TOLATA stands for The Trusts of Land and Appointment of Trustees Act 1996. It is a law in England and Wales that regulates the relationship between owners of property and those benefitting from that property who are not legal owners. It is used to resolve disputes between unmarried cohabiting (or former cohabiting) couples, but can also apply to married couples, other family members, and even business partners. TOLATA allows a court to establish the nature of the relationships and interests of the people involved in a dispute about a property, and to make an order that reflects that reality. But, as the type of relationship that the parties must have to the property is that of “trust”, another law, the Limitation Act 1980, must also be considered as this prescribes the time limits for bringing actions relating to trust property. Ignoring this may mean running out of time to use TOLATA to resolve a dispute.
When may TOLATA be used?
Where there is property that consists of or includes land, and in relation to which a trust has been created on purpose (express) or by implication (implied), TOLATA will be the law that sets out the duties of the trustees and the rights of the beneficiaries. It also provides ways to resolve disagreements between trustees and beneficiaries.
An express trust may, for example, be set up formally by parents to manage the family home for the benefit of their children after their deaths. Another relative may be the trustee. He or she will need to deal with differences of option that the children may have about what to do with the property once they become beneficiaries. If agreement cannot be reached by the children or their relative, TOLATA allows any one of them to approach the court to obtain a fair resolution.
TOLATA will also be the applicable law where, for example, a couple may have lived together for many years in a property they regarded as their family home. The house may have been registered in only one of their names, but both may have contributed to the mortgage payments, household expenses, and improvements to the property. If the relationship later breaks down, a court may recognise that an implied trust had arisen if the couple had a shared intention to regard the house as jointly owned. In such a situation the person in whose name the property is registered will be considered to have held it in trust for his or her ex-partner who has a beneficial interest. TOLATA assists a court to quantify the proportion and value of that interest.
Why do trust claims have time limits?
To encourage prompt action and to protect against the indefinite threat of litigation, our law generally operates on the basis that legal proceedings must be formally commenced within a specified time period. This is known as “limitation” and is set out in the Limitation Act 1980. Limitation relevant to trusts is set out in section 21of the Limitation Act 1980.
What time limits apply to TOLATA claims?
Generally, a beneficiary must bring any claim to recover trust property or against a trustee for breach of trust within six years from the date the right of action accrues, which is usually the date of the breach of trust. However, many factors will vary this general limitation period, including the age of a beneficiary, the type of trust, and the specific actions of a trustee or beneficiary. Professional advice may be needed to assess the exact time limit applicable in any particular case.
How to avoid a limitation problem when using TOLATA
The relevance of limitation to TOLATA claims is multifaceted. While the general limitation period may provide certainty and finality for trustees, for beneficiaries, it defines the timeframe within which they must assert their rights. However, both trustees and beneficiaries should also be aware that the general limitation period may not apply to their trust property and a claim may be brought at any time. This may affect how they approach the dispute about the property and their decision to use TOLATA to resolve this.
Therefore, as soon as you suspect that you may need to bring or defend a TOLATA claim, seek legal advice. This will help to ensure that you do not miss a limitation period and allow you to clearly understand the applicable law as you pursue steps to resolve your dispute.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
