Co-ownership

Created by: suesquena
Created on: 16-05-17 16:28

View mindmap

Co-Ownership
- Basics
  - Joint tenants
    - co-owners not treated as having separate shares
    - treated as single person not two individuals
    - right of survivorship (if one owner dies other becomes sole owner) applies
    - share proceeds of sale equally
    - cannot make gift of land in will to third party
  - Tenants in common
    - co-owners own distinct shares, which may be equal or unequal
    - right of survivorship does not apply
    - land passes under will or rules of intestacy
    - share proceeds of sale proportionate to share of ownership
  - process of severance: if parties originally bought as joint tenants may convert to tenants in common
  - co-owners either expressly declare land is held on trust or land or law will impose implied trust of land
- Co-ownership since Jan 1926
  - restriction on capability to create an undivided share in land (tenancy in common)
    - LPA 1925
      - s.1(6): legal estate cannot be created in undivided shares (tenants in common)
      - s.34(1): undivided share in land cannot be created except as provided for under Settled Land Act 1925
      - s.36(1): where joint tenants own a legal estate in land, a trust of land will be implied
      - s.36(2): no severance of joint tenancy of a legal estate to convert to tenants in common
  - tenancy in common may give rise to equitable rights
    - Bull v Bull 1925
      - Facts
        land purchased by P with his mother contributing some of purchase price
      - Held
        resulting trust arose & in equity a tenancy in common due to unequal contributions
        
        Lord Denning: Since 1925 there has been no such thing as a legal tenancy in common. All tenancies in common now are equitable only...
  - there are maximum number of trustees who can own legal estate in land
    - LPA 1925
      - s.34(1): undivided share in land cannot be created except as provided for under Settled Land Act 1925
      - s.34(2) : maximum four trustees can own legal estate in land, if more than four named in deed - first four hold land as joint tenants on trust of land for all in equity
- Tests to establish if co-owners hold equitable interest joint tenants or tenants in common
  - Test 1 - are all 4 unities present?
    - for unity of interest to be present co-owners must have the same interest in land (unity of interest)
    - A fee simple absolute
      - A fee simple absolute to A & B
        unity of interest present: same interest in land (a fee simple absolute)
      - A fee simple to A & B in unequal shares (A 3 quarters & B 1 quarter)
        unity of interest present: same interest in land but size of share different
      - to A for life, remainder B in fee simple absolute:
        unity of interest not present: A has life interest & B has fee simple in remainder
    - unity of title:
      - co-owners must receive interest under same document
    - Unity of time
      - co-owner's interest must vest at same time
    - unity of possession
      - co-owners must each be entitled to possession of whole land & cannot exclude other co-owners
    - if all four unities are not present:
      - is there unity of possession?
        yes: tenancy in common
        
        no: not co-ownership
    - if all 4 unities are present
      - it must be determined whether co-ownership is capable of taking form of joint tenancy or tenancy in common
  - Test 2 - express declaration in transfer?
    - under second test wording of declaration transferring land to co-owners is considered
      - Goodman v Gallant 1986
        if transfer of land to co-owners contains an express declaration of how co-owners should hold the equitable interest , declaration is conclusive
    - if no express declaration in transfer, the third test must be applied
  - Test 3 - word severance in transfer?
    - third test requires looking at whether declaration transferring land to co-owners contains words of severance
    - words of severance: words indicating that co-owners intend to own separate & distinct shares in the property (including equally, unequal, among)
    - if words of severance: co-owners take equitable interest in land as tenants in common
    - if transfer not declare how equitable interest should be held or contain words of severance, then fourth test applies
  - Test 4 - does equity presume a tenancy in common?
    - the circumstances of purchase considered as to whether equity presumes a tenancy in common
    - three situations where tenancy in common is presumed:
      - partnership property
        co-owners are business partners & land bought as partnership asset
      - lenders
        where more than one person lends money to a borrower, relationship between lenders is that of tenants in common
      - unequal contributions towards purchase price
        where two or more people buy land & make unequal contributions, equity presumes tenants in common & size of each tenant in common's share proportionate to contribution
    - if all four unities are present, no express declaration how equitable interest is held, no words of severance & no equitable presumptions apply: co-owners hold as joint tenants
- Title
  - if land is registered: co-owners will be registered proprietors
  - if tenants in common in equity: should place a restriction on proprietorship register to warn buyer of need to overreach
  - if joint tenants in equity: no restriction on the register
- Severance of the joint tenancy in equity
  - co-owners may be able to use severance to change their equitable interest from joint tenancy to tenancy in common
  - provision for severance by notice under s.36(2) LPA 1925
    - s.36(2): co-owner may sever joint tenancy in equity by serving a notice; notice must be: written, show correct intention (immediately effective) & served correctly (on all joint tenants)
    - Harris v Goddard 1983
      - prayer in divorce petition did 'no more than invite the court to consider at some future time whether to exercise its jurisdiction' so did not satisfy immediate intention for severance
  - rules serving notice contained in s.196 LPA 1925
    - s.196(3): notice sufficiently served if left at last know address or place of business of other joint tenants
    - s.196(4): notice sufficiently served if sent by registered post & recorded delivery, unless returned by post office as undelivered
  - s.196(4) applies even if proved notice never actually arrived at destination, whereas s.196(3) requires proof of physical service
    - Kinch v Bullard 1999
      - Neuberger J suggested possible to withdraw notice of severance if prior to other co-owners receipt
    - Re 88 Berkeley Road NW9 1971
      - notice correctly served: even though serving co-owner had signed on behalf of the recipient to prove receipt of notice
  - other methods of severance existed at common law prior to LPA 1925 still exist
    - Williams v Hensman 1861
      - three methods of severing a joint tenancy in equity:
        act by joint tenant operating on his share may sever that share
        
        mutual agreement
        
        course of dealing by joint tenants showing interests should be treated as a tenancy in common not joint tenancy
  - act by joint tenant which can sever: if unity of interest, title of time ceases to be present there is no longer a joint tenancy
  - if co-owner sells or gives their equitable interest to third party or mortgages it, transaction will have the effect of severing the equitable joint tenancy
  - bankruptcy also has effect of severing equitable joint tenancy (involuntary alienation of the equitable interest - co-owner's equitable interest vest in bankruptcy trustee )
  - Actual alienation required is required
    - Nelson-Jones v Fedden 1975
      - a co-owner's unilateral declaration did not destroy any of the three crucial unities & could not sever joint tenancy
      - Walton J: Moreover, if it did, it would appear that a wholly unconscionable amount of time and trouble has been wasted by conveyancers of old in framing elaborate assignments for the purpose of effecting a severance, when all that was required was a simple declaration
  - making gift of equitable interest to third party in will insufficient method of severance: before gift takes effect, right of survivorship will vest legal estate & equitable interest in land in surviving co-owner
  - mutual agreement and course of dealing may sever a joint tenancy
    - Burgess v Rawnsley 1975
      - mutual agreement: if co-owners expressly agree to sever joint tenancy in equity or if parties agree to deal with land in way which would have effect of severing
      - agreement need not be binding, if common intention to sever can be shown
      - course of dealing being relied on does not have to amount to an express or implied agreement to sever
      - course of dealing sufficient: if co-owner has made clear to other he wants to hold property under tenancy in common not joint tenancy
      - course of dealing sufficient: if co-owners intend shares to be held as tenants in common (executing simultaneous mutual wills which direct future distribution of each testator's 'share)
  - forfeiture occurs when a co-owner kills the other co-owner
    - Re K 1985
      - if a co-owner kills the other this severs joint tenancy in equity to prevent murderers benefitting from crime
      - victim's equitable interest passes to beneficiaries under will or intestacy
      - murderer takes legal estate in and as result of survivorship
      - legal estate held on trust of land for murderer & victim's estate as equitable tenants in common
  - if equitable joint tenants sever their equitable interest: the severing joint tenant takes a share in the property as a tenant in common
  - effect of severance: if two each co-owner takes an equal share in the equitable interest as tenants in common
  - if three co-owners: severing joint tenant takes a third share in the property as a tenant in common & other two having remaining equitable interest as joint tenants
- Sale by co-owners
  - where land is co-owned there is an implied land of trust
  - as trustees of land holding the legal estate: have power to sell the trust land, but issues can arise in relation to co-owners
  - sale by two or more co-owners: no issue if both joint the sale as buyer pays purchase price to both legal owners to buy whole legal estate & as from at least two trustees, equitable interests under implied trust of land are overreached (s.2 & s.27 LPA 1925)
  - Sale by sole surviving owner can cause issues:
    - A & B originally bought land as beneficial joint tenants
    - B dies & A wishes to sell to P
    - problem: P cannot be sure joint tenancy was not severed in equity before B's death
      - if not severed
        A & B continued to hold equitable interest as joint tenants
        on B's death legal estate & equitable vested in A by survivorship
        A can sell alone
      - if severed
        legal estate would still have continued to be held by A & B as joint tenants
        on B's death legal estate would vest in A by survivorshipd
        however, B's equitable interest was held as tenant in common
        on B's death equitable interest would pass under will or intestacy
      - if B's equitable interest not passed to A:
        A holding land on trust for himself & beneficiaries under B's will or intestacy
        P needs to ensure interests beneficiaries are overreached by insisting A appoints a second trustee
      - if registered land: A can prove ownership to P by copies of entries on the register of title:
        if there is no restriction on the proprietorship register, P entitled to assume A & B held land as joint tenants in equity before B's death
        A can show P copy of B's death certificate & P can assume A has taken whole legal estate & equitable interest by survivorship

Get Revising

Co-ownership

Comments

Similar Law resources: