Formalities required for transferring property

Formalities

Property can be a real property such as land, grounds, buildings and rights over lands or it can be personal property which includes cars, jewellery, paintings shares, bank accounts, patents, trademarks etc.

To transfer each one of them requires formalities to be fulfilled if the formalities are not met then the transfer into a trust or transfer as a gift will fail.

Land

  • Declaration of a trust involving land must be in writing or at least there must be a written evidence of it.
  • Transfer of a land or any interest therein must be in writing (deed) for conveying and for creating a legal estate.
  • A boundary dispute does not require the formality of writing and can be dispensed with orally.

Example

Simon intends to transfer his house to his wife, he must do so in writing (deed).

Goods and Chattels

  • Cars, jewellery, painting etc. requires an intention to give and there must be a manual delivery of such property or a deed (written document, signed and witnessed) will be required
  • However valuable property may be, a trust for personal property can be declared orally unlike land which has to be in writing

Example

Simon intends to give his BMW to his son, he must hand over the car and necessary documents to his son or make a deed.

Non-tangible Items

  • These are valuable rights such as shares, trademarks, patents, insurance policy etc.
  • Some form of writing is required to transfer such property, each property has its own requirements to transfer and those requirements must be fulfilled for an effective transfer.
  • Declaration of trust for a non-tangible item can be oral but the disposition of any interest must be in writing.

Examples

  1. Simon declares orally a trust which includes all his shares in Tesco. An oral declaration of trust is good enough for such type of property. However, in order to transfer these shares into trust/ handing over to the trustees, some form or writing is required. Which in the case of shares is by writing on the transfer form and registration by the company(Tesco) are essential to transfer the legal ownership from Simon to trustees.
  2. Simon hands over his shares in Tesco to his son Mike and states that they are from now on yours. However, in order for a gift to be effective, Simon has to fill the transfer form and send it to Tesco to change the legal ownership. Simply handing over the shares to his son will not complete the gift. It will remain Property of Simon.

Disposition of Equitable Interest

General Rule

Disposition or assignment of any equitable interest must be in writing and must also be signed by the person who wants to dispose of his equitable interest. The instructions to dispose of to an agent must also be done in writing as well.

Exceptions from Formalities

Following are exceptions to the general rule.

Every Effort Test

Where the donor/settlor has done everything within his powers to change the ownership/ legal title of the property, courts will accept this as an exception and will enforce the transfer despite the fact that the formalities are not fulfilled.

Examples

  1. Simon signs the transfer form and sends them to Tesco to change the legal title in the name of his son. However, Tesco for whatever reason failed to transfer the title to Simon’s son. As Simon has done everything possible on his behalf it will be considered sufficient by courts to declare that Mike is the owner of those Shares.
  2. Simon filled out land registry form to transfer his house to his son, which was signed and witnessed and handed over to his son Mike, who posted it to Land Registry. Land registry for whatever reason did not register it. After some time, Simon and Mike quarrelled with the effect that Simon now claims that it is still his house. As everything is done by Donor and Donee (Simon and Mike), the title may pass to Mike despite the fact that Land Registry has not transferred the ownership of the house.

Marriage Settlement

Marriage Settlement is another exception to the general rule that all the formalities of declaring a trust, transferring the property to a trust or making a gift must be fulfilled.

  • A trust is established, on marriage, to provide for the husband and wife and the children that they hope to have in future. The promise is in a deed (in writing) with the trustees that they would transfer any property to the trust that they acquire after the marriage.
  • It is an implied term in marriage settlement that in the absence of Children (a childless couple) the property will be held for next of kin.
  • Only husband, wife and children of marriage can enforce the marriage settlement.
  • Next of kin may inherit the property in cases where couples may not have any children but they cannot force the promise made under marriage settlement.

Conditions for Marriage settlement

  1. The promise must be made on the occasion of wedding.
  2. It must be conditional only to take effect on the marriage been taking place.
  3. The promise must be made by husband and wife for the purpose of or with the view to encourage or facilitate the marriage.

Examples

  1. Alan and Julie promised a marriage settlement and promised to bring everything they earn after the marriage a joint account. Alan received the inheritance of £100,000 which he mistakenly deposited into his own account instead of joint account. Alan died very next day. Julie as his wife and any children may enforce the marriage settlement promise made by Alan and £100,000 will be transferred to the joint account.
  2. Alan and Julie promised a marriage settlement and promised to bring everything they earn after the marriage into joint account. Alan received the inheritance of £100,000 which he mistakenly deposited into his own account instead of joint account. Alan and Julie died very next day. They had no children and now Julie’s next of kin wants £100,000 to be transferred to the joint Account. As they are not a party to the marriage settlement, they will not be able to enforce the transfer and £100,000 will go to the estate of Alan.

Death Bed Gifts

These are the gifts made whilst somebody is alive, but take effect on the death.

Examples

  • George, while very sick, at hospital gave keys of his BMW car to his son and told him, Son you have this car when I am gone and dies in next two weeks
  • Lee, while very sick and expecting a death in near future, gave the keys to his house and deed to his daughter and said it’s all yours. I want you to keep them and dies in next 6 months
  • Sam was visiting her boyfriend in the hospital who was gravely sick. He gave the keys to safety box which contained his shares, to Sam and told her that she can have all his shares in Tesco and Asda. However, her boyfriend survives the illness.

In the above examples, the formalities are not fulfilled, to transfer shares the transfer form must be filled and sent to Tesco and Asda. To transfer a land or any interest in land must also be made in writing and merely giving a key to a car does not make a person an owner of it.

Exception to General Rule

Deathbed gifts are an exception to the general rule on formalities. Following conditions must be fulfilled in order to obtain a deathbed gift without fulfilling the required formalities are as bellow

  • The person who is on death bed must have an “intention” to give a gift upon his/her death,
  • He/she is expecting to die in the near future and
  • Must provide some control over the gift to the donee

The person does not have to fulfil the formalities of writing and it will be a valid gift provided he/she had fulfilled the above-mentioned conditions.

Examples

  • George, while very sick, at the hospital gave keys of his BMW car to his son and told him, Son you can have this car when I am gone and dies in next two weeks. His son may take the BMW absolutely as all three conditions are met. George’s statement shows his intention to give his car, he died in near future and handing over the keys to the car will fulfil the third condition.
  • Lee, while very sick and expecting to die in the near future, gave the keys to his house and deed to his daughter Kimber and said it’s all yours. I want you to keep them. He dies the following month. For a similar reason, Kimber may have the house although the formalities have not been fulfilled.
  • Sam was visiting her boyfriend William in the hospital who was gravely sick. He gave the keys to the safety box to Sam and told her that she will have all his shares of Tesco and Asda in the box. However, her boyfriend survives the illness. Here the gift will fail as William has survived his illness.

The Rule in Strong v Bird

If the Donee (to whom the gift is made) becomes Executor or Administrator, he/ she will take the gift absolutely without going further into the requirements of formalities.

Examples

  1. George, while very sick, at the hospital gave his keys of his BMW car to his son and told him, ‘Son, you have this car’ and dies in the next two weeks. His son is also the executor of George’s will or he is appointed by the court as an administrator. The gift of BMW becomes absolute by becoming the Executor or Administrator. He can take the BMW absolutely.
  2. Lee, while very sick and expecting a death in near future, gave the keys to his house and deed to his daughter Kimber and said ‘it’s all yours’. ‘I want you to keep them’ and dies in next few months. Kimber is appointed as an administratix by the court. She now acquires the legal estate; the gift gets to the right person and the intention of the donor is respected.

Executors: A person chosen by the deceased person to execute his will in a will.

Administrator: A person chosen by a Court to execute someone’s will.

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.

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