Lenders v Beneficiaries

Question 1

What are the core legal conflicts between a lender and beneficiary

Answer 1

• Lender wants repayment
• Beneficiaries want to protect their right to live on stay in the property.

Question 2

What does the trust of land and appointment of trustees act 1996 say

Answer 2

• S.14 - Lender can apply for a court order for sale
• S.15 - Court balances multiple things to make a fair decision

Question 3

What does the court balance in the trust of land and appointment of trustees act 1996

Answer 3

• Beneficiary wishes
• Welfare of minors living on the land
• Interests of any creditors
• Purpose of the trust

Question 4

What does Bank of Baroda v Dillon talk about

Answer 4

• Lender had interest under a trust - Couldn’t just take possession
• Had to apply under trust of land and appointment of trustees act 1996 and court weighed both sides.

Question 5

What cant lenders do?

Answer 5

Lenders cannot ignore other equitable interests. established in Boland. e.g., A spouse having hidden ownership and is an actual occupant, that right can override the lenders claim.
- But if overreaching applies e.g., paid two trustees). Lender can take land free of beneficiary rights established in Flegg.

Question 6

What does the notion of “paid two trustees” mean

Answer 6

if someone buys a property or gives a mortgage on it, and the land is held on trust (e.g. for someone living there), the buyer or lender must pay the money to at least two trustees (the legal owners) for the deal to be fully valid.

Question 7

When are the beneficiaries rights wiped out?

Answer 7

If overreaching occurs and the beneficiaries rights are wiped out. They get money from two paid trustees notion but lose the right to stay.

Question 8

When the courts try to balance the security of lenders?

Answer 8

Courts try to balance the security of lenders upon checking
- Whether beneficiaries are protected e.g., actual occupation, no overreaching
AND
-If a fair solution like a sale or delay can be reached

Question 9

When does overreaching apply

Answer 9

• ## Overreaching applies when two paid trustees have paid money - E.g., actual occupant and one with title.

Question 10

When does overreaching fail

Answer 10

-Overreaching fails when only one trustee has been paid
-This means that the beneficiary could still potentially have rights under the LRA 2002 schedule 3

Question 11

What is overreaching?

Answer 11

• Overreaching is when a beneficiary equitable interest in land is removed and transferred to the sale when two trustees have been paid.