Экзамен зачет учебный год 2023 / Sparkes, A New Land Law

purchaser and trustees were acting in collusion.240 Equally fundamental is the requirement to sell to an independent purchaser, for if the buyer is someone connected to the trustee he will be liable to account for any profit made and more importantly the buyer’s title will be voidable. This prevents sale to any of the trustees, family members, or the family solicitor.241

Purchasers of unregistered land are exempted purchasers from the need to consider breaches of the trustees’ duties.242 A purchaser who knows of a breach of trust cannot, nevertheless, overreach or even override the beneficiaries since only a purchaser243 in good faith is protected: there is a requirement of honesty. In this way, trustees of land are required to get a fair price for the land before being granted the power to overreach. Restrictions on powers imposed by statute,244 court orders, and orders of Charity Commissioners245 must also be observed, but other restrictions are binding only when the purchaser has actual knowledge of a breach.246

2.Trusts of registered land

[13.54] Protection for buyers from trustees of land is not needed when title is registered.247 There is a pure (pre-Cave) curtain, subject only to any restriction on the register. Standard restrictions require purchase money to be paid to two trustees, but do not indicate how much money must be paid.248 Sale at an undervalue gives title, honesty in relation to known trusts not being a requirement.249 Amendment of the 1925 scheme in 1996 may have created a problem,250 but this is eradicated by the provision that a proprietor can exercise all owner’s powers apart from any restriction on the register.251 A person who buys from the proprietor and complies with the terms of any restriction gets good title and the beneficiary loses any overriding status.

Birmingham Rly v. London & NW Rly (1853) 4 De G M & G 115, 43 ER 451; Turner v. Harvey (1821) Jac 169, 37 ER 814.

240TA 1925 s 13(2); Davies v. Hall [1954] 1 WLR 855.

241Robinson v. Briggs (1853) 1 Sm & G 188, 65 ER 81.

242TLATA 1996 ss 6(5), 16(1).

243S 23(1); LPA 1925 s 205(1)(xxi).

244TLATA 1996 s 6(8).

245S 6(6)–(7); separate protections are available for a person buying charity land, see below [14.17ff].

246S 6(6)–(8).

247S 16(7). The reason according to Law Com 181 (1989), [6.1], was that protection for registered land had to be tied to the general review of overreaching which followed from Flegg. Given that this has now been scrapped, the trusts of land scheme is left imbalanced.

248There ought to be a standard restriction on the register requiring full value to be obtained whenever the proprietors are trustees, unless perhaps they are themselves beneficially entitled. This restriction is allowed under DLRR 2003 r 92, but is neither usual nor mandatory.

249LRA 2002 s 29.

250G Ferris & G Battersby: [1998] Conv 168; [2001] Conv 221; (2002) 118 LQR 270.

251LRA 2002 s 26(1); this provision may be much wider than is intended; see below [15.03].

14

MANAGEMENT TRUSTS

Pre 1997 trusts: trusts for sale, bare trusts, and strict settlements. Management during incapacity. Charities. death. School sites. Restrictions. Insolvency. Powers of attorney: ordinary and enduring, delegation of trusts and purchase from attorneys.

A. INTRODUCTION

[14.01] Were titles mainly unregistered, this chapter might appear to consist of an appalling ragbag of unconnected matters, but in the crazy world of registration there is a clear and underlying logic – the use of a restriction. If the rules for straightforward trusts of land can now be taken as read,1 a number of anomalous or special forms of trusts still require consideration. These include pre-1997 trusts, strict settlements, charitable trusts, school sites, extended overreaching powers applied to family charges, and trusts imposed on after-acquired land trusts for management on death, minority and incapacity. Also included are special uses of restrictions to cover quasicorporate landowners, landowners with restricted powers and on insolvency. The chapter concludes with a discussion of the use of power of attorney to pass management functions to an attorney without the division of legal and equitable ownership involved in a trust, and also the delegation of trusts and trust functions by way of power of attorney.

B. PRE-1997 TRUSTS FOR SALE

1.Nature of a trust for sale

[14.02] A trust for sale was the normal form of trust used for land holding before the 1996 reforms2 and it retains utility even today for investment property or where sale is really intended. The land is vested in trustees, who have a duty to sell the land. To take a simplified unregistered form of trust:

‘to T1 and T2 in fee simple on trust to sell the property and to hold the proceeds of sale or the net rents and profits until sale on trust for X for life, with remainder to Y absolutely.’3

1See above [13].

2Cheshire & Burn (16th ed), 78–79, 215–225; Megarry & Wade (6th ed), [8.109–8.122].

3This is drawn from the now repealed LPA 1925 s 35 (now repealed) “net” here means subject to the payment of expenses.

Figure 14-1 A trust for sale

The trustees held the legal estate and control of the basic management functions.

2.Existence of a trust for sale

[14.03] Between 1925 and the end of 1996 it was necessary to create expressly an immediate binding trust for sale4 in order to avoid being drawn into the cumbersome machinery of the strict settlement. This remains important when proving title to unregistered land involving an old trust; proper proof of the absence of a strict settlement is of vital importance in establishing that title has passed as it has appeared to do.5

A trust required a pre-emptory direction imposing a mandatory duty of sale on the trustees, though this could be balanced by a power to postpone sale or a requirement to proceed to sale only with the consent of named people.6 If, instead, trustees were given a power they had a discretion whether or not to sell,7 and this created a strict settlement.8 Trusts to sell or retain land were treated as trusts for sale with a power of postponement both before 1926 and afterwards.9

A trust for sale also had to be immediate, in contrast to a trust arising at some time in the future – for example when a duty to sell arose when a life tenant died,10 a lender demanded payment,11 or after a fixed time.12 In Re Hanson13 trustees were directed to purchase a house for the testator’s widow to live in until their son attained 25, and only then to sell, but until that time this was a strict settlement. The difference was largely semantic. For example in Re Herklots’ WT14 a will passed a house to trustees for sale, and even though a Miss Gordon was given the right to live in house for life “without prejudice to the trust for sale”, the duty of sale was nevertheless still held to be immediate.

4LPA 1925 s 205(1)(xxix), based on cases on SLA 1882 s 63(1) and SLA 1884 s 7; the exemption for trusts for sale was an afterthought: SLA 1925 s 1(7); LP (Amendment) A 1926 sch; SLA 1925 s 117(1)(xxx).

5Re Bryant & Barningham’s C (1890) 44 Ch D 218, CA.

6LPA 1925 s 205(1)(xxix).

7Re Hotchkys (1886) 32 Ch D 408.

8See below [14.10].

9LPA 1925 s 25(4); Re Crips (1906) 95 LJ 865; Re Johnson [1915] 1 Ch 435; Re White’s S [1930] 1 Ch 179.

10Want v. Stallibrass (1873) LR 8 Exch 175; Carlyon v. Truscott (1875) LR 20 Eq 348.

11Rooke v. Kensington (1856) 25 LJ Ch 567.

12Re Horne’s SE (1888) 39 Ch D 84; Re House [1929] 2 Ch 166.

13[1928] Ch 96, Astbury J; Bevan v. Johnston [1990] 2 EGLR 33, CA.

14[1964] 1 WLR 583, CA; Ayers v. Benton (1967) 204 EG 359; Abbey National BS v. Moss (1994) 26 HLR 249, CA. Query the correctness of Bacon v. Bacon [1947] P 151.

Trusts were binding if the trustees were obliged to sell the estate in all circumstances and not just to pay debts or as building plots.15 It was necessary to give the trustee power to sell free of any legal estates affecting the land16 but it was not essential that they could overreach all equitable interests.17

3.Transactions exceeding the powers of pre-1997 trustees for sale

[14.04] Trustees for sale used to have limited power and often effected transactions which were breaches of trust. Examples occurred when land was mortgaged to secure business debts,18 where the house was remortgaged to pay the trustees’ private debts,19 and even (curiously) where the mortgage was used to finance the initial acquisition of the house.20 When the trust land was registered, a restriction was required,21 but the registry wrongly discouraged such entries and so the problem was invariably overlooked.22 This official view confused the protected position of a buyer with the limited status of the trustees, though fortunately the 1996 Act gives trustees of land the full powers of an absolute owner. This aligns the law with earlier registry thinking.

Unregistered trustees for sale obviously had power to sell their land,23 but pre-1997 they were limited to Settled Land Act 1925 powers.24 Transactions which they lacked power to effect included gifts,25 undervalued sales, long leases, the grant of options26 and almost all mortgages.27 Charles Harpum suggested that power-based overreaching required strict compliance with the terms of an authorised power. It was, he said, a misconception that “overreaching will take place whenever trustees for sale make any disposition, whether it is within their powers or not.”28 On his view, an unregistered Flegg29 would not be overreached. Brilliant as the general thesis is, this particular criticism proceeds on a false analogy with bare powers. Before 1926, a bare power of sale could be vested in a person who held no estate, and to pass title it was necessary to observe precisely the terms of his power of sale,30 a “blundering execution” passing nothing.31 But modern trusts vest the legal estate in the trustees, so that legal title can pass either under a sale authorised by the trust deed (as before) or under an unauthorised sale to a purchaser who is protected, that is one without notice of any

15Re Smith & Lonsdale’s C [1934] WN 36.

16Re Parker’s SE [1928] Ch 247, 263, Romer J; query the correctness of this dictum.

17Re Leigh’s SE [1926] Ch 852; Re Leigh’s SE (No 2) [1927] 2 Ch 13; Re Ryder & Steadman’s C [1927] 2 Ch 62, CA. Such interests could be removed by extended overreaching powers.

18Williams & Glyn’s Bank v. Boland [1981] AC 487, HL.

19City of London Building Society v. Flegg [1988] AC 54, HL.

20Abbey National BS v. Cann [1991] 1 AC 56, HL.

21LR Form 10.

22Sood [1997] Ch 276, 281F, 286D.

23Amplified by TA 1925 s 12.

24LPA 1925 s 28.

25Davey v. Durrant reported in G Farwell, Powers (Stevens, 2nd ed 1893), 548.

26Oceanic Steam Navigation Co v. Sutherberry (1880) 16 Ch D 236, CA.

27Stroughill v. Anstey (1852) 1 De GM & G 648, 42 ER 700; Walker v. Southall (1887) 56 LT 882, North

J.

28[1990] CLJ 277, 279.

29[1988] AC 54 HL; C Harpum [1990] CLJ 277, 306.

30G Farwell Powers (Stevens, 2nd ed, 1893) ch V; Hawkins v. Kemp (1803) 3 East 410, 440, 102 ER 655, Ellenborough CJ; S Anderson (1984) 100 LQR 86, 89.

31Whitlock’s case (1609) 8 Co Rep 69b, 77 ER 580.

defect.32 That second alternative, the “great leap forward” in 1925, ensures that an unauthorised mortgage now passes legal title to the lender, the only question being whether or not the beneficial interests stick to the lender.33

Even if a transaction was unauthorised, manifold protections were available to purchasers.34 They could rely on an express provision in the trust deed, or insist that a defective transaction should be remedied by the trustees,35 and statute protected against improper use of loans,36 false receipts,37 and general defects in leases.38

Beneficial co-owners acted both as trustees and as beneficiaries under the same trust, so that collectively they constituted one absolute owner of the house. Before 1997, it was important to extend (ideally on the face of the legal title) the limited powers available to trustees for sale, so as to confer on the trustees all the powers of absolute owners. Additional powers were often limited to 80 years, even though there was no perpetuity problem – after the middle of 1964 pure management powers can be exercised indefinitely.39 Today trustees of land have all powers40 so extension is not required.

4.Termination of the trust for sale

[14.05] A pre-1997 title depends both on the existence of a valid trust for sale and also on its continued existence at the time of the sale. Termination of a trust for sale might be followed by a strict settlement or bare trust,41 and also happened if trustees sold all their land.42 But, so far as regards the safety and protection of any purchaser, a trust for sale was deemed to continue to subsist until the land was conveyed to (or under the direction of) those interested in the proceeds of sale.43 It was arguable that a buyer was not protected if he had actual knowledge that the trust for sale had ended.

C. OTHER PRE-1997 TRUSTS

1.Bare trusts

[14.06] Bare trusts require special consideration because before the Trusts of Land and Appointment of Trustees Act 1996 they lacked a proper power of sale. The Act

32Lloyds Bank v. Bullock [1896] 2 Ch 192; Bailey v. Barnes [1894] 1 Ch 25, CA. Notice doctrine is discussed below [15.06].

33Caunce v. Caunce [1969] 1 WLR 286; Boland [1981] AC 489 HL; etc.

34W Ambrose (1947) 11 Conv (NS) 86.

35G Farwell Powers (Stevens, 2nd ed, 1893) ch 7.

36TA 1925 s 17; Flegg [1988] AC 54, HL.

37TA 1925 s 14; LPA 1925 s 67 (payment to trustees’ conveyancer).

38LPA 1925 s 152; Pawson v. Revell [1958] 2 QB 360, CA.

39Perpetuities and Accumulations Act 1964 s 8.

40TLATA 1996 s 6.

41Re Cook [1948] Ch 212 (there was a reconversion to land); Re Grimthorpe [1908] 2 Ch 675, CA.

42Re Wakeman [1945] Ch 177; Re Wellsted’s WT [1949] Ch 296, CA; Re Power [1947] Ch 572. This problem is solved by TLATA 1996 ss 6(3)–(4), 17.

43LPA 1925 s 23; Peters v. Lewes & District Rly (1881) 18 Ch D 429; Re Lord Sudeley & Baines & Co’s C [1894] 1 Ch 334; Re Dyson & Fowke’s C [1896] 2 Ch 720.

embraces them as just one more species of trust of land44 with the object of conferring a clear statutory power of sale.

A bare trust arose where one or more trustees held land on trust for a single beneficiary who was a competent adult,45 and absolutely entitled to the land in possession. Bare trusts include both land held by a single trustee (T holds on trust for B absolutely) as in Hodgson v. Marks,46 and also cases with two or more trustees,47 and arose whether the trust was passive or active48 since any active duty terminated when one adult beneficiary claimed the land.49 If T buys land with money provided by B, T holds on resulting trust for B. Bare trusts also arise if B transfers land to T with an express provision that T is to hold on trust for B,50 if a transfer is invalidated by undue influence, pending registration of a transfer, or where title is divested after the two month period allowed for first registration.51 But a contract does not create a trust in this sense.52 The death throes of many settlements involve a period when a single adult beneficiary becomes absolutely entitled.

The 1996 regime readily incorporates bare trusts, since the trustees hold the legal estate with a power of sale and all the other powers of an absolute owner.53 The beneficiary is protected by consultation provisions54 and by the rule that the beneficiary can direct the trustees how to exercise their administrative powers.55 Transitional provisions in 1925 had sought to execute bare trusts existing at the commencement of the legislation by passing the legal estate to the beneficial owner,56 but the possibility of bare trusts arising after 1925 was overlooked.57 This left a doubt about whether bare trustees could overreach their beneficiaries,58 and although it could be argued that a power of sale was implied by statute,59 it was only safe to rely on an express power of sale.60

44S 6; Law Com 188 (1989), [1.7], [2.17], [3.10]; S Gardner (1988) 104 LQR 367.

45Re Douglas & Powell’s C [1902] 2 Ch 296; Re Jump [1903] 1 Ch 129.

46[1971] Ch 892, CA; Wilson v. Wilson [1969] 3 All ER 945, 949C, Buckley J.

47C Harpum [1990] CLJ 277, 302, Law Com 188 (1989), [2.17]. The beneficiary might be one of the trustees; contrast in other contexts: Morgan v. Swansea Urban Sanitary Authority (1878) 9 Ch D 582; Re Blandy Jenkins Estate [1917] 1 Ch 46.

48Hanbury & Martin, Modern Equity (Sweet & Maxwell, 16th ed, 2001), 71–72; Inland Revenue Commissioners v. Silverts [1951] Ch 521, CA; this despite Christie v. Ovington (1875) 1 Ch D 279; Re Docwra

(1885) 29 Ch D 693; Re Cunningham & Frayling [1891] 2 Ch 567.

49Re Johnston [1894] 3 Ch 204; Re Nelson [1928] Ch 920n, CA.

50Hodgson v. Marks [1971] Ch 892, CA (oral trust).

51See above [9.27].

52Lloyds Bank v. Carrick [1996] 4 All ER 630, CA.

53TLATA 1996 s 6.

54S 11.

55Saunders v. Vautier (1841) 4 Beav 115, 49 ER 282, affirmed Cr & Ph 240, 41 ER 482; TLATA 1996 s 6(5)–(6).

56LPA 1925 sch 1 part II paras 3, 6(d).

57Maitland’s Equity, 140; JF Garner (1971) 35 Conv NS 92.

58Sale was possible where trustees had been appointed by the court: LPA 1925 s 2(2); WJ Swadling [1986] Conv 379; LPA 1922 s 3(3)(iii) was clearer; see below [14.09].

59C Harpum [1990] CLJ 277, 302–304; Re Pratt [1943] 2 All ER 375 (shares).

60H Potter (1928) 44 LQR 227, 233–234.

2.Trusts of after acquired land

[14.07] Since 2001,61 trustees have had a general power to investment in land, whether for investment, for occupation, or for any other reason. This is restricted to the purchase of a legal estate in freehold or leasehold land in the UK.62 The powers of an absolute owner can be restricted by the trust instrument and are subject to any statutory provision.

Before the recent Act trustees of land could acquire substitute land63 but personalty trustees required authorisation from their trust instrument. Where that authorisation existed, statute imposes a trust of land on a purchaser64 — where land is acquired by trustees of a personalty settlement or where trustees have lent money secured by a mortgage of land but the borrower has later lost the right to redeem by his delay.65 It was therefore possible, even common, to have a situation where land had been bought without the power to do so. Before 1997 this could also arise where trustees for sale sold all their land and only afterwards – when they had ceased to hold any land – did they acquire replacement land; this replacement was not authorised and this lack of authorisation could also create problems for a purchaser who had notice of the want of authority.66

3.Family charges

[14.08] The Trusts of Land Act 1996 imposes a trust of land when a document made after 1996 causes land to be charged with payment of a family charge. These are defined to be a rentcharge for life or a shorter period or any capital, annual, or periodic sum charged on land, whether the charge arises immediately or only after an interval, provided that it is created voluntarily, in consideration of marriage or by way of family arrangement.67 The beneficiary usually waives his right in order to facilitate a sale. However a recalcitrant beneficiary cannot be forced to agree to this, and in such a case formal overreaching will be required. Instruments creating a family charge operate as a declaration of trust,68 enabling the trustees to sell the burdened land69 free of the family charge, leaving the beneficiary to look to the proceeds of sale. Pre1997 family charges could be imposed behind an express trust for sale but otherwise created an optional strict settlement.70

61Trustee Act 2000 ss 8–10; in force February 1st 2001.

62The duty of care applies under TA 2000 sch 1 para 2 subject to any express exclusion.

63TLATA 1996 s 6, as amended by TA 2000 sch 2 para 45.

64LPA 1925 s 32; Power v. Banks [1901] 2 Ch 487; Re Jenkins & HE Randall & Co’s C [1903] 2 Ch 362; TLATA 1996 sch 2 para 2.

65LPA 1925 s 31; TLATA 1996 sch 2.

66Re Wakeman [1945] Ch 177; Re Wellsted’s WT [1949] Ch 296, CA; Re Power [1947] Ch 572. This problem is solved by TLATA 1996 ss 6(3)–(4), 17.

67TLATA 1996 sch 1 para 3.

68As above.

69S 6; a second trustee may be needed.

70See below [14.10].

4.Extended overreaching

[14.09] The creator of a trust confers a mandate on the trustees to sell the property free of interests created by the settlement, but neither he nor his trustees may improve his title by purporting to free the land of interests which bound him at the moment of settlement.

Suppose that family estates were held in fee simple subject to an equitable rentcharge in favour of a family member created in 1930 but otherwise absolutely. In 1960, the freehold was then settled on trustees for sale subject to the existing equitable rentcharge. The trustees can now use normal overreaching to sell free of the beneficial interests under the 1960 settlement, but require extended overreaching powers to sell free of the 1930 rentcharge.

This is highly abnormal today though the very word “overreaching” was reserved for this case before 1926,71 where there was some special contract or statutory power to justify an extended power.72

Original proposals to allow all trustees extended overreaching powers proved too drastic to pass the Lords,73 and it is now restricted to ad hoc trusts of land.74 Trustees have this power only if they have been approved or appointed by the court75 or if sale is made by a trust corporation.76 Many burdens are safe even from extended overreaching77; these are interests protected by a deposit of the title deeds, restrictive covenants, equitable easements, estate contracts, and most registered land charges. However, it is possible to overreach registered annuities and general equitable charges (equitable mortgages) despite the potential prejudice of loss of security to a lender.

D. PRE-1997 STRICT SETTLEMENTS

1.Conveyancing machinery

[14.10] A strict settlement78 was made before 1997 by creating a succession of beneficial interests without imposing any duty of sale. The simplest possible settlement benefitted X for life, with remainder to Y absolutely. The Settled Land Act 1925 vested the land, the right to sell, and all management powers in the tenant for life, that is an adult

71Jowitt’s Dictionary of English Law (2nd ed by J Burke, 1995) vol 2, 1299; JM Lightwood (1927–1929) 3 CLJ 59, 68.

72Eg a compound settlement: SLA 1925 s 31; Re Leigh’s SE (No 2) [1927] 2 Ch 13; Re Parker’s SE [1928] 1 Ch 247; Re Sharpe’s Deed of Release [1939] Ch 51.

73JM Lightwood (1927) 3 CLJ 59, 68.

74LPA 1925 s 2(2)–(3), as amended by TLATA 1996 sch 3; Cheshire & Burn (16th ed), 892–894; Megarry & Wade (6th ed), [4.073–4.082].

75LPA 1925 s 2(2)(a); extended powers continue for successors.

76The “or” in s 2(2)(a) is apparently disjunctive, however absurd it may be to deny extended powers to an approved trustee (T1) holding with a trust corporation (T2).

77LPA 1925 s 2(3); LPA 1922 s 3 was clearer.

78Chapelle’s LL (5th ed), ch 7; Cheshire & Burn (16th ed), ch 4, 188–215, 883–889; Goo’s Sourcebook (3rd ed), ch 12; Grays’ Elements (3rd ed), 646–653; Maudsley & Burn LL – Cases (7th ed), ch 6; Megarry & Wade (6th ed), [8.003–8.108]; Thompson’s Modern LL ch 8.

beneficiary with a life interest in possession, here X. Trustees of the settlement were appointed, primarily, to receive the capital money arising on sale.

Figure 14-2 A strict settlement

Complex certainly, but with its own internal logic. It was useful as a vehicle for the management of family estates where land was vested in successive members of family. Suppose, for example that X is current Lord of Xanadu and on his death, the title, the land and the family estates would descend to his eldest son, the next Lord Xanadu. Under a strict settlement, X (the current lord) is effective owner of the land as tenant for life, a legal structure which reflects the reality on the ground.

Changes in society and in the taxation regime has made this legal fabric of aristocratic settlements irrelevant.79 No new strict settlements may be created after 1996 and a limitation which would have created a strict settlement now creates a trust of land.80 If land is passed to T on trust for X for life with remainder to Y absolutely the land and the management powers are vested in the trustee, T. Pre-existing strict settlements continue indefinitely.

2.Strict settlements in proper form

[14.11] Properly created strict settlements are easy to recognise. Where title is registered the terms of the settlement are not revealed by the proprietorship register, but its existence is easily deduced from a restriction which contains the names of the Settled Land Act trustees as the proper recipients of sale proceeds and other capital money.81 This is a signal that the registered proprietor is a tenant for life,82 a person who can control sale of the land but is not entitled to receive the sale proceeds.

A buyer needs to know little of the Settled Land Act in order to obtain a good title. Changes of ownership within the settlement (that is a change in the person entitled as

79A Pottage (1998) 61 MLR 162.

80TLATA 1996 s 2(1).

81SLA 1925 s 119(3); LRA 2002 s 89; DLRR 2003 sch 7.

82SLA 1925 s 19. A tenant for life must be an adult with a life interest in possession in the whole income: Peasley v. Haileybury & Imperial Service College [2001] WTLR 1365, Ch D. If there is none (eg because the life tenant was a minor) the land should be vested in statutory owners as defined in s 20.

tenant for life) are supervised by the registrar and a purchaser deals with whoever is registered. If a settlement ends, this must be proved to the registrar who will then remove the Settled Land Act restriction. Beneficial interests under a strict settlement can only be minor interests,83 so that occupation of the land is no protection.

Strict settlements of unregistered land are flagged by a vesting document. A vesting deed is used for a settlement created during the settlor’s lifetime or a vesting assent after a settlement created by will. The policy of the Settled Land Act 1925 was to ensure that all settlements were made by two documents,84 a vesting deed and a trust instrument,85 the latter being curtained off the title. So buyers must act on the basis of the vesting deed, even if it contains errors.86 Again, the function of the vesting deed is to identify the tenant for life who holds the legal estate and can sell; it also identifies the trustees of the settlement who are required to receive and invest the purchase money.

Changes in ownership occur when, for example, a life tenant dies and the property passes to a new life tenant. Special documents mark out these changes. A vesting deed is required for a lifetime change87 and a special grant of probate limited to settled land and a vesting assent on death.88 These documents will now trigger compulsory first registration.89 Buyers must assume that the settlement continues so long as there is any reference in the latest vesting document to the Settled Land Act trustees, but he must assume it has ended when there is a plain conveyance without mention of the trustees.90

Overreaching occurs on a sale under a strict settlement91 by the tenant for life or statutory owners, but purchase money92 has to be paid to the trustees of the settlement;93 a receipt is required from two trustees or a trust corporation, or purchase money may be paid into court.94

3.Inadvertent strict settlements

[14.12] The Trusts of Land Act 1996 removes, at last,95 the notorious trap of accidental strict settlements created in home made wills.96 What is the problem with this, innocuous looking, testament?

83LRA 2002 sch 1 para 2, sch 3 para 2(a).

84If a lifetime settlement was created by one document: the legal estate was paralysed until the problem was rectified, and ever afterwards there was no curtain: SLA 1925 s 13; Re Alefounder’s WT [1927] 1 Ch 360; Davies v. Hall [1954] 1 WLR 855.

85SLA 1925 s 4(1).

86S 5(3); Re Curwen [1931] 2 Ch 341; Re Cayley & Evan’s C [1930] 2 Ch 143.

87S 8.

88AEA 1925 ss 22–24; SLA 1925 s 7(1). An ordinary grant and assent are used when the settlement ends.

89LRA 2002 s 4(1)(a), (9).

90SLA 1925 s 110(5); it should be supplemented by a deed of discharge: s 17.

91LPA 1925 s 2(1)(i); SLA 1925 s 72.

92Mortlock v. Buller (1804) 10 Ves Jun 292, 308, 32 ER 837, Eldon LC.

93Trustees are defined in a complex way by SLA 1925 s 30.

94SLA 1925 s 72.

95H Potter (1944) 8 Conv (NS) 147, 165; GA Grove (1961) 24 MLR 123, 128.

96Muir v. Lloyds Bank [1992] LSG July 22nd, 32; EC Ryder (1962) 15 CLP 194; Law Com WP 94 (1985), [3.3].