Navigating legal tides: leasehold interests and beach hut disputes under TOLATA
28 August 2024
Beach huts are a quintessential part of the British seaside experience, cherished as retreats for leisure. These small, brightly painted wooden structures, typically found on or near beaches, were originally designed as shelters for beachgoers to change into swimwear and store belongings. They have evolved into iconic seaside features, offering a nostalgic slice of British coastal life. In popular areas like Dorset, Norfolk, or Southwold, beach huts can fetch prices ranging from £50,000 to over £300,000, with one on sale for £575,000 in 2021.
Leasehold interest in beach huts
When it comes to ownership, beach huts are often leasehold properties, meaning the land they sit on is usually owned by entities like the Crown Estate, local authorities, or private landowners. Leases can vary in length, with longer leases generally adding more value to the property.
Co-ownership
Co-ownership of beach huts can be complex, especially when it comes to determining beneficial ownership. If multiple individuals purchase a long lease, a trust of land is created. The co-owners are trustees, holding the property on trust for the beneficiaries. This means that the beneficiaries have the right to occupy the land and are entitled to the proceeds from any sale of the lease.
Clear documentation is key to avoiding disputes over property ownership. Including a declaration of trust within the lease or in panel 10 of the Land Registry TR1 form when assigning a lease can help clarify the beneficial interests and rights of all parties involved.
It is also crucial to consider whether a beneficial interest has been created informally, such as when a third party contributes to the purchase price of a long lease with the understanding that they will receive a share of the sale proceeds. Such an arrangement can give rise to a common intention constructive trust (CICT), even if nothing is put in writing. For more detailed information on this, please see our previous article on declarations of trust and CICTs.
The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) allows trustees or beneficiaries to apply to court for a declaration of their rights if ownership is unclear. The court can make orders concerning the sale of the land, the division of proceeds, occupation of the land, and other such matters.
The case of Gilpin & Ors v Legg [2017] EWHC 3220 (Ch) highlights the complexities involved in determining beneficial ownership. In this case, the High Court had to decide on the possession of land with beach huts, ultimately ruling in favour of the landowner. Although the issue of beneficial ownership was not central to the case, the judge’s struggle with the beneficial ownership of “Hut 5” underscores the importance of clear and consistent documentation. The discrepancies between the deposit receipt and the sale agreement complicated the issue of ownership. This case serves as a reminder that both beneficial and legal owners have the right to protect their property interests, but clear documentation can save significant time and legal costs.
Conclusion
Given the complexities highlighted in cases like Gilpin & Ors v Legg, having expert advice is invaluable, especially when dealing with jointly owned properties or investments like beach huts.
If you have any specific questions or need further information about property rights, feel free to contact our specialist TOLATA team.
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Gabriella Banham
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Stephanie Butler
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at August 2024.