Exclude co-owners & pay occupation rent: TOLATA 1996 s. 13
Under TOLATA 1996 s. 13, trustees may restrict occupation rights and require occupying beneficiaries to pay outgoings, expenses, or compensation.
Official text
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TOLATA 1996 s. 13 — United Kingdom
Where two or more beneficiaries are (or apart from this subsection would be) entitled under section 12 to occupy land, the trustees of land may exclude or restrict the entitlement of any one or more (but not all) of them. Trustees may not under subsection (1)— unreasonably exclude any beneficiary’s entitlement to occupy land, or restrict any such entitlement to an unreasonable extent. The trustees of land may from time to time impose reasonable conditions on any beneficiary in relation to his occupation of land by reason of his entitlement under section 12. The matters to which trustees are to have regard in exercising the powers conferred by this section include— the intentions of the person or persons (if any) who created the trust, the purposes for which the land is held, and the circumstances and wishes of each of the beneficiaries who is (or apart from any previous exercise by the trustees of those powers would be) entitled to occupy the land under section 12. The conditions which may be imposed on a beneficiary under subsection (3) include, in particular, conditions requiring him— to pay any outgoings or expenses in respect of the land, or to assume any other obligation in relation to the land or to any activity which is or is proposed to be conducted there. Where the entitlement of any beneficiary to occupy land under section 12 has been excluded or restricted, the conditions which may be imposed on any other beneficiary under subsection (3) include, in particular, conditions requiring him to— make payments by way of compensation to the beneficiary whose entitlement has been excluded or restricted, or forgo any payment or other benefit to which he would otherwise be entitled under the trust so as to benefit that beneficiary. The powers conferred on trustees by this section may not be exercised— so as prevent any person who is in occupation of land (whether or not by reason of an entitlement under section 12) from continuing to occupy the land, or in a manner likely to result in any such person ceasing to occupy the land, unless he consents or the court has given approval. The matters to which the court is to have regard in determining whether to give approval under subsection (7) include the matters mentioned in subsection (4)(a) to (c).
Section 13 is where the practical remedy in co-ownership disputes sits. Where two or more beneficiaries are entitled under section 12 to occupy land, the trustees may exclude or restrict the entitlement of any one or more of them - but, importantly, not of all of them. Subsection (2) sets the limits: the exclusion must not be unreasonable and the restriction must not go to an unreasonable extent.
Subsection (3) allows reasonable conditions to be imposed on a beneficiary in relation to occupation, and subsection (5) gives examples: paying the outgoings or expenses in respect of the land, or assuming other obligations relating to it. Subsection (6) is the provision people are usually looking for without knowing its name. Where one beneficiary's entitlement has been excluded or restricted, conditions may be imposed on another requiring them to make payments by way of compensation to the beneficiary kept out, or to give up a benefit under the trust in their favour. That is the statutory basis of what is usually called occupation rent.
Subsection (4) lists what the trustees must consider: the intentions of whoever created the trust, the purposes for which the land is held, and the circumstances and wishes of each beneficiary entitled to occupy. Subsection (7) is the crucial safeguard - these powers may not be used to prevent a person already in occupation from continuing to occupy, or in a manner likely to result in them ceasing to occupy, unless they consent or the court approves. So the person already living there cannot be removed by a decision of the trustees alone.
When it applies
One former partner remains in the jointly owned house and the other wants a payment for being kept out.
Co-owners agreeing that one will live there and pay the mortgage and outgoings.
A beneficiary who has moved out wanting to return to a house another beneficiary occupies.
Arguments about who pays insurance, council tax and repairs while only one owner lives there.
A trustee deciding whether occupation by one beneficiary can be restricted at all.
What this section does not say
×It does not let trustees exclude everyone. The power reaches "any one or more (but not all)" of the beneficiaries entitled.
×It does not allow a person already in occupation to be removed. Subsection (7) requires their consent or the court's approval.
×It does not fix the amount of any compensation. What is reasonable in a particular case is a question of fact, and section 14 is the route to a decision.
×It does not make occupation rent automatic. It is a condition that may be imposed where an entitlement has been excluded or restricted, not an entitlement that arises by itself.
×It does not apply to a beneficiary who has no section 12 right in the first place.
Worked examples
Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.
Illustrative example
After a separation, one former partner has lived in the jointly owned house for three years while the other has been renting elsewhere. The one in the house pays the mortgage and says that means nothing is owed for the occupation.
How the wording applies
Subsection (6) is where occupation rent comes from: where one beneficiary's entitlement has been excluded or restricted, conditions may be imposed on another requiring payments by way of compensation to the person kept out. The fact that decides whether it arises at all is whether the person outside was actually excluded or restricted, rather than having chosen to leave - and the mortgage payments are not a complete answer, since subsection (5) treats outgoings as a condition of occupation in their own right.
How the parties settled it
They agree a monthly figure for occupation, credited against the mortgage payments already made, with the balance settled out of the sale proceeds when the house is sold.
Illustrative example
Two co-owners agree that one will live in the house and pay everything while the other moves out, but they never write anything down. Two years later they cannot agree what was meant about council tax, insurance and a new boiler.
How the wording applies
Subsection (3) allows reasonable conditions to be imposed on an occupying beneficiary, and subsection (5) gives examples: paying the outgoings or expenses in respect of the land, or assuming other obligations relating to it. The fact that makes this dispute solvable is which payments were outgoings of occupation and which were capital improvements to the asset, because the two are treated very differently when the accounts are drawn.
How the parties settled it
They agree the occupier bears council tax, utilities and routine maintenance without credit, and that the boiler is treated as a capital improvement to be reflected in the shares on sale.
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This page reproduces the text of TOLATA 1996 s. 13 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.