Land Law Solve the Problem with Sunnydale Cottage - Essay Example

Order 150887 Topic: Land Law solve the problem with Sunnydale Cottage I. Introduction This paper seeks to identity the issues raised by agiven problem (See case facts.); explain the relevant legal rules supported by appropriate authorities; apply the relevant rules to the facts in the problem using a structured and logical argument; and apply advice to all parties concerned in the case. 2. Analysis and Discussion 2.1 The Case Facts: •Adrian, Barbara, Charlotte, Donald and Eden decided to pool their resources and purchase a house together because none of them, individually, could afford to do so. •They brought Sunnydale Cottage for £500,000 in January 2005 without the aid of a mortgage advance. •Adrian, Barbara, Charlotte and Donald were registered as proprietors at the District Land Registry. •All five of them contributed equally to the purchase and each of them occupied one of the five bedrooms at the house. • In December 2005 Adrian agreed with his friend Mark that in return for a loan of £10,000 Adrian would change his share on Sunnydale Cottage in favour of Mark. On receiving the money Adrian wrote to Mark saying “I herewith transfer to you my interest in Sunnydale Cottage as security for the repayment of the £10,000 you recently lent me.” •In February 2006 Barbara told the others that she had just made a will in which she had left her share in Sunnydale Cottage to her mother, Mavis. •In May 2006, Charlotte went abroad for a few months on holiday. She sent post cards to each of the other inhabitants of Sunnydale Cottage saying that she had met Costas, a Greek waiter, and wanted to marry him. Accordingly, she notified them all that “My one fifth share in Sunnydale Cottage is to be ring-fenced and should anything happen to me Costas is to get it.” The postcard to Barbara was lost in the post and never delivered. Charlotte has tried of Costas and has now returned to live in Sunnydale Cottage. •Barbara then dies in a road accident. •Shortly afterwards Donald’s gambling addiction has resulted in him being adjudicated bankrupt. The shame drives him to commit suicide. •Shortly after that, Charlotte died of a heart attack. • Donald’s trustee in bankruptcy now proposes to sell Sunnydale Cottage to enable him to clear Donald’s debts. Eden objects to this because she wants to live in the house. Any number of sources from anywhere as long as all stated. 2.2 What are the issues? a. Who has a right to the Sunnnydale Cottage at the time it was proposed to be sold by the trustee of Donald? b. May Eden prevent the sale proposed by the trustee of Donald? 2.3 What are the relevant authorities? The authorities to be applied in the case facts are as follows: 1. Trusts Of Land And Appointment Of Trustees Act 1996, particularly the rules on Co-ownership and Powers of Trustees. In regard to said laws, Jones, J. and Palmer, W. (1997) said: ii. Co-ownership The TLATA avoids this problem as there is no duty to sell under a trust of land, merely a power of sale. All land subject to a trust will be held on a "trust of land" (TLATA s 1). Existing settlements are excluded, but land already held on express or implied trusts for sale are included within the provision. Although it is still possible to create express trusts for sale, as a subset of the trust of land, this will rarely be appropriate for domestic situations, and even here the power to postpone sale cannot be excluded. This means that there is no longer a problem posed by an imperative duty to sell, in situations where that was the last thing intended. i. Trustees Powers One of the most important features of the TLATA is the nature of the trust of land. No longer is there a duty on the trustees to sell the land, there is simply a power to do so if desired. This perhaps reflects the fact that the reasons why trusts are set up nowadays are not the same as in 1925. a. Consultation of beneficiaries - section 11 The trustees of land, when exercising any function relating to the land subject of the trust, are now under a duty (as far as practicable) to consult with beneficiaries of full age and beneficially entitled to an interest in possession in the land. They must give effect to the wishes of those beneficiaries, so far as they are consistent with the general interest of the trust. If there is a dispute among the beneficiaries, the wishes of the majority (according to the value of their combined interests) should be followed (section 11(1)). 2. Law of Property (Miscellaneous Provisions) Act 1989 (c. 34). In citing the provisions said law, Crown (1989), on Deed and their execution, provides:     (2) An instrument shall not be a deed unless—  (a) it makes it clear on its face that it is intended to be a deed by the person making it or, as the case may be, by the parties to it (whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise); and  (b) it is validly executed as a deed by that person or, as the case may be, one or more of those parties.     (3) An instrument is validly executed as a deed by an individual if, and only if—  (a) it is signed—  (i) by him in the presence of a witness who attests the signature; or  (ii) at his direction and in his presence and the presence of two witnesses who each attest the signature; and  (b) it is delivered as a deed by him or a person authorized to do so on his behalf. 2.4 Analysis and Discussion - Application of the relevant rules to the facts in the problem. To answer this question: “Who has a right to the Sunnnydale Cottage at the time it was proposed to be sold by the trustee of Donald?”, an investigation must be made whether there were reductions or transfers from property as a result of transactions entered into by the original co-owners. There were five original co-owners of Sunnydale Cottage at the start, hence we must trace whether each has validly transferred his or her interest in the Sunnydale Cottage. As for Adrian, case facts say that in December 2005, he agreed with his friend Mark that in return for a loan of £10,000 Adrian would change his share on Sunnydale Cottage in favour of Mark and that on receiving the money Adrian wrote to Mark saying “I herewith transfer to you my interest in Sunnydale Cottage as security for the repayment of the £10,000 you recently lent me.” To apply the rules under the Law of Property (Miscellaneous Provisions) Act 1989 (c. 34), on Deed and their execution let, we quote the same as follows:     (2) An instrument shall not be a deed unless—  (a) it makes it clear on its face that it is intended to be a deed by the person making it or, as the case may be, by the parties to it (whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise); and  (b) it is validly executed as a deed by that person or, as the case may be, one or more of those parties. As to whether a transfer of interest was effected in favour of Mark, it would appears that that there was intention based on the rule above on the part of Adrian in effecting the transfer but the transfer was to his interest as security for repayment of the loan and not as to ownership . In the absence of any additional fact that there was foreclosure on the part of the Mark, it would appear that ownership of the Adrian’s interest in Sunnydale cottage remains with him and with not Mark. As for Barbara, case facts said that in February 2006 she told the others that she had just made a will in which she had left her share in Sunnydale Cottage to her mother, Mavis and that Barbara latter died in a road accident. As for the validity of the will to effect the transfer the same must be presumed to exist since there appears to be intention on the part of Barbara based on the Law of Property (Miscellaneous Provisions) Act 1989 (c. 34). In the absence of any evidence to the contrary and in the absence of any that would prohibit the transaction. A will is a valid mode of transferring property. As for Charlotte, case facts say that in May 2006, Charlotte went abroad for a few months on holiday. While abroad she sent post cards to each of the other inhabitants of Sunnydale Cottage saying that she had met Costas, a Greek waiter, and wanted to marry him and that accordingly, she notified them all that “My one fifth share in Sunnydale Cottage is to be ring-fenced and should anything happen to me Costas is to get it.” It was further stated by case facts that the postcard to Barbara was lost in the post and never delivered and that Charlotte has tried of Costas and has now returned to live in Sunnydale Cottage but shortly thereafter, she died of a heart attack. As to whether therefore there was transfer made to Costas by the notice that was sent to the other co-owners through post card, it is submitted that that there was no valid transfer even though she subsequently died because there the marriage between Charlotte and Costas never materialized. Moreover the notice which provided “My one fifth share in Sunnydale Cottage is to be ring-fenced and should anything happen to me Costas is to get it.” could not be considered as constituting a will for it may just amount to a notice that does not comply with the requirements of a will or of intention and signing the same as required by the Law of Property (Miscellaneous Provisions) Act 1989 (c. 34) on Deeds and their execution as explained earlier. Moreover, Charlotte never mentioned in the case facts that she did execute a will as was done by Barbara. As for Donald, there was no mention about any transfer made about his interest before his death except that he incurred debts for which his trustee now comes wanting to sell the property to pay his debts. As for Eden, there was also no mention about any transfer made and in fact she now wants to prevent the sale being proposed by the trustee of Donald We can now answer the question: “Who has the right to the property at the time of sale?” and the corollary question of whether the sale could be prevented. In this particular portion the law to apply to the set of facts is the law of Trusts of Land and Appointment of Trustees Act 1996, particularly the rules on Co-ownership and Powers of Trustees. Since the property is subject to the rules of co-ownership and therefore each of the original parties and/or their assigns or heirs has an equal share of 1/5. Adrian still has the right subject to the right his creditor named Mark for the interest of 1/5 of the property as collateral for the loan. Barbara’s interest must be deemed to have validly transferred his interest to her mother. As for Charlotte, the person who has the right is her legal heir but not Costas. As for Donald’ trustee wanting to sell the property, the claim should be limited to 1/5 of total interest in the property. Eden has also has a share of 1/5 in the total interest. Could Eden then prevent the sale of Sunnydale? Jones, J. and Palmer, W. (1997) said: “The TLATA avoids this problem as there is no duty to sell under a trust of land, merely a power of sale. All land subject to a trust will be held on a "trust of land" (TLATA s 1). Existing settlements are excluded, but land already held on express or implied trusts for sale are included within the provision. Although it is still possible to create express trusts for sale, as a subset of the trust of land, this will rarely be appropriate for domestic situations, and even here the power to postpone sale cannot be excluded. This means that there is no longer a problem posed by an imperative duty to sell, in situations where that was the last thing intended.” This non-compulsory sale of the property is supported Jones, J. and Palmer, W. (1997) on Trustees’ Powers by saying: “One of the most important features of the TLATA is the nature of the trust of land. No longer is there a duty on the trustees to sell the land, there is simply a power to do so if desired. This perhaps reflects the fact that the reasons why trusts are set up nowadays are not the same as in 1925. The modern house buyer will be well aware of the negative equity traps generated in the late 1980s and will therefore purchase a home primarily for occupation for himself and any partner and/or family, and only secondly for investment purposes.” It is therefore clear that although the trustee of Donald has the option to ask for the sale, it is no longer compulsory under the new law. Therefore, as to whether Eden can prevent the sale, the answer is in the affirmative but she must pay the interest of Donald to the latter’ trustee if the latter insists. As to other heirs who still co-owns the property by virtue of transfer made by the original owners then they may exercise the right of the original owners by living in the Sunnydale cottage unless they want their share to be liquidated for which they must express their intentions to the other co-owners. The basis for this is that under the law under section 11 of TLATA, “The trustees of land, when exercising any function relating to the land subject of the trust, are now under a duty (as far as practicable) to consult with beneficiaries of full age and beneficially entitled to an interest in possession in the land. They must give effect to the wishes of those beneficiaries, so far as they are consistent with the general interest of the trust. If there is a dispute among the beneficiaries, the wishes of the majority (according to the value of their combined interests) should be followed (section 11(1)).” 2.5 Apply advice to all parties. The advice to each of the parties is to know their rights after all what happened. Adrian has the right subject to the right of his creditor name Mark for the interest of 1/5 of the property as collateral for the loan, Barbara’s mother has validly received the 1/5 interest, the nearest surviving heir of Charlotte has 1/5, Donald’ trustee has 1/5 and Eden has 1/5 plus the right to prevent the sale of the property subject to the wishes of the majority of the parties. Transfer made by original parties must be held valid as evidenced by their intentions which comply with the rules on deed execution. But since the property was originally subject to co-ownership, each party could not exactly pinpoint in the property where his or share of 1/5 is unless they all now agree. 3. Conclusion The law on land respects the rights of original parties in the ownership but respects their rights to transfer to whomever they want to subject to the original intention of the parties on the property held in common. The new law may have allowed the non-compulsory sale of the land which is jointly owned but it is still preserve the rule of majority in case a dispute among the beneficiaries now arises. References: 1 Jones, J. and Palmer, W. (1997), Trusts of Land and Appointment of Trustees Act 1996, {www document} URL http://www.landlaw.org.uk/, Accessed January 28, 2007 2. Crown (1989) Law of Property (Miscellaneous Provisions) Act 1989 (c. 34) , {www document}URL , //www.landlaw.org.uk/, Accessed January 28, 2007 Read More