Co-ownership - Resolving disagreements between co-owners (se...

Learning Outcomes

This article examines the legal framework provided by sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996) for resolving disagreements concerning co-owned land. Upon completion of this article, you will understand the circumstances under which an application can be made to the court regarding a trust of land, the scope of the court's powers under section 14, and the specific factors the court must consider under section 15 when determining such applications, including the different approach taken when a trustee in bankruptcy applies. This will equip you to analyse SQE1 scenarios involving co-ownership disputes.

Beyond these core points, you will be able to identify who qualifies as “a person interested” under s 14, appreciate the interaction with trustees’ general powers and duties (including the duty to consult beneficiaries), and predict the practical effects of court-ordered sales, including overreaching of beneficial interests. You will also be able to distinguish between non-bankruptcy and bankruptcy applications, apply the “purpose of the trust” factor in domestic and commercial contexts, and evaluate how minors’ welfare and secured creditors’ interests are balanced in typical fact patterns.

SQE1 Syllabus

For SQE1, you are required to understand how disagreements between co-owners of land are resolved through the statutory mechanisms provided by TLATA 1996, with a focus on the following syllabus points:

• The circumstances giving rise to an application to the court under section 14 TLATA 1996.
• Identifying the parties who are entitled to make an application under section 14.
• The types of orders the court may make under section 14.
• The specific factors outlined in section 15 TLATA 1996 that the court must consider when exercising its powers under section 14 in non-bankruptcy cases.
• The distinct statutory factors under section 335A Insolvency Act 1986 that apply when the application under section 14 TLATA 1996 is made by a trustee in bankruptcy.
• Applying these statutory criteria to determine the likely outcome in specific factual scenarios involving co-ownership disputes.
• The practical effect of court-ordered sales on beneficial interests, including overreaching.
• The interaction of trustees’ powers under TLATA (such as s 6 and the duty to consult under s 11) with s 14 applications.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Under s 14 TOLATA 1996, which of the following can apply to the court for an order relating to trust land?
   1. A trustee of the land only.
   2. A beneficiary of the trust only.
   3. Any person with an interest in the property subject to the trust, including trustees and beneficiaries.
   4. Only a person currently occupying the land.
2. When determining an application under s 14 TOLATA 1996 (not made by a trustee in bankruptcy), which of the following is NOT a factor explicitly listed in s 15(1)?
   1. The intentions of the settlor(s).
   2. The financial needs of the beneficiaries.
   3. The welfare of any occupying minor.
   4. The interests of any secured creditor.
3. A trustee in bankruptcy applies for an order for sale of a bankrupt co-owner's family home one month after the bankruptcy order. Which legislation primarily guides the court's decision?
   1. Section 15 TOLATA 1996 only.
   2. Section 14 TOLATA 1996 only.
   3. Section 335A Insolvency Act 1986.
   4. The Family Law Act 1996.

Introduction

Where land is owned by more than one person concurrently, a trust of land automatically arises under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996). While co-ownership allows shared enjoyment and benefit, disagreements inevitably arise. Co-owners might dispute whether the property should be sold, how it should be used, or who should occupy it. TOLATA 1996 provides a key statutory mechanism for resolving these disputes through court intervention, primarily via sections 14 and 15. Understanding the scope of these sections and the factors guiding the court's discretion is essential for advising clients in co-ownership scenarios.

The TLATA regime modernised co-ownership by giving trustees broad powers equivalent to those of an absolute owner (s 6), abolishing the old duty to sell (save where expressly imposed), and recognising beneficiaries’ real interests in land. Against this backdrop, s 14 gives a route to resolve deadlock; s 15 tells the court how to exercise its discretion in non-bankruptcy situations. In bankruptcy, s 335A Insolvency Act 1986 displaces s 15 and introduces a strong statutory preference for creditors after one year, subject to narrow “exceptional circumstances”.

Key Term: Trust of Land
Under TOLATA 1996, any trust property that includes land is a trust of land. This automatically includes all forms of co-ownership (joint tenancies and tenancies in common).

Applying to the Court under Section 14 TOLATA 1996

Section 14 TOLATA 1996 confers power on the court to make orders regarding land held under a trust. This provides an important route for resolving deadlock or disagreement between interested parties.

A key feature of s 14 is its breadth. The court may be asked to authorise a sale where one trustee refuses, regulate occupation where living together has become untenable, resolve disputes over whether the trust land should be used for business or retained as a home, declare beneficial shares where they are disputed, or even order partition in truly exceptional cases. Applications are typically brought via the Part 8 procedure, but the procedural route is less important in SQE1 than understanding who can apply and what the court may order.

Key Term: Person with an interest in property subject to a trust of land
This encompasses trustees, legal and equitable owners (beneficiaries), those holding security over a beneficial interest (e.g., judgment creditors with charging orders), mortgagees whose security depends on a sale by trustees, and the trustee in bankruptcy of a beneficiary whose interest has vested in them. It does not include unsecured creditors or persons with merely personal rights (like contractual licensees or statutory “home rights” under the Family Law Act 1996).

Key Term: Overreaching
The LPA 1925 allows certain equitable interests to be detached from the land and transferred to the purchase monies on sale when capital money is paid to at least two trustees (or a trust corporation). A sale by trustees pursuant to a court order under s 14 is an overreaching event.

Who Can Make an Application?

An application to the court under section 14 can be brought by any trustee of land or any person who has an interest in the property subject to the trust.

Examples of eligible applicants include:

• A co-owner seeking sale or a declaration of beneficial shares.
• Trustees wanting authority to proceed without unanimity or to override a consent requirement in the trust instrument.
• A mortgagee or other secured creditor aiming to realise security where a co-owner resists sale.
• A beneficiary seeking regulated occupation or exclusion of a violent co-owner.
• A trustee in bankruptcy seeking sale to realise the bankrupt’s vested beneficial interest (with different statutory factors).

It is important to note what s 14 cannot do.

• It is not a gateway to appoint or remove trustees. The court’s jurisdiction to appoint/remove trustees lies principally under Trustee Act 1925 and separate procedural routes.
• It does not create new beneficial interests; rather, it allows the court to declare existing interests and regulate trustees’ functions.
• It is not a substitute for the mortgagee’s own power of sale. Lenders often prefer to rely on s 101 LPA 1925, but where the lender’s position depends on trustees selling (for example, where registered proprietors are resisting), s 14 is used to compel trustee action.

Scope of the Court's Powers

Section 14 grants the court a wide discretion. It may make any order it thinks fit concerning:

1. The exercise by the trustees of any of their functions. This includes powers relating to sale, leasing, mortgaging, partitioning the land, or deciding who can occupy the property. The court can authorise sale without unanimity and may override consent requirements in appropriate cases.
2. Declaring the nature or extent of a person's interest in the property. This is particularly relevant where the shares under a tenancy in common are disputed, or where an interest under a constructive or resulting trust is claimed. In domestic settings lacking an express declaration, the court may apply modern case law principles to infer or impute beneficial shares.

Orders under s 14 frequently interact with trustees’ duties and beneficiaries’ rights elsewhere in TLATA. For example, trustees must consult adult beneficiaries with interests in possession (s 11), and the court must have regard to beneficiaries’ wishes in non-bankruptcy s 14 applications (s 15(3)). Where occupation is contested, the court can regulate it under s 13, including imposing terms, excluding a co-owner where necessary (e.g., for violence), and ordering compensation (occupation rent) to balance fairness between occupants and non-occupants.

The most common application under section 14 is for an order compelling the trustees to sell the property when one co-owner wishes to realise their investment and another resists the sale.

Worked Example 1.1

Fatima and Gary own their home, "The Willows," as tenants in common in equity, with Fatima holding 60% and Gary 40%. Their relationship ends, and Fatima moves out. Gary continues to live at The Willows. Fatima wants the property sold so she can access her capital. Gary refuses, wanting to stay there. Can Fatima apply for an order for sale?

Answer:
Yes. Fatima, as a person with an interest in property subject to a trust of land (an equitable tenant in common), can apply to the court under s 14 TOLATA 1996. She can request an order directing the trustees (Fatima and Gary) to exercise their function of selling the property. The court will then determine the application based on the factors in s 15.

In practice, the court may instead regulate occupation, order a sale with a short postponement, or require Gary to buy out Fatima’s share within a specified timeframe, failing which a sale is ordered. Where minors occupy, the court often looks for calibrated solutions—sale now, sale later, or sale with deferred completion—to avoid blunt outcomes.

Determining Applications under Section 15 TOLATA 1996

When an application is made under section 14 (and it is not made by a trustee in bankruptcy), the court's decision is guided by the factors set out in section 15 TOLATA 1996. The court must consider these factors to achieve a fair balance between the competing interests.

The s 15 list is deliberately non-exhaustive. It establishes the matters to “have regard to”; it does not create a rigid hierarchy. Case law shows the court will take a broad view, weighing context and taking a practical approach to outcomes. Outcomes include immediate sale, postponed sale, refused sale, regulated occupation, occupation rent, or partition (rare).

The Section 15 Factors

Section 15(1) requires the court to have regard to:

• (a) The intentions of the person or persons (if any) who created the trust: Why was the trust established? Was it intended as a family home, an investment, or for another purpose? Evidence might be found in a trust deed, conveyance, or inferred from the circumstances at the time of acquisition. Where the original intention is clear and continuing, the court is more likely to refuse a sale.
• (b) The purposes for which the property subject to the trust is held: What is the current purpose of the trust? Has the original purpose ended (e.g., a family home for a couple whose relationship has broken down – Jones v Challenger) or does it continue (e.g., providing a home for remaining children – Re Evers’ Trust)? The court considers the purpose at the time of the application. In investment or commercial contexts, the purpose often points to sale if the investment has failed or must be realised.
• (c) The welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home: The needs of children residing in the property are a significant consideration. A sale might be postponed if it would cause undue hardship to minors, although the weight given to this factor may decrease as the children get older. The court generally seeks to avoid disruption mid-school year where possible.
• (d) The interests of any secured creditor of any beneficiary: If a beneficiary has charged their equitable interest (e.g., taken out a loan with a charging order), the creditor's desire to recover their debt is a relevant factor. Case law indicates that creditor interests frequently weigh heavily, especially where the debt is large and growing; however, they do not automatically trump all other considerations in non-bankruptcy cases.

Section 15(3) also requires the court to have regard to the circumstances and wishes of the beneficiaries of full age who are entitled to an interest in possession (or the majority according to the value of their shares if disputed). This provision gives practical effect to the duty to consult in s 11 and ensures the court hears from those whose interests are most directly affected.

Key Term: Section 15 Factors
The specific criteria listed in s 15(1) and s 15(3) TOLATA 1996 that a court must consider when determining an application under s 14 (excluding applications by a trustee in bankruptcy).

The Balancing Exercise

TOLATA 1996 does not assign specific weight to any single factor. The court must weigh all relevant factors in the context of the specific case. The outcome is therefore highly fact-dependent. The court might order an immediate sale, postpone the sale (perhaps until children finish education), refuse a sale, or make other orders regulating occupation or buyout options.

Illustrative points from first-instance decisions:

• In domestic cases, courts recognised that TLATA slightly “tilted” the balance toward families compared with the old law, but creditors’ interests can still prevail where appropriate, particularly if the debt is large or increasing and long delay is unjustified.
• The “purpose” factor can be decisive: if the home was purchased jointly as a family home and that purpose is continuing (e.g., one parent and children remain), sale may be refused or deferred; if the purpose has exhausted (relationship irretrievably broken down, no minors in residence), sale is likely to be ordered.
• Wishes of the majority by value under s 15(3) can strongly influence the result, but they are not conclusive if other s 15 factors point clearly the other way.

Worked Example 1.2

Henry and Wendy bought a house together in 2015 as joint tenants in law and equity to be their family home. They have two children, aged 8 and 12. Henry took out a loan secured against his beneficial interest to fund a business venture, which failed. The lender, Secure Loans Ltd, obtained a charging order and now applies under s 14 TOLATA for an order for sale. Wendy opposes the sale, wanting to keep the family home for the children.

What factors will the court consider under s 15?

Answer:
The court must consider the s 15 factors:
(a) Intentions: To provide a family home.
(b) Purpose: The purpose continues as a family home for Wendy and the children.
(c) Welfare of minors: The children's welfare (aged 8 and 12) is a primary consideration, potentially favouring postponement.
(d) Interests of secured creditor: Secure Loans Ltd has a valid charge and a strong interest in realising its security. Creditor interests are often given substantial weight.
(e) Wishes of beneficiaries: Wendy wishes to remain; Henry's wishes may be less relevant given the debt.
The court will balance the need to protect the family home for the children against the legitimate claims of the creditor. While postponement is possible, case law suggests creditor interests are often prioritized unless exceptional circumstances exist.

A common calibrated outcome would be to order sale but postpone it to a fixed date (for example, after the school year), or to order sale unless Wendy can buy out Henry’s share by a set date. The court will be alert to the risk that mortgage arrears or interest on the charging order may grow and erode equity if sale is delayed for too long.

Worked Example 1.3

Ian and Jane co-own their home. Ian was declared bankrupt on 1 March 2022. On 1 May 2023 (over a year later), Ian's TiB applies for an order for sale. Jane has a serious long-term illness and requires constant care at home, which Ian provides. Moving would severely disrupt her care regime and negatively impact her health. Are these circumstances likely to be considered exceptional under s 335A?

Answer:
Possibly. While the interests of the creditors are assumed predominant after one year, Jane's serious illness and need for care at home might constitute exceptional circumstances (Re Raval, Re Bremner). The court would need detailed medical evidence. If deemed exceptional, the court would still perform a balancing exercise, considering the creditors' interests alongside Jane's health needs, but a postponement of sale becomes a realistic possibility, unlike in typical cases after the one-year mark.

Applications by a Trustee in Bankruptcy

The situation changes significantly if one of the co-owners is declared bankrupt. Their beneficial interest in the property vests automatically in their Trustee in Bankruptcy (TiB). The TiB typically seeks to realise the asset for the benefit of creditors by applying for an order for sale under s 14 TOLATA.

Key Term: Trustee in Bankruptcy (TiB)
An individual appointed to administer the assets of a bankrupt person for the benefit of their creditors.

If the TiB applies to the court under section 14 TOLATA 1996 for an order for sale (which is common, as the TiB needs to realise assets for creditors), section 15 TOLATA does not apply. Instead, the court must consider the factors set out in section 335A of the Insolvency Act 1986.

Section 335A Insolvency Act 1986 Factors

The court must consider:

• The interests of the bankrupt's creditors.
• Where the application concerns a dwelling house which is/was home to the bankrupt and their spouse/civil partner (or former spouse/civil partner):
  • The conduct of the spouse/partner regarding the bankruptcy.
  • Their needs and financial resources.
  • The needs of any children.
• All the circumstances of the case other than the needs of the bankrupt.

Before the one-year threshold, the court performs a broad balancing exercise. After one year, the statute introduces a presumption.

The One-Year Rule

Crucially, section 335A(3) states that if the application is made more than one year after the bankruptcy, the court must assume that the interests of the creditors are predominant after one year, unless the circumstances of the case are exceptional.

This means that after one year, an order for sale is almost automatic, barring exceptional circumstances.

Key Term: Exceptional Circumstances (Insolvency Act 1986)
This term is interpreted narrowly by the courts. It means circumstances beyond the normal hardship associated with bankruptcy and eviction (e.g., severe illness of an occupant requiring stability in the home, significant disability adaptations to the property). Disruption to children's education or difficulty finding alternative housing are generally not considered exceptional (Re Citro).

Notable points:

• Serious or terminal illness of a non-bankrupt occupier, significant mental health conditions requiring settled support, or compelling care needs linked to the property can amount to exceptional circumstances.
• Mere inability to obtain equivalent accommodation, disruption to schooling, or general hardship associated with losing a home will not suffice.
• The European Convention on Human Rights has been raised in challenges, but the statutory scheme in s 335A (including the one-year rule) has been held compatible with Convention rights.

A TiB must also be mindful of Insolvency Act s 283A (the “use it or lose it” provision): if the TiB fails to deal with the bankrupt’s home within three years, the property may re-vest in the bankrupt. That time limit is separate from the s 335A one-year presumption and affects the TiB’s case management.

Worked Example 1.4

Leena and Paul co-own a flat. They separate and Paul moves out. Two months later, Paul is adjudicated bankrupt. The TiB applies under s 14 TOLATA within eight months of the bankruptcy for an order for sale. Leena remains in occupation with their 6-year-old child. How will the court approach the application?

Answer:
Because the application is within one year of the bankruptcy, the s 335A balancing exercise is not subject to the presumption in favour of creditors. The court will consider creditors’ interests, Leena’s needs and resources, the child’s needs, and all circumstances except the bankrupt’s needs. A short postponement may be granted to accommodate schooling or allow Leena to arrange alternative housing, but the court will still be alert to creditors’ legitimate interest in realisation and is unlikely to defer sale for a long period absent special reasons.

Exam Warning

A common mistake is to apply the section 15 TOLATA factors when an application under section 14 is made by a Trustee in Bankruptcy. Remember that section 335A Insolvency Act 1986 provides the specific, and different, criteria for these situations, particularly the critical one-year rule favouring creditors.

Further Practical Points and Illustrations

• Trustees’ duty to consult (s 11 TLATA) applies in ordinary trustee decision-making. In a s 14 application, s 15(3) requires the court to have regard to adult beneficiaries’ circumstances and wishes, giving statutory footing to the consultation principle.
• Where sale is ordered, overreaching normally occurs, attaching equitable interests to the proceeds. This ensures purchasers take free of beneficial interests provided capital money is paid to two trustees (or a trust corporation). Occupiers’ overriding interests do not prevent a court-ordered sale; they are extinguished on completion with their value carried across into the monies.
• Occupation can be regulated under TLATA s 13. Exclusion orders are rare but may be granted where, for example, domestic violence makes joint occupation impossible. Occupation rent may be ordered to compensate non-occupying beneficiaries.
• Partition is exceptional but possible. TLATA enables partition either by trustees or by court order where sale is inappropriate but physical division is sensible (e.g., adjoining plots used separately by beneficiaries).
• Mortgagees often rely on their own power of sale under s 101 LPA 1925. However, they may still be “persons interested” under s 14 and can use TLATA to compel trustees to co-operate in a sale where the trust structure impedes enforcement.

Worked Example 1.5

Three friends—A, B, and C—co-own two adjoining plots forming a smallholding. A and C want to sell everything, but B is willing to buy the plot he currently cultivates and proposes physical division. There are no minors in occupation; the land is used solely for hobby farming. B applies under s 14 for partition rather than sale. How might the court respond?

Answer:
The court has power to order partition. Under s 15, the original purpose (shared hobby use) is relevant, as are the current wishes and circumstances of adult beneficiaries (s 15(3)). With no minors’ welfare issues and a practical, value-preserving division available, partition can be a proportionate outcome. The court may order partition so B takes the plot he cultivates, with A and C free to sell the remainder or use it as they wish.

Summary

Resolving Co-ownership Disputes: TOLATA 1996 & Insolvency Act 1986

Key Point Checklist

This article has covered the following key knowledge points:

• Section 14 TOLATA 1996 allows trustees or those with an interest in trust land to apply to the court for orders regarding the trust.
• The court under s 14 can make orders about trustee functions (like sale) or declare parties' interests, and may regulate occupation, impose terms, or (rarely) partition.
• Section 14 does not authorise the court to appoint or remove trustees; that falls under separate legislation (e.g., Trustee Act 1925).
• For non-bankruptcy applications, the court must consider the s 15 TOLATA 1996 factors: intentions, purposes, minors' welfare, secured creditors' interests, and beneficiaries' wishes.
• The s 15 list is not exhaustive and requires a balancing exercise; no single factor dictates the outcome and context matters.
• The “purpose of the trust” factor can be decisive—if the family-home purpose continues, sale may be refused or deferred; where it has ended, sale is more likely.
• When a Trustee in Bankruptcy applies under s 14, the court uses the factors in s 335A Insolvency Act 1986, not s 15 TOLATA.
• Under s 335A, if the application is made more than one year after bankruptcy, creditors’ interests generally outweigh all other considerations unless circumstances are exceptional.
• 'Exceptional circumstances' under s 335A are narrowly defined and relate to situations beyond the usual hardship of bankruptcy (e.g., serious illness requiring stability or special adaptations).
• A sale ordered by trustees (including pursuant to a court order under s 14) typically overreaches equitable interests, transferring them to the proceeds of sale.
• Trustees must consult adult beneficiaries with interests in possession (s 11 TLATA), and the court has regard to beneficiaries’ wishes (s 15(3)).
• TLATA s 13 enables the court to regulate occupation, including exclusion in proper cases and compensation by way of occupation rent.

Key Terms and Concepts

• Trust of Land
• Person with an interest in property subject to a trust of land
• Overreaching
• Section 15 Factors
• Trustee in Bankruptcy (TiB)
• Exceptional Circumstances (Insolvency Act 1986)