Trust for Sale in English Law: From LPA 1925 to TLATA 1996
Before 1997, all co-owned land was automatically held on a trust for sale with a duty to sell. TLATA 1996 abolished the implied duty and replaced it with a flexible trust of land — giving beneficiaries rights of occupation and consultation they never had under the old regime.
Timeline of the Law
Pre-1926
Co-owned land held under various equitable forms; no single implied trust
1 Jan 1926
Law of Property Act 1925 in force — s34-36 LPA 1925 imposes statutory trust for sale on all co-owned land; equitable owner has right of occupation under the implied duty to sell, but trustees have power to postpone
1 Jan 1997
Trusts of Land and Appointment of Trustees Act 1996 in force — replaces trust for sale with 'trust of land'; all existing trusts for sale converted to trusts of land; implied duty to sell abolished; new statutory rights of occupation (s12 TLATA 1996) and consultation (s11 TLATA 1996) for beneficiaries
Post-1997 (present)
New co-ownership of land automatically held on trust of land; no duty to sell; trustees have powers of absolute owner subject to TLATA 1996; court can order sale under s14 TLATA 1996 on application by trustee or any person with interest
Frequently Asked Questions
What was the trust for sale of land in English law?
A trust for sale was a form of trust under which the trustees were under a duty to sell the trust property — typically land — but had a power to postpone the sale. Under the Law of Property Act 1925 (ss34-36), whenever land was co-owned by two or more people (other than in a single beneficial ownership), it was held on an implied trust for sale by the legal owners as trustees. The beneficial owners had equitable interests under the trust. The doctrine of conversion meant that, because of the duty to sell, the interests were notionally treated as personal property (money) rather than real property (land) — though this had limited practical impact in most cases. The duty to sell could be overridden by all the beneficiaries of full age and capacity consenting to postponement.
What is the difference between a trust for sale and a trust of land under TLATA 1996?
The Trusts of Land and Appointment of Trustees Act 1996 replaced the trust for sale with the 'trust of land' from 1 January 1997. The key differences: (1) Duty to sell: a trust for sale imposed a duty to sell (with a power to postpone); a trust of land has no duty to sell — trustees have a power (but not a duty) to sell under s6 TLATA 1996. (2) Doctrine of conversion: abolished by TLATA 1996 — beneficiaries' interests are now classified as interests in land, not notionally in money. (3) Beneficiary rights: TLATA 1996 introduced explicit statutory rights for beneficiaries: the right of consultation (s11) and, where a beneficiary is entitled to be in occupation, a right to occupy the land (s12). (4) Court orders: applications for sale are now made under s14 TLATA 1996 (previously under the old law — typically under s30 LPA 1925, now repealed). (5) Transitional: existing trusts for sale as of 1 January 1997 were automatically converted to trusts of land.
What are the rights of beneficiaries under a trust of land?
Under TLATA 1996, beneficiaries of a trust of land have several important rights: (1) Right of occupation (s12): where the purposes of the trust include making the land available for a beneficiary's occupation, that beneficiary has the right to occupy the land. This can be restricted or excluded by trustees in certain circumstances (s13). (2) Right of consultation (s11): trustees must, so far as practicable, consult with the beneficiaries of full age who are beneficially entitled to an interest in possession and, so far as consistent with the general interest of the trust, give effect to the wishes of those beneficiaries. (3) Right to consent: the trust instrument can require beneficiary consent before trustees can exercise their powers of sale or other dispositions (s8). (4) Right to apply to court: any trustee or any person who has an interest under the trust can apply to the court under s14 TLATA 1996 for an order relating to the exercise of the trustees' powers — including an order for sale.
How does the court decide whether to order a sale under s14 TLATA 1996?
Under s15 TLATA 1996, the court must have regard to: (a) the intentions of the person(s) who created the trust; (b) the purposes for which the property subject to the trust is held; (c) the welfare of any minor who occupies or might reasonably be expected to occupy the land as their home; (d) the interests of any secured creditor of any beneficiary. In cases where a creditor (typically a trustee in bankruptcy or a bank with a charging order) is seeking sale, the creditor's interests generally prevail unless there is very good reason to refuse — particularly once children are grown (the family purpose is spent). Where the land is occupied as a family home and minor children live there, courts have sometimes delayed sale until children finish school, though this is now less common than under the old law.
Can an express trust for sale still be created after TLATA 1996?
Yes — it is still legally possible to create an express trust for sale after 1 January 1997, but TLATA 1996 applies to such trusts. Even an express trust for sale is now treated as a trust of land under TLATA 1996 (s1), and the implied duty to sell is effectively removed in practice because: the power to postpone is now unlimited (trustees can postpone indefinitely without being in breach of trust); and the doctrine of conversion no longer applies (s3). The beneficiaries still have their TLATA 1996 rights of occupation and consultation. An express trust for sale is therefore now largely equivalent to a trust of land. The main practical reason to create an express trust for sale (rather than a trust of land) would be to signal an intention to sell and distribute, though even this purpose is better served by a trust of land with an expressed direction.
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