Legal and beneficial ownership
In the English legal system, the word “ownership” can have different meanings depending on context and if there is not clarity about what sort of ownership is being referred to, then confusion can easily result. The important distinction is between legal ownership and beneficial (also called equitable) ownership. Sometimes the legal owner will be one and the same person as the beneficial owner, but in other circumstances that will not be the case.
Characteristics of a legal owner:
• The legal owner is entitled to sell a property and must sign the relevant documents, (but unless he is also the beneficial owner he is not entitled to keep the money from the sale);
• When a property is registered, it is the legal owner who is shown in the Property Register; he is then described as a “registered proprietor”;
Characteristics of a beneficial owner:
• When a property is sold, a beneficial owner will be entitled to all or part of the money from the sale;
• A beneficial owner does not need to sign the deed transferring the property (or even agree to the Transfer) unless he is also the legal owner;
When the legal owner is not also the beneficial owner, he is said to hold the property “on trust”. He may also be described as a trustee. The beneficial owner can be described as having an “interest under a trust”. The law imposes a number of duties on people who act as a trustee, but Land Registry plays no part in regulating or enforcing those duties.
It will be evident from some of the characteristics above that Land Registry’s main concern is in registering legal ownership and dealing with transactions relating to legal ownership. Very often, Land Registry will have no knowledge as to whether the beneficial owner is the same as the legal owner, and indeed, it does not need to have this knowledge in order to carry out its functions under the land registration legislation.
