A settlement of property is a disposition of property which creates a succession of interests in it. e.g. A for life with remainder to B in fee simple. Settlements of laud are of two kinds, namely (i) the strict settlement, which is governed by the Settled Land Act 2011, and (ii) the immediate binding trust for sale of land (called the trust for sale for short), which is governed by the Law of Property Act 2011.
Settling your land
The expression “settled land” means land which is subject to a strict settlement. Technically a trust for sale of land is not a settlement of land, but of money, by reason of the equitable doctrine of conversion, which in turn is based on the maxim equity looks upon that as done which ought to be done”. As the trustees are bound to sell the land equity looks upon that as done, i.e. upon the land as having already been sold, and this is so even if the trustees have the usual power to postpone sale (trustees for sale of land always have power to postpone the sale unless the trust instrument otherwise provides’).
A trust for sale
The interests of the beneficiaries under a trust for sale, therefore, are in theory interests in money from the beginning. A settlement of land is a strict settlement unless the instrument imposes an immediate binding trust to sell the land, or the circumstances are such that some statute provides that the laud shall be held upon such a trust for sale .2 It will be observed that the settlement will be a strict settlement unless there is a trust for sale which is immediate and binding.
A trust for sale is “immediate” if it is operative now and not merely in the future. Thus, if land is settled on A for life with remainder upon trust for sale for the benefit of B for life with remainders over (i.e. some further remainder or remainders), then during A’s lifetime the land will be settled land and subject to the Settled Land Act, because the trust for sale is not immediate. When A dies, however, the trust for sale will become immediate and the land will cease to be settled land, and the Law of Property Act will then apply.
The meaning of the word “binding” is a matter of doubt. Possibly it is merely a word of emphasis, designed to stress that land will be settled land unless there is a trust to sell it (i.e. an obligation to sell it) and that the mere fact that the instrument confers a power of sale will not take the settlement out of the Settled Land Act. Other possible meanings of the word are too complicated for us to consider here. The Law of Property Act 2011, section 205, makes two points clear.
A trust for sale which is otherwise immediate and binding is not prevented from being so by reason of the fact that the trustees are given power to postpone sale, or the fact that they are required to obtain the consents of specified persons before selling.