Trusts of Land

• Original version: <a href='/vid/trusts-of-land-907695913'>Trusts of Land</a>

Settlements and Trusts Charts

Introduction

Scope of Practice Direction:

This Practice Direction deals with Trusts of Land. The Land and Conveyancing Law Reform Act 2009 [S.I. 27 of 2009] [the 2009 Act] substantially amended the law in this area and therefore in this practice direction:

Section 1 deals with Land Registry practice in relation to Trusts in Land as and from the 1st December 2009 [the commencement date of the 2009 Act]

Sections 2 to 6 deal with Land Registry practice in relation to settlements and trusts and the law up to an including the 30th November 2009.

Section 7 deals with Land Registry Practice re trustees including Charitable trusts.

Glossary of Terms

• Life Estate – Not inheritable, it determines on the death of the holder.
• Estate Pur Autre Vie – Life estate that determines on the death of a person, other than the holder (To: A and the heirs of his/her body). Inheritable estate descending on the issue of the holder, i.e. to children or if deceased to grandchildren. If the estate is assigned, the assignee takes an estate pur autre vie. When this life estate determines, the issue of the original holder of the fee tail are entitled. A tail male was limited to the male issue of the holder. (To: A and the heirs male of his/her body).
• Base Fee – Created by disentailing assurance, where the fee tail holder fails to enlarge the fee tail into a fee simple because (1) s/he fails to obtain the consent of the protector of the settlement, (i.e. the life tenant in possession) or (2) fails to enrol the Deed within 6 months in Court. The estate is a fee simple, liable to determine on the failure of issue of the tenant in tail who executed the disentailing assurance.
• Fee Simple – The largest freehold estate, fully assignable and inheritable.
• Determinable Fee – (To: A in fee simple until etc). The grantor has a possibility of reverter. If the relevant event occurs, the estate determines and reverts to the grantor.
• Fee Simple Condition Subsequent – Similar to a determinable fee BUT what the grantor retains, in this case, is the right to re-enter the property for breach of condition. The estate does not determine unless and until the grantor re-enters for condition broken.
• Jointure – Annuity payable out of settled lands to the settlor’s spouse.
• Portion – Once off capital payment to children of settlor, not otherwise benefiting from the settlement.
• Dower – Right of widow to 1/3rd of husband’s inheritable realty. This is a burden under section 69 of the Registration of Title Act 1964, (No. 16.1964).
• Curtesy – Life estate of widower in all, his wife’s inheritable realty, provided issue have been born capable of inheriting.

1. Trusts in Land

1.1 Under section 11 of the 2009 Act the only legal estates capable of being created or disposed are a freehold estate and a leasehold estate.

All other estates or interests take effect as equitable interests only. Thus where a life estate is created in freehold land a trust will come into operation under Part 4 of the 2009 Act and the freehold estate will be held by the trustees. Any fee simple in remainder or reversion will be held under a trust and will be equitable interests only.

1.2 Under section 13 of the 2009 Act the creation of a fee tail of any kind at law or in equity is prohibited.

Any instrument entered into on or after the 1st December 2009 purporting to create a fee tail in a person vests in the said person a legal or equitable fee simple as the case may be. This is so even if a contract has been entered into prior to the commencement of the 2009 Act.

Where a person, before the commencement of the 2009 Act, was entitled to a fee tail at law or in equity, or after commencement, a person becomes entitled to such a fee tail, that person on commencement of the 2009 Act is entitled to a legal or equitable fee simple as the case may be [without the necessity of executing a disentailing assurance under the Fines and Recoveries (Ireland) Act 1834 which is repealed] provided any protectorship is ended.

A fee tail includes a base fee provided the protectorship has ended and a base fee created by failure to enrol the disentailing deed. It does not include the estate of a tenant in tail after possibility of issue extinct [where the issue to succeed have to be the children of a specified spouse and where that spouse predeceases the tenant in tail and they have no children] where the tenant in tail becomes a tenant for life and the reversionary or remainder estate takes effect on the death of the tenant in tail.

This largely reflects the situation prior to the 2009 Act except in the case of a base fee created by failure to enrol the disentailing deed where in effect the former tenant in tail becomes a life owner only. Such a fee simple will not be subject to any estates or interests limited by the instrument creating the fee tail to take affect after the termination of the fee tail but will be subject to any estates or interests limited to take effect in defeasance of the fee tail which would be valid if limited to take effect in defeasance of a fee simple [as in a determinable fee simple].

1.3 Section 18 of the 2009 Act establishes the new statutory model of a “trust of land”.

This covers all forms of trusts in land:

• “strict settlements” where land is settled directly on persons, by an instrument whenever created, without the use of a trust;
• where land is held on a trust whenever it arises and of whatever kind [express, implied, resulting, constructive, bare and trust for sale];
• where land vested before or after the 1st December 2009 in a minor.

The imposition of a trust in the case of (a) and (c) is a recognition of the practical realities. A tenant for life in (a) had the powers of dealing with land of a “tenant for life” including the power of sale and if the tenant for life sold the land the purchase money had be paid to the “trustees of the settlement” [section 22 of the Settled Land Act 1882]. In the case of a minor while the legal fee simple may have been vested in him/her absolutely s/he was deemed to be a tenant for life for the purposes of the Settled Land Act 1882 [section 59].

1.4 Section 19 of the 2009 Act sets out who are trustees of land in the case of each type of trust as set out in section 18:

(a) Strict settlement:

(i) where it exists before the 1st December 2009, the tenant for life within the meaning of the Settled Land Act 1882 together with any trustees of the settlement for the purposes of that Act

(ii) where it is purported to be created on or after the 1st December 2009 the person who would fall within paragraph (b) if the instrument creating it were deemed to be an instrument creating a trust of land

(b) Trust of land created expressly

(i) any trustee nominated by the trust instrument, but if there is no such person, then

(ii) any person on whom the trust instrument confers a present or future power of sale of the land, or power of consent to or approval of the exercise of such a power of sale, but, if there is no such person, then,

(iii) any person who, under either the trust instrument or the general law of trusts, has power to appoint a trustee of the land, but, if there is no such person, then,

(iv) the settler, or, in the case of a trust created by will, the testator’s personal representative of representatives.

(c) Minor
In the case of land vested in a minor before the 1st December 2009 or purporting to so vest on or after the 1st December 2009, the persons who would fall within paragraph (b) if the instrument vesting the land were deemed to be an instrument creating a trust in land.

(d) Implied, resulting, constructive or bare Trust.
The person in whom the legal title to the land is vested.

Section 19(3) of the Act confirms the current ultimate default provision of obtaining an order of the court appointing a trustee of land or vesting land in a person as trustee.

1.5 Application for registration where a trust in land exists lodged on or after the 1st December 2009
In any application for registration where a trust in land exists lodged on or after the 1st December 2009 the only registration that can be applied for is registration of the trustees as owners. The interest of a minor or a life interest are equitable interests only. Equitable interests are not registerable interests. It is open to the owner of an equitable interest to apply for the registration of an inhibition [See Practice Direction – Cautions and Inhibitions]. However where an application to register a life interest or a minor was lodged prior to the 1st December 2009 but settled on or after the 1st December 2009 registration of a life interest or of a minor can proceed [date of lodgement is date of settling Rule 58 Land Registration Rules 2012 [LR Rules 2012].

1.6 In any case where registration is effected under paragraph 1.4 above and the trust comes to an end
In any case where registration is effected under paragraph 1.4 above and the trust comes to an end [e.g. life interests come to an end or the minor comes of age] the trustees will have to transfer the property to the relevant person.

1.7 Application in relation to a fee tail
Any application in relation to a fee tail [see paragraph 1.2 above] whether to register same or to convert a current registration of a limited owner [fee tail] into the owner of the fee simple should be referred to the Divisional Manager.

1. 8 Where a limited owner [tenant for life] is registered prior to the 1st December 2009:

(i) It is open to the trustees of the trust in land to apply [see Section 20 of the 2009 Act and Rule 66 of the LR Rules 2012 and Form 86] to be registered as full owners. Note in the case of a transmission Form 86 should not be used. Form 37 or Form 39 should be used – see Practice Direction – Devolution and Transmission.

(ii) If a registered limited owner dies [tenant for life] prior to the 1st December 2009 Rule 93 and Forms 45 and 46 apply [see Part 5 below].

(iii) If a registered limited owner dies on or after the 1st December...