Second Trustee Service under Trustee Act 1925 section 14(2)(a)

Description

In English and Welsh land law, when property is owned by more than one person those people ALWAYS possess the registered legal title as joint tenants. Any trust on which those joint tenants hold that title is known as a “beneficial interest”, and is not intended to be reflected on the Land Register. See our Declaration of Trust product for more details.

The Land Register is only interested in recording the detail of legal interests. However, when the Land Registry is informed that legal owners possess land subject to some beneficial interest – e.g. a tenancy in common arrangement – then the Land Registry will record a “trust restriction” on the legal title to indicate that the legal title is held subject to some beneficial interest. The Land Register will not record what that beneficial interest actually is – the Land Registry will just note that there is some beneficial interest.

There is more detail about this regime in our client guidance entitled, “OWNERSHIP OF PROPERTY INVOLVING MORE THAN ONE PERSON” – linked here.

Because the legal title to land owned by more than one person is always held jointly, as outlined, then the rule of “Survivorship” always applies to the legal title. This means that any joint legal owner who dies “drops off” the legal title by virtue only of dying, i.e. without any registration or probate required [the Land Registry only require evidence of their death, e.g. a death certificate – or a probate if there is a probate]. The legal title is left after their deaths remaining owned only by those legal owners who are still alive. This means the estates of any dead legal owners have no legal interest in the title - only, possibly, a beneficial interest in the underlying trust, if there is any such interest.

“Survivorship” for legal title often means that the last surviving joint legal owner is left to deal with the entire beneficial ownership of all their former co-trustees. If all the legal owners should die, i.e. including the final legal owner, then the representative of the last surviving legal owner is left to deal with the entire beneficial ownership, in the last surviving owner’s place.

These effects are frequently misapplied by inexperienced conveyancers – and rarely properly appreciated by lay-people, because the concepts are so confusing.

Trustee Act 1925 section 14(2)(a) prevents any one legal owner holding land subject to such a trust, by themselves, from “giving a valid receipt” for the proceeds of sale of land. To give proper discharge of the trust such a “sole survivor” should appoint a co-trustee to act with them on any such sale. If the sole survivor fails properly to appoint such a co-trustee on a transfer (e.g. sells by themselves) then the sole trustee will not discharge the beneficial interests on which they held the land – i.e. the person to whom they transfer the land will become the new legal trustee, still holding the land subject to the original trust [that might not be as they intended, however].

Although the “sole surviving trustee” might consider appointing someone with an interest in the beneficial title to act with them as co-trustee on the sale, the “sole survivor” may actually appoint anybody at all – any  “interested bystander” - to be a co-trustee with them. The co-trustee appointed does not have to have any beneficial interest in the land. In many cases (e.g. in instances of dispute or conflict) the sole survivor might actually prefer to appoint someone as co-trustee who has no beneficial interest in the property.

The role of co-trustee implies a host of obligations and liabilities that “casual bystanders” will neither understand, nor be equipped to discharge. Accordingly, most “casual bystanders” would not want to accept the role of co-trustee (at least, if they understood what they were doing!) Please note that we do not offer to advise co-trustees considering exercising that role.

However, the Trust Corporation within our group – Hargreaves Mounteney Trustee Company Limited (“HMTC”) – is qualified as a “bystander” able to offer the informed service of acting as a co-trustee in most circumstances. You can be assured that HMTC both understands its role, and is perfectly placed to discharge that role, since HMTC has all the facilities in place that a co-trustee requires, i.e.

       A legally-compliant “Trustee” bank account to hold third-party proceeds not our own;

       £3M of applicable, Solicitors Regulatory Authority complaint, Professional Indemnity Insurance; and

       £250,000 capital required to act as a Trust Corporation in the first place, plus the legal structure required to do so.

If your property requires a co-trustee under the legislation, then HMTC’s service may offer the perfect solution to the issue, at an inexpensive rate.

How long will it take?

We don’t generally do anything for new clients until our process of client retention has concluded – this involves agreeing the scope of what we are doing for the price (our terms are below), setting-up our client record (that includes ID checks), and producing the bill (payment in advance is required for all new clients).

The appointment normally occurs within the transfer documentation, which requires all parties involved to sign the correctly completed form – so this should not be left until the last moment.

Before accepting the appointment, HMTC will need to understand how it will exit the appointment via the appropriate distribution of funds. Although it takes HMTC no time at all to understand this once it has been properly explained, the time it takes for clients to give that explanation can often be the critical path. HMTC will not be able to accept the appointment until this has been finalised.

Money Matters

Your supplier is unregulated Hargreaves Mounteney Trustee Company Limited, that does not charge VAT

We charge £220

There is more about our fees on our website here

If you have any questions or require any further information, please don’t hesitate to Contact Us.