Guide For Trustees Selling Property In England & Wales

Author:Mr Michael Morris and Richard Lloyd
Profession:Collas Crill

In today's world with society becoming ever more litigious it has become paramount that trustees ensure they conduct their relationships with their advisers so as to minimise the risk of negligence by the advisers and the exposure of liability to the trustees.

Whilst trustees are often content to use solicitors put forward by the beneficiary, there are some pitfalls and issues to consider when dealing with property which merit consideration from the trustee's perspective and which justify the trustee's appointing experienced practitioners rather than relying on the beneficiary's preference or the cheapest option. The purpose of this guide is to provide some practical tips for trustees in their dealings with property in England & Wales.

Beneficiary's Interests

Following the introduction of the Trusts of Land and Appointment of Trustees Act 1996 ("TLATA") Under TLATA trustees no longer have a duty to sell the land and therefore, beneficiaries are entitled to benefit from the land both in relation to occupation as well as in relation to the proceeds of sale.

Under section 11 of TLATA, trustees must consult the equitable owners and "in so far as is consistent with the general interest of the trust" give effect to their wishes. However, there is no requirement for any purchaser to ensure that the beneficiaries have been consulted. The only remedy for the beneficiaries if they are not consulted is to apply to the court under section 14 TLATA or sue the trustees after the sale.

The trust deed may however, contain a requirement that the trustees obtain the consent of the beneficiaries prior to the exercise of some or all of their powers (which may include the power to sell property). This requirement goes much further than consultation, and a restriction should be placed on the title to the Property at the Land Registry ensuring that the requirement is complied with.

If there is a requirement for the trustees to obtain the beneficiaries' consent and the land is unregistered land, then under section 16 TLATA, the purchaser will not be affected if the trustees failed to obtain the consent, provided that he was unaware that consent was needed.

The proceeds of sale will then be held under the terms of the trust in place of the property for the beneficiaries.

Trustees have a power to sell, not an obligation.

Title Guarantee

Title Guarantee is used to imply covenants of title and is given in the sale contract. The presumption where the sale contract is...

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