Priya is advising a family trust company on a portfolio of interests in land in Leeds. Each interest was created recently. The company asks which of them is capable of existing as a legal estate under the Law of Property Act 1925, rather than only in equity. Which of the following interests is capable of being a legal estate?

1. A life interest in a house, given to the settlor's brother.
2. A freehold interest that takes effect only after the death of a present life tenant.
3. A leasehold interest granted for 99 years at a premium, with a fixed start date.
4. A fee tail granted to the settlor's eldest grandchild.
5. A freehold interest in a flat that is to end if the owner marries.

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Answer: C. Since 1925 only two estates can be legal: the fee simple absolute in possession and the term of years absolute (LPA 1925, s 1(1)). A lease for 99 years with a fixed start date is a term of years absolute, so it can be legal if created with the right formalities. The life interest and the fee simple in remainder cannot be legal estates. A fee tail cannot even be created now: since 1997 an attempt to grant one takes effect as a trust of the land (Trusts of Land and Appointment of Trustees Act 1996, Sch 1, para 5). The freehold that ends on marriage is a determinable fee, which is not 'absolute'. The tempting wrong answer is the remainder interest: it is a freehold, but it is not 'in possession', so it can only take effect in equity.

Law of Property Act 1925, s 1(1); Trusts of Land and Appointment of Trustees Act 1996, Sch 1, para 5

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Land Law · Formalities for leases

Dev owns a shop in Bolton. He agrees with Mara that she may occupy it for two years at the best rent reasonably obtainable, with no premium, starting next week. They shake hands but sign nothing. Dev's solicitor is asked whether Mara will have a legal lease. The land is unregistered. Which of the following is correct?

1. Mara has a legal lease, because a lease of three years or less at the best rent without a premium, taking effect in possession, may be created orally.
2. Mara has only an equitable lease, because every lease must be made by deed to be legal.
3. Mara has only a licence, because a lease cannot exist without a written agreement.
4. Mara has no interest in the land, because the agreement fails for lack of writing under section 2 of the 1989 Act.
5. Mara has a legal lease only once it is registered at HM Land Registry.

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Answer: A. A legal lease must normally be made by deed (LPA 1925, s 52(1)). There is an exception. A lease for three years or less, taking effect in possession, at the best rent reasonably obtainable without a fine, may be created orally or in writing (ss 52(2)(d) and 54(2)). Dev and Mara's lease fits all those conditions: two years, immediate possession, best rent, no premium. So it is a legal lease. The tempting wrong answer is that a deed is always needed. That is true only for leases outside the s 54(2) exception.

Law of Property Act 1925, ss 52(1), 52(2)(d), 54(2)

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Land Law · Registration of title

Hamza owns the unregistered freehold of a house in Cardiff and has never registered it. His solicitor explains that some dealings with unregistered land trigger compulsory first registration under the Land Registration Act 2002, and that a failure to register leads to legal consequences. Hamza wants to know which of the following dealings would trigger compulsory first registration. Which one would?

1. The exchange of contracts for the sale of the freehold, before completion.
2. The grant of a lease of exactly seven years, by deed, to a tenant.
3. The grant of a legal easement over the freehold, by deed, to a neighbour.
4. The grant to a tenant of a lease for a term of 15 years, taking effect in possession.
5. The assignment of an existing lease that has only five years left to run.

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Answer: D. Compulsory first registration is triggered by listed events. They include a transfer of the freehold on sale or by gift, the grant of a lease of more than seven years, and the assignment of a lease with more than seven years left to run (LRA 2002, s 4(1)). A 15 year lease is therefore a trigger. A contract is not, and a lease of exactly seven years is not. The tempting wrong answer is the seven year lease: the test is 'more than seven years', so exactly seven years falls just outside it.

Land Registration Act 2002, s 4(1)

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Land Law · Registered land: unregistered registrable disposition

Ruth is the registered proprietor of a shop in Hull. Three years ago she granted Tom a ten year lease by deed. Tom took possession, pays rent and runs his business there. The lease was never registered at HM Land Registry. Ruth has now sold her freehold to Zed, who is registered as the new proprietor. The register shows no mention of Tom. Tom's solicitor asks whether Zed is bound by Tom's lease. Which of the following is correct?

1. Zed is bound: the lease is a legal lease, because it was made by deed and Tom took possession.
2. Zed is not bound: an unregistered lease of more than seven years cannot affect a registered buyer for value.
3. Zed is bound only if Zed had actual notice of the lease before completion.
4. Zed is bound because a lease of any length overrides a registered disposition.
5. Zed is bound: the lease takes effect in equity only, but Tom's actual occupation makes it an overriding interest.

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Answer: E. A lease of more than seven years is a registrable disposition. Until it is registered it does not take effect at law (LRA 2002, s 27(2)(b)). Tom therefore has an equitable lease, enforceable under Walsh v Lonsdale. A registered disponee for value takes free of unprotected equitable interests (s 29). But an interest of a person in actual occupation overrides unless an exception applies (Sch 3, para 2). Tom is in actual occupation, so his interest binds Zed. The tempting wrong answer is that Zed takes free because the lease is unregistered: that forgets the overriding interest route.

Land Registration Act 2002, ss 27(2)(b), 29; Land Registration Act 2002, Sch 3, para 2

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Land Law · Contracts for the sale of land

Olu orally agrees with his neighbour Karen that he will buy her registered garden plot for 40,000 pounds. The deposit of 4,000 pounds is paid by bank transfer. Olu then spends a further 6,000 pounds clearing the plot, relying on Karen's repeated promises to sign a contract. Karen now refuses to sell. No document has been signed by either of them. Olu wants to enforce the sale. Which of the following best states Olu's position?

1. There is a valid contract, because the deposit was paid and Olu acted in part performance.
2. There is no valid contract under s 2 of the 1989 Act, although Olu may have other claims, such as recovery of the deposit or proprietary estoppel.
3. There is a valid contract, because an oral contract for land is enforceable once money is paid under it.
4. There is no contract and Olu has no claim at all, because s 2 of the 1989 Act makes the transaction void for every purpose.
5. There is a valid contract, but only an order for damages is available, not specific performance.

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Answer: B. A contract for the sale or other disposition of an interest in land can be made only in writing. It must incorporate all the terms the parties expressly agreed, and be signed by or for each party (Law of Property (Miscellaneous Provisions) Act 1989, s 2(1) and (3)). Olu and Karen have signed nothing, so there is no contract, and part performance is no longer a route to enforcement. Section 2(5) saves resulting, implied and constructive trusts. Olu can seek return of the deposit, and may argue proprietary estoppel or a constructive trust (Yaxley v Gotts), although estoppel is hard where both sides knew a formal contract was still needed (Cobbe v Yeoman's Row). The tempting wrong answer is that payment makes the oral deal binding. It does not.

Law of Property (Miscellaneous Provisions) Act 1989, s 2(1), (3), (5); Yaxley v Gotts [2000] Ch 162

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Land Law · Overriding interests: actual occupation

Mr Rana is the sole registered proprietor of the family home in Leicester. His wife, Mrs Rana, paid half of the purchase price and lives in the house, so she has a beneficial interest under a trust. She has never registered anything. Without telling her, Mr Rana grants a charge over the house to Northgate Bank to secure a business loan. Her clothes and car are plainly there. The bank did not inspect or ask who lived there. When the loan defaults, the bank seeks possession. Which of the following is correct?

1. The bank takes free of her interest, because she did not protect it by a restriction.
2. The bank takes free of her interest, because it was overreached when the loan money was paid to Mr Rana.
3. The bank takes subject to Mrs Rana's beneficial interest, because it is an interest of a person in actual occupation and overreaching did not occur.
4. The bank takes free of her interest, because only a legal estate can override a registered charge.
5. The bank takes subject to her interest only if the bank had actual knowledge of her at completion.

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Answer: C. A beneficial interest under a trust of land is an interest in land. It binds a registered chargee if the beneficiary was in actual occupation at the time of the disposition (LRA 2002, ss 29(2)(a)(ii) and 30; Sch 3, para 2; Williams & Glyn's Bank v Boland). The exceptions do not apply: she was not asked, and her occupation was obvious. Overreaching needs capital money paid to two trustees or a trust corporation (LPA 1925, ss 2 and 27), and here there was only one. The tempting wrong answer is that a restriction was needed. A restriction gives protection, but actual occupation is a separate route.

Land Registration Act 2002, ss 29, 30; Sch 3, para 2; Law of Property Act 1925, s 2(1)(ii)

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Land Law · Overriding interests: exceptions

Zed agrees to buy a registered house in Luton from Anya, the sole registered proprietor. Before completion, Zed's solicitor writes to Jake, who lives in the house with Anya, asking whether he claims any interest in it. Jake, who in fact has a 20 per cent beneficial share from contributing to the price, ticks the box saying 'no interest claimed'. Zed completes and is registered. Jake later claims his share binds Zed. Which of the following is correct?

1. Jake's interest does not override, because he failed to disclose it when enquiry was made and could reasonably have been expected to.
2. Jake's interest overrides, because actual occupation always protects a beneficial interest.
3. Jake's interest overrides, because the enquiry should have been made of Anya, not Jake.
4. Jake's interest overrides, because Zed could not rely on the answer without inspecting the house.
5. Jake's interest does not override, because it was never registered by a restriction.

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Answer: A. An occupier's interest overrides a registered disposition unless an exception applies (LRA 2002, Sch 3, para 2). One exception is the interest of a person of whom enquiry was made before the disposition and who failed to disclose the right when they could reasonably have been expected to do so (para 2(b)). Jake was asked and denied any claim, so Zed takes free. The tempting wrong answer is that actual occupation always protects. It does not: the exceptions in para 2 apply, and the buyer's enquiry to the occupier is the safest way to engage this one.

Land Registration Act 2002, Sch 3, para 2(b)

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Land Law · Overriding interests: short leases

Lena is the registered proprietor of a commercial unit in Swindon. Two years ago she granted Omar a six year lease of the unit by deed. Omar runs a printing business there and uses it all day. Because the term is short, the lease was not registered. Lena has now sold the freehold to Zoe, who is registered. Zoe says she is not bound by Omar's lease because the register does not mention it. Which of the following is correct?

1. Zoe is bound only because Omar is in actual occupation of the unit.
2. Zoe is not bound, because every lease must be shown on the register to bind a buyer.
3. Zoe is bound only if Omar registered a notice of the lease against Lena's title.
4. Zoe is bound, because a legal lease granted for not more than seven years is an overriding interest.
5. Zoe is not bound, because a lease for more than three years overrides only if it was granted orally.

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Answer: D. A lease for seven years or less is not a registrable disposition, so it takes effect at law without registration. A legal lease granted for a term of not more than seven years is also an overriding interest (LRA 2002, Sch 3, para 1). Omar's six year lease was made by deed, so it is legal, and it binds Zoe whether or not Omar is in occupation and whether or not Zoe knew of it. The tempting wrong answer is that the tenant's occupation is what protects him. Occupation is relevant only to para 2, which is not needed here.

Land Registration Act 2002, Sch 3, para 1; Land Registration Act 2002, s 27(2)(b)

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Land Law · Overriding interests: easements

Ola buys a registered house in Exeter. A neighbour, Gwen, used a path across the bottom of the garden for 25 years to reach her allotment, and so acquired a legal easement by prescription. The path has not been used for three years, is overgrown, and cannot be seen on a reasonable inspection. Nobody told Ola about it, and she did not know of it. Gwen's right is not on the register. Gwen later claims the easement against Ola. Which of the following is correct?

1. Ola is bound, because all legal easements override a registered disposition.
2. Ola takes free of the easement, because it was not known to her, not obvious on a reasonable inspection and not used in the last year.
3. Ola is bound, because an easement by prescription is protected by actual occupation of the allotment.
4. Ola takes free, because easements cannot bind registered land unless entered on the register.
5. Ola is bound, because Gwen used the path for more than 20 years.

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Answer: B. A legal easement that is not on the register overrides a registered disposition only in limited cases (LRA 2002, Sch 3, para 3). The easement binds if the buyer knew of it, or if it was obvious on a reasonable inspection of the land, or if it was exercised within the year before the disposition. None applies to Gwen's path. So Ola takes free. The tempting wrong answer is that a legal easement always binds. That was the old position for many easements, but para 3 is narrower, to protect buyers who could not discover the right.

Land Registration Act 2002, Sch 3, para 3; Land Registration Act 2002, s 29(2)(a)(ii)

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Land Law · Protecting interests on the register

Ayesha bought a house in Ipswich jointly with her partner Dan, but Dan alone is the registered proprietor. She paid 60 per cent of the price and so has a beneficial interest under a trust. Ayesha and Dan are now arguing, and she fears Dan may sell or mortgage the house without her. She wants to protect her interest on the register. Ayesha's solicitor considers the options. Which step should the solicitor take?

1. Apply for a unilateral notice, because it protects any equitable interest in the property.
2. Apply for an agreed notice, because Dan has not yet disputed her share.
3. Apply for a caution against first registration, because the house is now registered.
4. Take no step, because her interest in the house can never be affected by a sale by Dan.
5. Apply for a restriction, because a notice cannot be entered in respect of an interest under a trust of land.

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Answer: E. The usual way to protect a beneficial interest under a trust of land is to register a restriction against the legal title, so that a disposition by the sole proprietor needs the beneficiary's consent or two trustees' receipt (LRA 2002, ss 40 and 42). Section 33(a) says that a notice cannot be entered in respect of an interest under a trust of land. The tempting wrong answer is a unilateral notice, which is a common way to protect other equitable interests, such as an estate contract. It cannot be used for Ayesha's trust interest.

Land Registration Act 2002, ss 33(a), 40, 42

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Land Law · Priority of interests in registered land

Mo is the registered proprietor of a warehouse in Derby. He signs a written contract to sell it to Ben for 500,000 pounds, completion in three months. Ben does not register any notice and does not take possession. Before completion, Mo sells the warehouse to Cara for 550,000 pounds. Cara has no knowledge of Ben's contract, pays the price and is registered as proprietor. Ben's solicitor asks whether Ben can enforce his contract against Cara. Which of the following is correct?

1. No: Ben's estate contract is an unprotected minor interest and Cara, a registered disponee for value, takes free of it.
2. Yes: Ben's contract is a specifically enforceable equitable interest and binds all later buyers.
3. Yes: Cara is bound because the contract was in writing and signed by Mo.
4. No: Ben's contract is void because Mo did not own the warehouse until completion.
5. Yes: Cara is bound if she could have found out about the contract by asking Mo.

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Answer: A. An estate contract is an equitable interest in land. Under LRA 2002, s 29, when a registrable disposition is registered for valuable consideration, the buyer takes free of interests that are not protected on the register, unless they override. Ben's contract was not protected by a notice, and Ben is not in occupation, so there is no override. Cara takes free. Ben's remedy lies in damages against Mo. The tempting wrong answer is that a specifically enforceable contract binds later buyers. It does so only if protected on the register or overriding.

Land Registration Act 2002, ss 29(1), 32

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Land Law · Adverse possession of registered land

Sam has occupied a strip of land at the end of a registered field in Taunton for eleven years without permission. He fenced it, grew vegetables and told neighbours it was his. The registered proprietor, a company called Ashdown Estates Ltd, never visited. Sam applies to HM Land Registry to be registered as proprietor. Ashdown receives notice of the application and objects. None of the special conditions in Schedule 6 applies. What is the likely result?

1. Sam is registered at once, because he has been in adverse possession for more than ten years.
2. The application is rejected for good, because the owner's objection ends any claim by Sam.
3. The application is rejected, but if Sam remains in adverse possession for a further two years he may apply again and be registered.
4. Sam is registered after a further twelve years' adverse possession counted from the objection.
5. The application succeeds because Ashdown's objection cannot be considered without a court order.

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Answer: C. After ten years' adverse possession a squatter may apply to be registered (LRA 2002, Sch 6, para 1). The registered proprietor is notified and may object. If the owner objects, the application is rejected unless the squatter can bring himself within one of three narrow conditions in para 5 (such as estoppel or a reasonable mistake about a boundary). None applies. But if the squatter remains in adverse possession and the owner has not evicted him or started proceedings within two years of rejection, he may apply again and is then entitled to be registered (paras 6 and 7). The tempting wrong answer is automatic registration at ten years.

Land Registration Act 2002, Sch 6, paras 1, 3, 5, 6, 7

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Land Law · Adverse possession of unregistered land

Cliff, a farmer, has grazed sheep on a field of unregistered land next to his own farm for thirteen years. He repaired the fence and kept the gate locked. The paper owner, Mrs Greaves, lives abroad. She knew Cliff was using the field but did nothing, as she had no plans for it. Cliff did not ask permission. Mrs Greaves now wants her field back. Which of the following is correct?

1. Cliff has acquired no title, because Mrs Greaves had no present use for the land.
2. Cliff has acquired no title, because the limitation period for land is twenty years.
3. Cliff has acquired a good title, but only after he registers the land at HM Land Registry.
4. Cliff has acquired no title, because Mrs Greaves's knowledge of his use meant he had her permission.
5. Cliff has acquired a good title, because he has had factual possession and the intention to possess for more than twelve years.

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Answer: E. For unregistered land, the owner's right to recover land is barred after twelve years from the date the squatter takes possession (Limitation Act 1980, s 15 and Sch 1, para 1), and the owner's title is then extinguished (s 17). The squatter must show factual possession and an intention to possess (J A Pye (Oxford) Ltd v Graham). Fencing, locking the gate and grazing satisfy this. The owner's inaction and lack of plans are irrelevant. The tempting wrong answer is that the owner's lack of use defeats the claim. After Pye, it does not.

Limitation Act 1980, ss 15, 17, Sch 1 para 1; J A Pye (Oxford) Ltd v Graham [2002] UKHL 30

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Land Law · Unregistered land: land charges

Greg owns an unregistered house in Chester. He granted Hana a written option to buy it for 300,000 pounds. Hana did not register a land charge. Greg later gave the house as a gift to his son Sam, who knew nothing of the option. Hana now exercises the option. Hana's solicitor asks whether Sam is bound by the option. Which of the following is correct?

1. Sam takes free, because an unregistered estate contract is void against anyone who acquires the legal estate.
2. Sam is bound, because he is a donee, and the failure to register a land charge helps only a purchaser for money or money's worth.
3. Sam takes free, because he had no notice of the option when the house was given to him.
4. Sam is bound only if Hana was in actual occupation of the house at the time of the gift.
5. Sam is bound, but only for the period of one year after the option was granted.

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Answer: B. An option to purchase is an estate contract, registrable as a Class C(iv) land charge. If it is not registered, it is void against a purchaser for money or money's worth of a legal estate in the land (Land Charges Act 1972, s 4). A purchaser is a person who takes for valuable consideration (s 17), so a donee such as Sam is not protected. Sam therefore takes the house subject to the option. The tempting wrong answer is that non-registration always makes the interest void. It protects only someone who gave value; a volunteer is bound.

Land Charges Act 1972, ss 2(4), 4, 17

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Land Law · Co-ownership: express declaration of trust

Chen and Rita, friends, buy a house in Brighton. Chen contributes 70 per cent of the price and Rita 30 per cent. The transfer to them, signed by both, says that they hold the property 'as beneficial joint tenants'. There is no fraud or mistake. Years later they fall out. Chen's solicitor is asked what shares they hold in the equity. Which of the following is correct?

1. Chen holds 70 per cent and Rita 30 per cent, because the shares follow their contributions.
2. They hold as tenants in common in shares fixed by the court, because their contributions were unequal.
3. Chen holds 70 per cent, because the legal estate is held by joint tenants but equity follows the money.
4. They hold equally as beneficial joint tenants, because the express declaration in the transfer conclusively settles their beneficial interests.
5. The declaration is void because a trust of land must be declared in a separate deed.

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Answer: D. Where land is conveyed to co-owners with an express declaration of their beneficial interests, the declaration is conclusive unless it is set aside for fraud or mistake (Goodman v Gallant). Chen and Rita declared that they hold as beneficial joint tenants. So the equity is shared equally with survivorship, despite the unequal contributions. A joint tenant can still sever later. The tempting wrong answer is a share by contribution. That approach (resulting trust or Stack v Dowden) is used only where the transfer has no declaration of the beneficial interests.

Goodman v Gallant [1986] Fam 106; Law of Property Act 1925, s 53(1)(b)

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Land Law · Severance of a joint tenancy

Maya and Nia bought a flat in Manchester as beneficial joint tenants. Maya later made a will leaving 'all my property, including my share of the flat' to her daughter Dee. Maya has now died. She and Nia never spoke about the flat's ownership and did not exchange any notice. Dee claims half the flat. Which of the following is correct?

1. Nia owns the whole flat by survivorship, because Maya's will could not sever the joint tenancy.
2. Dee owns half the flat, because the will severed the joint tenancy on its date.
3. Dee owns half the flat, because Maya's death severed the joint tenancy in equity.
4. Nia owns the whole flat only if she was living in the flat when Maya died.
5. Dee owns half the flat, because Maya's will was a declaration of intention to sever.

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Answer: A. Joint tenants hold the whole property together, and on the death of one the survivor takes everything by survivorship. That passes outside the deceased's will. A will cannot sever a joint tenancy, because it speaks only at death, when survivorship has already operated. Severance in equity needs one of the methods in Williams v Hensman (an act operating on one's own share, mutual agreement or a mutual course of dealing) or written notice under LPA 1925, s 36(2). None occurred, so Nia takes the whole flat. The tempting wrong answer is that the will severed the tenancy. Dee's claim would have worked only if Maya had severed in her lifetime.

Williams v Hensman (1861) 1 J & H 546; Law of Property Act 1925, s 36(2)

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Land Law · Severance by written notice

Omar and Ruth own their home in Bristol as legal and beneficial joint tenants. Following a quarrel, Omar's solicitor writes to Ruth giving notice that Omar wishes to sever the joint tenancy in equity. The letter is delivered by hand to Ruth at the house and she reads it. She does not reply. A week later Omar dies. His will leaves everything to his brother Ian. Who is entitled to Omar's beneficial share?

1. Ruth, because she did not agree to the severance and so survivorship applies.
2. Ruth, because severance by notice takes effect only when the notice has been registered.
3. Ian, because the written notice severed the joint tenancy as soon as it was served on Ruth.
4. Ian, but only if Ruth replied in writing accepting the notice.
5. Ruth, because severance cannot take effect within a week of the notice being served.

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Answer: C. A joint tenant of the equitable interest may sever it by giving written notice to the other joint tenants (LPA 1925, s 36(2)). The notice need not be agreed, accepted or registered. It takes effect when it is served. After severance, Omar and Ruth hold as tenants in common in equal shares, so Omar's share passes under his will to Ian. The tempting wrong answer is that Ruth's silence preserved survivorship. Survivorship ends on service, and the notice was delivered by hand and read.

Law of Property Act 1925, ss 36(2), 196

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Land Law · Overreaching

Sam and Tia are registered as joint proprietors of a house in Reading and hold it on trust for themselves. Sam's mother Dot lives in a self-contained annexe. She contributed to the price and has a beneficial interest. She is in actual occupation. Sam and Tia grant a legal charge of the house to Marlow Bank, which pays the loan money to both of them. Dot did not consent and was not asked. The loan defaults and the bank seeks possession. Is Dot's interest binding on the bank?

1. Yes: she is in actual occupation, so her interest overrides under Schedule 3 paragraph 2.
2. Yes: overreaching applies only if Dot signed the charge.
3. No: an equitable interest can never bind a chargee.
4. Yes: overreaching requires payment to three trustees.
5. No: the payment of capital money to two trustees overreached her interest, which now attaches to the money.

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Answer: E. Overreaching lets a purchaser or mortgagee take free of beneficial interests under a trust if capital money is paid to at least two trustees or a trust corporation (LPA 1925, ss 2(1)(ii) and 27(2)). The beneficiary's interest then attaches to the proceeds. Dot's occupation does not help, because the 2002 Act does not undo overreaching (City of London Building Society v Flegg). Two trustees (Sam and Tia) received the money. The tempting wrong answer is that occupation protects her. That would be the answer if there had been only one trustee, as in Boland.

Law of Property Act 1925, ss 2(1)(ii), 27(2); City of London Building Society v Flegg [1988] AC 54

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Land Law · Trusts of land: orders for sale

Joe and Kim, an unmarried couple, own a house in Norwich as joint tenants at law and in equity. They bought it to be a family home. Their two children, aged 7 and 10, live there with Kim. The relationship has ended. Joe applies to the court under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 for an order for sale. Kim opposes. Which of the following best states how the court will decide?

1. The court must order sale, because one co-owner has asked and co-owners have an absolute right to sell.
2. The court has a discretion and must consider the s 15 factors, including the purpose of the trust and the welfare of the children who live there.
3. The court must refuse sale, because children live in the house.
4. The court must order sale if Joe offers to pay Kim her share of the equity.
5. The court may consider only the interests of any secured creditors.

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Answer: B. Any person interested in land held on trust can apply to the court for an order under s 14 TOLATA 1996. The court has a wide discretion. Under s 15(1) it must have regard to the intentions of the person who created the trust, the purposes for which the property is held, the welfare of any minor who occupies or may reasonably be expected to occupy the property, and the interests of any secured creditor. If the purpose was to provide a family home and the children still live there, the court may refuse or postpone sale. The tempting wrong answer is that sale follows automatically. It does not.

Trusts of Land and Appointment of Trustees Act 1996, ss 14, 15

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Land Law · Co-ownership and bankruptcy

Lia and her husband Karim own their house in Coventry as beneficial joint tenants. Karim was made bankrupt 14 months ago. His trustee in bankruptcy applies under section 14 of TOLATA 1996 for an order for sale, to pay Karim's creditors. Lia opposes, saying she and two teenage children need the house and would face hardship if they had to move. There are no other unusual circumstances. Which of the following is most likely?

1. The court will refuse sale, because the welfare of the children outweighs the creditors under s 15 TOLATA 1996.
2. The court will order sale only if Lia agrees, because she is a joint tenant.
3. The court will refuse sale, because Lia's half of the equity is not part of Karim's estate.
4. The court will order sale, because after one year it assumes creditors' interests outweigh others unless the circumstances are exceptional.
5. The court will order sale only if the trustee applied within the first year of bankruptcy.

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Answer: D. When a trustee in bankruptcy applies for sale of a home co-owned by the bankrupt, the court applies Insolvency Act 1986, s 335A rather than the ordinary s 15 balance. If the application is made more than one year after the bankrupt's estate vested in the trustee, the court must assume that the creditors' interests outweigh all other considerations unless the circumstances are exceptional. Ordinary hardship from moving, even with children, is not exceptional (Re Citro). The tempting wrong answer is that the children's welfare carries the day. It is a s 15 factor, but s 335A displaces it after a year.

Insolvency Act 1986, s 335A(2), (3); Re Citro [1991] Ch 142

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