Core Principles of Trust Law

A trust is created when a settlor (the person creating the trust) intends to impose a legal obligation on a trustee to hold property for the benefit of a beneficiary. The trust must be clearly established, leaving no ambiguity in the settlor's intention.

The trust property must be clearly identifiable, leaving no doubt about what is being held in trust. This includes both the physical asset and the beneficiary's specific interest in it.

The beneficiaries of the trust must be clearly defined, allowing the court to determine who has a right to the property.

A fixed interest trust outlines the precise shares or amounts each beneficiary will receive. There's no room for interpretation or discretion by the trustees.

In a discretionary trust, the settlor gives the trustees the power to choose how much, if anything, each beneficiary receives. The trustees have flexibility to distribute the property.

To create a valid trust, the settlor must formally transfer legal title of the trust property to the trustee. The specific procedures vary depending on the type of property.

Tangible assets, like diamonds, need to be individually identified for a trust to be valid.

Intangible assets, like shares, are often grouped into classes. To be certain, the class of shares must be clearly defined.

Fungible assets, like company shares of the same class, are interchangeable. A specific asset within the class does not need to be identified.

Non-fungible assets are distinct and unique, like diamonds. Each specific asset needs to be identified to ensure certainty.

At common law, the burden does not pass. The original covenantor remains liable for the covenant. This means that the burden of the covenant does not automatically apply to future owners of the land.

If the original covenantor is sued for breach of the covenant, they can seek compensation from the successor owner if an indemnity was agreed upon when the property was sold. This is a way for the original owner to protect themselves financially.

A covenant's benefit can pass by express assignment to a future owner. The process requires both a written agreement and notice to the party responsible for fulfilling the covenant.

A covenant's benefit may pass to a future owner of the dominant land without a written assignment. This happens when the covenant is connected to the land, there was an intention for the benefit to pass, both the original covenantee and the successor have legal ownership of the land.

A fundamental principle in mortgage law that allows a borrower to buy back their property even after defaulting on the mortgage loan. It protects borrowers from losing their property immediately.

The order in which lenders are paid from the proceeds of a property sale when a borrower defaults. This ensures that the lenders with higher priority get paid first.

Lenders may use their right to sue for the debt owed by the borrower, but this is less effective if the borrower is already in arrears.

Lenders can take possession of the mortgaged property before selling it. This allows the lender to ensure the property is empty when it is sold.

Lenders must follow specific rules and procedures when selling a property after defaulting on a mortgage. These rules are designed to protect the borrower and ensure a fair sale.

Lenders must exercise their powers with care and follow specific guidelines, like obtaining a fair market value for the property. This protects borrowers against unfair treatment.