Implied trust for sale as trust of land – TOLATA 1996 s 5
Statutory implied trusts for sale of land become trusts of land without a duty to sell, and Settled Land Act 1925 s.1 does not apply.
Schedule 2 has effect in relation to statutory provisions which impose a trust for sale of land in certain circumstances so that in those circumstances there is instead a trust of the land (without a duty to sell). Section 1 of the Settled Land Act 1925 does not apply to land held on any trust arising by virtue of that Schedule (so that any such land is subject to a trust of land).
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This provision changes what happens when a statute (such as the Law of Property Act 1925) creates an implied trust for sale of land. Under the old law, the trustees had a duty to sell the land and hold the proceeds. Now, under Schedule 2 of TOLATA 1996, that implied trust for sale becomes a trust of land. The trustees are no longer required to sell; they hold the land itself on trust for the beneficiaries.
Additionally, section 1 of the Settled Land Act 1925 (which applies to settlements of land) does not apply to land held on a trust arising from Schedule 2. This means the land is treated as a trust of land, not as a settlement. The trustees have the powers and duties of trustees of land under the rest of TOLATA.
When it applies
- Two siblings inherit a house as co-owners. The law previously imposed a trust for sale, meaning the trustees had to sell. Now it becomes a trust of land, so they can hold the property without a duty to sell.
- A piece of land is held on a statutory trust for sale under the Settled Land Act 1925. Under s.5, that trust becomes a trust of land, and the Settled Land Act no longer applies to it.
- Land is held by trustees for a minor under a statutory trust for sale. The duty to sell is removed, and the trustees now have the powers of a trust of land.
What this section does not say
- This provision does not govern express trusts for sale (those are dealt with by TOLATA 1996 s.4).
- It does not apply to trusts arising by operation of law outside the statutes listed in Schedule 2, such as resulting or constructive trusts.
- It does not affect the general powers of trustees under a trust of land (those are in TOLATA 1996 s.6).
- It does not remove the duty to sell in all cases; only where the trust is an implied statutory trust for sale as listed in Schedule 2.
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This page reproduces the text of TOLATA 1996 s. 5 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.