Co-ownership 591

16.2.3. Use of co-owned property

16.2.3.1.Land

Prior to the enactment of the Trusts of Land and Appointment of Trustees Act 1996, co-ownership of land operated behind what was known as the trust for sale. This was a device adopted by the framers of the Law of Property Act 1925 to provide a mechanism that would facilitate the marketability of land by adopting a trust form whose default position was sale rather than retention of the co-owned land. Under the trust for sale, the land would (at least theoretically) have to be sold unless the trustees unanimously decided to postpone sale. As part of a process freeing up the market in land, the adoption of this mechanism should not be under-estimated although it is clear with hindsight that in over-emphasising marketability the Act went too far and elevated the exchange value of land above its use value (see section 2.4.4.2 above).

Admittedly, an important aspect of land ownership is its exchange value in both the commercial and the residential settings. However, the residential market is primarily concerned with the use value of land. Owner-occupiers do, of course, buy with an eye to their investment but their main purpose in purchasing land is (by definition) to provide themselves and their families with a home. To correct the obvious imbalance inherent in the trust for sale form, the courts in the decades following the 1925 Act slowly developed an approach that sought to supplant the preference for sale by asking what was the collateral purpose in buying the land to act as a counterweight to the impetus towards sale.

As we shall see, much of this case law is still relevant, but first we must consider the effect of the Trusts of Land and Appointment of Trustees Act 1996 which sought to restore equilibrium by adopting the trust of land rather than the trust for sale in all cases of co-ownership – replacing the statutory bias towards sale with a form that was neutral as between sale and retention to ensure that neither the exchange value nor the use value of land was elevated above the other. Although trusts for sale can still be expressly created, they are no longer imposed as a matter of course, and under section 4 trusts for sale created both before and after the 1996 Act take effect as trusts of land with the trustees given discretion to postpone sale as they think fit.

In considering use of co-owned land, we will concentrate on section 12 of the 1996 Act, under which beneficiaries in possession behind a trust of land have a conditional right to occupy the land, subject to the exclusions and restrictions detailed in section 13. Sections 12 and 13 provide:

12 THE RIGHT TO OCCUPY

(1) A beneficiary who is beneficially entitled to an interest in possession in land subject to a trust of land is entitled by reason of his interest to occupy the land at any time if at that time –