Legal Estates and Beneficial Interest

Legal Estates and Beneficial Interest

Legal Estates and Beneficial Interest

HM Land Registry registers only legal estates and the proprietor is registered as the owner of a legal estate. However, the register does not guarantee that the proprietor is the beneficial owner and that they own the land for their benefit.

The term ‘owner’ in relation to land is generally understood to mean the legal owner and is normally the registered proprietor. When two or more people are registered as proprietor of the land they are known as ‘joint proprietors’ and the legal estate cannot be divided.

The owner at law may not be the same person as the beneficial owner. A beneficial owner is a person entitled to the benefit of the land and on their death the equitable interest may not pass in the same way as the legal ownership does.

The equitable or beneficial interests

Unlike the legal estate, the beneficial ownership can be split into equal or unequal shares.

Joint proprietors always own the registered estate on trust for themselves or for a third party. A trust in land is the relationship between the legal owner(s) and the beneficial interest in the land.

If they hold it on trust for a third party this means that they, as legal owners, are not entitled to the equity at all and must pass this on to the person beneficially entitled to it. If they hold it on trust for themselves, this means no one else has any beneficial interest in the property.

If an equitable joint tenancy exists, the beneficial interest of any joint tenant (proprietor) will pass on death to the surviving tenant. The last survivor will then hold the land as sole legal and beneficial owner and, as a result, the trust will come to an end. On a sale of the land that person will then be entitled to receive the whole of the purchase money.

Tenants in common

Some people may decide to hold the land as tenants in common, on their death their share would vest in the beneficiaries under their will, for example, their children or relatives. If the property was subsequently sold following the death of one of the proprietors, a second trustee would need to be appointed to sell it. This is because the purchase price needs to be paid to at least two trustees in order for the beneficial interest to be overreached. The trust would then attach to the proceeds of sale and the purchaser would take the property free from any trust.

Protection of beneficial interests

Under the Land Registration Act 2002, a restriction can be entered in the register of any property or land by anybody who has a sufficient interest in it. These restrictions may also control or limit the trustees’ powers in dealing with the property or land.

The duty of applying for any necessary restrictions falls on the trustees, though a beneficiary under the trust may also apply.

There is one circumstance where the registrar is obliged to enter a restriction without an application, when registering two or more people as joint proprietors of a registered estate and there is no evidence to show they are holding it on trust for themselves as beneficial joint tenants.

Where more than one party has an interest in a registered estate, the general rule that decides the priority of each party’s claim is that each interest ranks in accordance with the date of its creation. Someone with an existing interest will not be affected by a later disposition. However, there is one important exception. Someone who acquires a registrable disposition for value will, by registering their interest, postpone the priority of any other interest that has not already been protected in the register.

For expert assistance regarding legal estates and for protection of beneficial interest contact help@bizlawuk.co.uk or WhatsApp us on 07583452230 and we can connect you to the right professional. Visit www.bizlawuk.co.uk to find out more about how we can help you with our other services. If you find this information useful, please follow our social media platforms, like and share.

Reina D'costa

Dual qualified, experienced, practical and proactive solicitor. Founder of Bizlaw UK, a new model legal service consultancy.