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Please can somebody explain the difference between land ownership and beneficial interest to me - brain exploding!

9 replies

confuugled · 08/03/2013 00:05

Just wondering if anybody out there can try to clarify something for me (longterm MN who's name changed just in case I out myself).

Bit of background to simplify what my issues are (hopefully!)
I'm trying to sort stuff out relating to some land that belongs to myself, my sister and my two cousins that we've inherited. It's in trust - it's been in trust for a long time - back to my dad and grandad, each owning a half share of the land. My dad's share got left to my mum, then she gave me and my sis a half of her half share each. My grandad left his half share to my nan and she gave her share to my cousins, so we all now own a quarter share of the beneficial interest.

When my mum gave my sis and I the land, she thought she had given it to us and that we owned it, as you would do when you buy a house and you become the new owners. Turns out that what the solicitor had done was to give us the beneficial interest but leave her as the owner.

My mum and late uncle were the most recent trustees of the land - but she is now going to make the 4 of us into trustees and retire from being a trustee, and the land is going to be registered as a result. Will this make us the actual owners (in simplistic terms)?

However looking at the trustee documents, the background shows that the beneficial interest has been left to xxx when yyy dies - but never mentions actual ownership. But then Mum got listed as owner on previous documentation as did Uncle who was also a trustee (but he's never actual owned any of it, it skipped him and went to his dc).

So I'm confused - when do you 'own' land and how is this different from having a beneficial interest in it?

(Sorry to ask here but the solicitors that are dealing with all this just seem to make everything more complicated (not helped by the fact that they have been involved with the land itself for over 40 years). Also not helped by the fact that the first version of the document they sent was full of lots of mistakes - like getting the family name wrong more than half the time, addresses wrong, referring to 'the will' but not whose will (could have been any one of 5) or including it in any associated schedule, formatting all over the place and not including any plans of the land even though they thought we were signing it - so all stuff that raises red flags. New versions have come through and there is now only one name spelt wrong and a couple of bits that haven't been added in)

The whole plot gets more confusing as when dad died, he left a share in another plot of land to mum, which we discovered recently is now wholly owned by the inheritors of other co-owner. We know from the other plot of land that the solicitors didn't ask the executors to do any deed of transfer from them to mum, it was something that had to be done a few years down the line when the omission was discovered. And yet this bit of land was done around the time of probate - why would they do one and not the other when dealing with the whole estate - very strange. And the land registry has it down as having had an un-named beneficial charge against it for part of the time in dad's share - but then that dropping when co-owner died and his wife inherited it. All a real shock to mum when she discovered this a few months back as you kind of assume that land you own a share of will remain land you own a share of, nobody has ever asked her for a signature to remove her beneficial interest - how can beneficial interest be taken away from you without you knowing? (worried now that my own beneficial interest could disappear without me knowing!)

We're getting somebody to look at it and the land registry were quite helpful but because of the time it happened - up to 17 years ago, but could have been just 5 years ago, not sure exactly when - it's tricky tracking down documents. And still nobody has been able to explain how the land has been transferred without having the relevant signatures of either the executors or mum, or why they would show a beneficial interest on the land but without a name or how that could disappear.

Sorry, just realised this has got horribly long. if you've made it this far - thank you!

OP posts:
CardinalRichelieu · 08/03/2013 00:19

Argh thank you for reminding me why I chose a practice area that does not involve land law! It is very complicated. I will do my best to explain until someone who knows better comes along.

Basically there is the legal ownership and the beneficial interest which are different things. When you have a trust, the trustees have the legal ownership and the beneficiaries have the beneficial interest. If you don't have the legal interest of land you cannot sell it etc. you just 'enjoy' it. Trustees have the total legal powers of an owner but are restricted by the wording of the trust document. At a given point (stated in trust doc) the trust comes to an end and property is vested wholly in such Bs as stated. Trusts can't run forever.

It sounds like your mum now wants to bring the trust to an end which would mean the beneficiaries would get the land in the shares which were laid down in the trust (I am assuming you are all adults). You would then become the actual owners if the trust was ended.

I'm sorry, I can't make head nor tail of the second bit about your dads land.

Land law can be very complicated and I'm not sure anyone can give you a straight answer on here because it would depend exactly what was in the trust document and several other things. Perhaps you could get a face to face meeting with the solicitors and ask them to explain it carefully?

gaelicsheep · 08/03/2013 00:23

Erm, this is ringing bells from my years old law diploma. I think that the trust exists as a separate legal entity so that no one actually owns it, but they have a beneficial interest instead. I think this but I am quite possibly wrong. I have my books somewhere so could look things up, but I rather hope a soliciting type will be along to be more helpful.

gaelicsheep · 08/03/2013 00:24

There you go :-)

CardinalRichelieu · 08/03/2013 00:30

Also, you cannot split the legal title to land. If you do it tears the fabric of space and time (fact). So if you do want to split it you have one person with the legal title holding it on trusts for the others, who have equitable interests.

confuugled · 08/03/2013 01:07

Thank you CardinalRichlieu and GaelicSheep ThanksThanks

If only they had said that at the beginning then things would have been so much clearer! that is exactly what I have been trying to get a grip on, but nobody has ever managed to put it that simply and they just keep making it more and more convoluted.

No, the trust isn't coming to an end - it's effectively moving on down to the next generation and we're all taking over from her, plus we're happy for it all to filter on down to us, so that's good. It's moved through the generations since the 60s so that's fine. And heaven forbid we should try to split it up and tear apart time and space!

Sorry the last bit was so confusing now you know how I feel reading through all these legal documents!. Basically dad and uncle owned another plot of land but not in a trust and as tenants in common (the one that you can do what you want with your separate shares anyhow). When dad died, mum inherited his share of the land, listed in probate etc. Never really thought about it much since. Happened to be speaking to cousin about something else and he was talking about his field - ie the one that my dad had owned a share of. Seems that he had inherited it from his mum, who in turn had inherited it from her husband/my uncle when he died. And at some point mum's interest in the land (ie the share my dad left her) just disappeared off the registration documents, but nobody can explain how this can happen or why it happened in this case.

I think part of the problem that it is confusing is that whatever happened is not supposed to have happened so people keep saying 'well that can't have happened' instead of trying to figure out how we can figure out a) what happened and b) if we can reclaim the share of the land that used to belong to mum!

Thank you again for your kind and clear explanations!

OP posts:
gaelicsheep · 08/03/2013 01:13

I can take no credit, but I'm glad Cardinal's response helped. Smile

confuugled · 08/03/2013 01:47

No no, gaelicsheep, you're selling yourself short. Your explanation helped lots too - they both did, so thank you :o

OP posts:
CardinalRichelieu · 08/03/2013 10:45

Oh good, I'm glad it was helpful!

iheartdusty · 08/03/2013 11:30

would it help to think of it this way?

a trustee 'looks after' the land for the beneficial owners. A person can be both a trustee and a beneficial owner at the same time.

A single owner who has both the legal ownership and 100% of the beneficial interest doesn't need to 'look after it' for herself, so there is no question of any trust.

If the beneficial interest - ie the right to enjoy the land - belongs to 2 or more people, then the legal owner, the trustee, looks after it for them.

So for example if there are 2 legal owners - eg a married or unmarried couple - both of them own the legal title 100%, because that can't be split, as CardinalRich says. But they each have a share in the property. Say, they each have a 50% share. That is their beneficial interest. So each of them is a trustee who is 'looking after' the beneficial interest of the other person as well as their own share.

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