Assignment of beneficial interest underimplied trust
Is the equitable interest merely a contractual right and thus one could transfer the benefit of the equitable interest simply by way of contract?
The formalities for the transfer of a beneficial interest are quite simple, but, for speed and peace of mind, select a precedent based upon section 53(1)(c) of the 1925 Act (making sure that you get the paragraph letter right). The transfer can be completed without notifying the building owner, but such notification in writing is most advisable, again mainly for insolvency reasons.
If the company cannot claim a beneficial interest then it has an unsecured debt, the benefit of which can be transferred with the formalities laid down in section 136 of the 1925 Act. This deals with assignment of so-called choses in action and expressly requires the debtor to be notified in writing. Again, use of a precedent book could be desirable.
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Assignment of beneficial interest underimplied trust
Q If a company has contributed towards the construction of a building and now wants to transfer the benefit of its equitable interest in the property to a third party, what document does the company need to use?
Is the equitable interest merely a contractual right and thus one could transfer the benefit of the equitable interest simply by way of contract?
A In contrast to a mere contractual right, a beneficial interest (under a trust) counts as a property right which, if suitably protected, would give the company or its transferee priority over ordinary creditors in the event of the building owner’s insolvency. The company cannot, apparently, point to an express declaration of trust made with the formalities prescribed by section 53(1)(b) of the Law of Property Act 1925. However, the company or transferee may be able to assert an implied trust provided that it can be shown (preservation of evidence essential) that the money was put up, not as a loan, but as an investment (the intention being that the building owner would hold the property for the benefit of himself and the company in shares proportional to their respective contributions to its acquisition).
The formalities for the transfer of a beneficial interest are quite simple, but, for speed and peace of mind, select a precedent based upon section 53(1)(c) of the 1925 Act (making sure that you get the paragraph letter right). The transfer can be completed without notifying the building owner, but such notification in writing is most advisable, again mainly for insolvency reasons.
If the company cannot claim a beneficial interest then it has an unsecured debt, the benefit of which can be transferred with the formalities laid down in section 136 of the 1925 Act. This deals with assignment of so-called choses in action and expressly requires the debtor to be notified in writing. Again, use of a precedent book could be desirable.
