What is TOLATA?
TOLATA stands for the Trusts of Land and Appointment of Trustees Act 1996. It is a piece of legislation that regulates the relationship between owners of property and land. Applying to co-habiting couples (and former co-habiting couples), the principle is that the legal owner of a property (the trustee) may be different from the person benefitting from it (the beneficiary). TOLATA is enacted when a dispute arises between non-married cohabitees who live in a property that is solely owned or owned through joint tenants or tenants in common. It is possible to specify a certain share of the property owned, when owning the property as tenants in common.
This means that one member of a cohabiting couple may own a share of the family home despite not being a legal owner. Alternatively, both partners may be legal owners, but the equity in the family home is not divided equally between them. If a separating couple cannot agree on the division of the equity, they may apply to the Court under TOLATA to determine a range of issues, including whether they both own a share in the family home (and if so, the proportion each of them owns); who may occupy it; and whether (and if so when) it should be sold.
TOLATA is more commonly used by co-habiting couples, not married couples seeking divorce. TOLATA is a backwards-focused exercise, looking at how the couples lived their lives in terms of the property they owned.
Additionally, property and land can be held on trust for the benefit of family members (who can be named as beneficiaries under the trust) and TOLATA can be utilised where a beneficiary is looking to sell property.
How to get equity from a property under TOLATA
Typically, you would need to follow certain legal procedures involving the trust of land. TOLATA provides a framework for resolving disputes and making decisions regarding the management, sale, or transfer of property held in trust. Here is a general outline of how you can access equity from a property under TOLATA:
1. Determine the Trust Arrangement
- TOLATA applies when property and land is held in a trust, which may be jointly owned or held in a way that benefits multiple parties (such as cohabitees, family members, or business partners).
- You need to identify the nature of the trust. Is it a bare trust (where the trustee holds the legal title for the benefit of the beneficiaries), a constructive trust, or a resulting trust?
- The terms of the trust will outline how the equity in the property is to be divided or accessed.
2. Consider Whether the Property Can Be Sold
- If there are disagreements between the co-owners, beneficiaries or trustees about the property, you may need to apply to the court to resolve the matter.
- The court may consider whether it is appropriate for the property to be sold, based on the intentions of the trust, the interests of the beneficiaries, and whether the sale is in line with the trust's purpose.
3. Apply to the Court for Sale or Transfer of Property
- If the property is held in trust and you are seeking to get equity out, one option is to apply to the court for a sale order. The court has discretion in deciding whether to grant such an order, and it will take into account a range of factors such as the terms of the trust.
- Alternatively, it may be possible to obtain a transfer of the property to another beneficiary by using TOLATA to achieve this outcome indirectly- see the article on Savage v Savage.
4. Consider Legal Advice
- Because TOLATA is complex and often involves disputes or negotiations between multiple parties, it is important to consult with a solicitor who specialises in TOLATA. They can guide you through the legal process, assist with the application to the court, and help resolve any issues related to the trust or equity distribution.
Summary
- TOLATA allows beneficiaries or trustees of a property held in trust to seek the release of equity, which can be through a sale or transfer of the property.
- You may be able to apply to the court for a sale order under TOLATA if there are disputes.
- The court will consider a range of factors to include the terms of the trust.
Consulting a solicitor is recommended to ensure that you follow the proper legal steps and understand your rights in this process.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
