Where a property is held as tenants in common would a property trust require registering more than once or would the other co-owners be required to be involved?
I have a client who has inherited a property with two siblings. Currently the beneficial and legal owners are the same so it is exempt. They own it as tenants in common. One owner is considering preparing a Declaration of Trust to gift 50% of his 1/3 share to his wife. This would create a need to register his 1/3 share on the TRS and he would be trustee and settlor, with him and his wife as the beneficiaries.
Potentially his siblings would need to referred to in some way? Although the legal and beneficial owners for their 1/3 shares remains the same.
It might be that a separate trust need to then be registered for the whole of the property?
The whole situation is fraught with ambiguities so the only “wrong” answer is the one that lands you with a penalty…
A reasonable solution might be to register a single trust over the whole property, setting out the 4 beneficiaries and their respective shares. Would it make sense to document it slightly differently? ie a deed of assignment by the husband, followed by a declaration of trust setting out all four shares. You can then upload the declaration of trust.
I agree with Andrew’s first line and how!
The Declaration of Trust does not change the legal title only the equitable title. It is registrable in its own right as an express bare trust since the trustee and the beneficiary of that equitable interest are not the same persons so it is not excluded. The main trust also ceases to be excluded because the beneficiary of the DOT is not a legal owner. If the legal title is transferred into the names of all the beneficiaries, old and new, it becomes excluded again.
That is why Andrew’s suggestion may not work. The assignment of an equitable interest is not a separate trust at all. But I am afraid that strictly it disapplies the excluded status nonetheless. Even if it is a legal assignment under LPA 1925 s136 of the equitable interest the trust no longer comes within para 9 Sch 3A if the land is registered: as it does not convey the legal title to the land so as to make the wife of the assignor a trustee of it. You need a TR1. If the land is unregistered it might work but not being an expert I can’t say whether it might trigger an obligation of first registration.
What you can be sure of is that all of this subtlety will be lost on the lunatics operating the TRS asylum. The good news is that the present trust is not registrable. Pragmatically you could follow Andrew’s suggestions and register the trust for the first as being outside 3A. In the unlikely event they understand what has happened and challenge you, no real mischief has been committed so that, it is to be hoped, you would be found to have “taken all reasonable steps and exercised all due diligence” and so no penalty or criminal offence. (What does “all” add? Probably the same as it adds to “best endeavours” i.e. nothing). Curiously, you will not find this defence in TRSM, only in the regulations, but HMRC do not need a defence for their (presumably) entirely deliberate omission.
If the trust had already been registered such a DOT or assignment would only have caused an obligation to notify the change of beneficiary.
Jack Harper