Types of Tenancies for Minors Equitable tenancy
Although the minor does not have a tenancy and would not be enforceable at law, there is an alternative to holding a legal tenancy for minors and that is to create between the minor and the landlord an equitable agreement whereby there is no actual grant of tenancy to a minor just an agreement to grant one, when he reaches the age of 18
It will instead be regarded as an equitable tenancy and this will allow the minor to benefit from the tenancy. This entitles the minor to use the property immediately, despite not holding legal title.
The landlord retains the legal title on trust for the benefit of the minor and the minor holds the tenancy in equity. This circumvents the problem created by the prohibition in section 1(6) Law of Property Act 1925, by removing the need for the minor to hold the legal title in order to make use of the tenancy. By decision of the Court of Appeal was confirmed this in Kingston upon Thames RBC v Prince where it held that minor can hold an equitable tenancy and therefore a 13 y.o. was able to succeed to a secure tenancy in equity.
An equitable tenancy is one where the legal title is held in trust by an adult. In that case the mother held the legal title, but the trustee could be an adult relative or friend, social worker or the landlord. Where a minor is granted a tenancy and an express trust is not created, the minor becomes an equitable tenant. The landlord retains the legal title on trust for the benefit of the minor, and the minor holds the tenancy in equity.
A tenancy may also be held in equity by a minor where an adult and a minor are granted a joint tenancy. A joint tenancy can be granted if the minor will be living with someone who is over 18 and the older tenant will hold the tenancy in trust.
In all cases where a trust is implied, the tenancy will be held in trust until the minor reaches 18.
Although there will be cases where a trust is imposed as a matter of law, an express trust can be created. In many cases, the trust is simply for the trustee to hold the legal estate until the minor reaches 18. However, a trust can impose additional obligations and benefits. The legal position of 16-and 17-year olds who occupy accommodation under an express trust has not been the subject matter of any recent case law.
In most cases the minor will be both a beneficiary under a trust and will at the same time be treated by the courts as an equitable tenant. Where the terms of an express trust allow the beneficiary to occupy accommodation, reasonable conditions can be imposed by the trustee.
However, trustees cannot exercise their powers in a way likely to result in the minor giving up occupation, or so as to prevent the minor from occupying land subject of the trust unless the minor consents, or the approval of the court is given (section 13(7) Trusts of Land and Appointment of Trustees Act 1996). The trustee is not liable to pay the rent unless he has made a personal guarantee to do so or unless that obligation appears in an express trust deed. A trustee can apply to the court for guidance about the exercise and extent of his powers if unsure (section 14 Trusts of Land and Appointment of Trustees Act 1996). Where a trustee is unwilling or unable to act and hold the legal interest, the court has the power to a new or replacement trustee (section 41 Trustee Act 1925).
In the agreement it must be also declared that the tenancy is being held on trust for the minor, and it is advisable that a trust deed confirming the minor's interest in the property is created. It would be advisable to take further legal advice before drafting an equitable agreement.