One can own land in two ways:

  1. Legal ownership entails conferring entitlement to the legal stake in the property.
  2. Beneficial ownership refers to the entitlement to a beneficial interest in a property. It distinguishes between the legal owner, holding the formal title to the property, and the beneficial owner, who receives the advantages and benefits associated with the property.

The individual holding the legal title to a property is recognized as the legal owner, while the beneficial owner is the individual entitled to enjoy the property’s advantages.

Understanding the Legal Stake in Property Ownership

The legal concern regarding a property pertains to the entitlement to occupy or utilize the property. This concern is held by the legal proprietor, specifically the individual listed on the title deeds in the Land Registry.

Unveiling the Advantages of Property Beneficial Interest.

The beneficial interest represents the ownership of the economic advantage derived from a property. This interest is held by the beneficial owner, who is the rightful recipient of the monetary value associated with the land, irrespective of the official records at the Land Registry.

Specifically, advantageous interest grants entitlements to:

  • Reside on the premises.
  • a portion of the revenue generated from renting out a property
  • A portion of the profits from the sale will be refunded in case the property is sold.

While it is possible for The legal owner and the beneficial owner of a piece of land to be one and the same, this is not always the case. In situations where the property is controlled through a trust by two individuals, the legal owner, whose details are recorded at the Land Registry, acts as a trustee for the advantage of another individual, known as the beneficial owner. The legal owner is commonly referred to as the ‘bare trustee’, while the individual benefiting from the ownership is termed the ‘beneficiary’.

Exploring the Benefits of Distinguishing Legal Ownership from Beneficial Ownership

Shared Ownership of Property

It is possible for multiple individuals to opt for purchasing a property together, either as joint tenants where each party has equal rights to the entire property and in case of one individual passing away, their ownership automatically transfers to the other tenant, or as tenants in common where each tenant holds a distinct share of the property which passes according to their respective Will upon their death. This arrangement is known as co-ownership, and both parties’ names will be listed as legal owners in the Land Registry.

Nevertheless, co-owners of a property under legal ownership may seek a discrepancy between the beneficial and legal interests. This could involve granting one party a larger portion of rental income or property interest.

Haslemere solicitors have the expertise to represent clients in a range of areas, including Family Law, Conveyancing, Dispute Resolution and Estate Planning. They are friendly and approachable, and we appreciate that many of our clients are unfamiliar with legal procedures.

The Scenario of Sole Legal Ownership

When an individual owns a property solely, they might wish to grant their partner (be it a spouse, civil partner, or cohabitant) a stake in the property’s advantages, despite lacking a legal ownership claim. Bestowing a beneficial interest upon a partner who is not the legal proprietor allows said partner to partake in the monetary worth of the property, including rental earnings and profits from its sale.

Establishing Beneficial Interests: Methods and Strategies

The concept of separating legal ownership from beneficial ownership can be achieved through the execution of a Declaration of Trust. This legal document formally recognizes the beneficial ownership of a property and outlines the specific beneficial interests held by each co-owner, irrespective of the details recorded in the Land Registry.

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