I would welcome people’s opinion on the following issue.
I am looking after a trust fund which owns a residential property. The terms of the trust were to allow the testator’s widow X to occupy the farmhouse during her lifetime and after her death to four remaindermen A, B, C & D in the shares 45%, 45%, 5% & 5% absolutely. The remaindermen are from three different relationships and they don’t get on.
X died in November 2018 and A has lived in the property all his life and continues to live there. He seems in no rush to move out and he is currently living there rent free.
Beneficiary B feels very strongly that Beneficiary A should pay an occupation rent under the Trusts of Land & Appointment of Trustees Act 1996. Beneficiary A doesn’t want to do so.
One of the two trustees is a retired property solicitor and he feels that, as this is now a bare trust, it is up to the beneficiaries to agree any occupation rent between themselves. An internal and an external litigation solicitor both think it is up to the trustees to decide whether to charge an occupation rent.
The Will was made in 1993 and the testator died in 1995. The Will contains a power to allow the trustees to permit any of the beneficiaries to occupy the property and to make such provisions as the payment of outgoings or expenses as they see fit.
The amount of occupation rent that B would be entitled to is about £10,000.
The 2 trustees continue to be the trustees of land, even if held on bare trust for the 4 beneficial owners.
Yes, the trustees could impose an occupation rent on A, but before doing so they might consider the provisions of s.11 TLATA 1996 - consulting the beneficiaries and giving effect to the wishes of the majority. In the absence of any other right of occupancy, I suggest A occupied as a licensee at will of the now deceased life tenant.
It seems to me that A cannot claim a right of occupancy under s.12 TLATA 1996, so that if he continues in occupation, paying an occupation rent, he might be a “tenant” and the trustee will need to comply with the various statutory obligations imposed on landlords under the landlord and tenant regulations etc.
Whilst the best solution is probably for the trustees to assent the land into the names of the 4 remaindermen now entitled, that might be easier said than done.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
ToLATA 1996 section 11 does not apply, since the will was made before that Act was passed (see s 11(2)(b). Sections 12 and 13 do however apply and give each beneficiary the prima facie right to occupy: section 13 (6)(a) is perhaps the key here in that if any beneficiary’s right of occupation is prevented or restricted, the beneficiary in occupation may be required to compensated him or her. Requiring the payment of such compensation reflects the law as it as before 1996.