Co-ownership

Form of co-ownership in which all the co-owners own the whole title to the whole land.    

Conversion of a JT into a tenancy in common 

A form of co-ownership in which the beneficial title is divided between the co-owners in separate shares. 

The law imposes a trust whenever two or more people own land concurrently (s.34 and 36 Law of Property Act (LPA) 1925). Since 1/1/1997, trusts of land are defined by s.1(1) TOLATA 1996.

The trustees hold the legal title for the benefit of the beneficiaries. It is possible to be both at the same time.

(Since 01/01/1997) S.1(1) TOTALA 1996 imposes a trust on two or more people owning land together concurrently.

This means the trust, a trustee (or trustees) holds (hold) the legal title for the benefit of a beneficiary or beneficiaries.

A JT can be legal or equitable but a TIC can only exist in equity (LPA 1925, SS1(6), 34(1), 36(2).

Owners are regarded as the one person, and united by the 4 unities:

1.    Possession: all JT are entitled to possess the whole of the land.

2.    Interest: they each hold identical interests (freehold, leasehold)

3.    Title: their interests was obtained by the same document

4.    Time: their interest vested in them at the same time

AG Securities v Vaughan [1990] JT of a student flat failed as C’s arrived at different times.

As they are “one person” if one dies in a JT then the other becomes the sole beneficiary and retains all of the land, this is known as the right of survivorship. This is not available for TIC.

‘Individual shares’. Although the land is held in separate shares, not actually portioned. Requires:

1.    Requires only the unity of posses and

2.    Does not give rise to any right of survivorship

Can be no more that 4 legal JT. If title is conveyed to more than 4 people, the first 4 willing, mentally competent, over 18 year old, people are names on the deed. The remaining will be beneficial owners only.

May be either JT or TIC or a combination. Beneficial TIC will exist only where on of the unities is missing, but also if there is a particular reason for inferring that there was no intention to create a JT, and that can be shown by:

1.    Creating a TIC expressly in the deed

2.    Using words, which show an intention that the owners should have shares in the conveyance.

3 circumstances in which equity presumes a TIC:

1.    Make unequal contributions to the purchase price, provided property was not purchased as a family home (Stack v Dowden and Jones v Kernolt [2012], but compare with Laskar v Laskar [2008] where the house was purchased as an investment).

2.    Are business partners or are acquiring the land for business purposes; or

3.    Are lending money on a mortgage

Presumption can be rebutted if there has been an express agreement to JT (Malayan Credit Ltd v Jack Chia-MPG Ltd [1986]).

Dowden & Stack were co-habitees. Purchased a house in their joint names but made no declaration as to entitlement of the beneficial interest in the property. The parties separated and Stack brought an action for sale of the property and distribution of the proceeds in equal shares.

Held:

The starting point for determining beneficial interests where the legal title was held jointly is that beneficial interest will also be held jointly. This presumption may be displaced where there is evidence that this was not their intention.

reference (http://e-lawresources.co.uk/Land/Stack-v-Dowden.php)

Held that for property which purchased for commercial purpose, the contributions to the mortgage repayments could be treated as a contribution to the purchase-price. Based on the facts given, the house was purchased for residential purposes and since they did not contribute any money towards the purchase-price, they are not be able to establish the beneficial interest under the resulting trust.

Reference (https://www.lawteacher.net/free-law-essays/property-trusts/possession-of-the-cottage.php)

M & J occupied different parts of business premises, but had the property conveyed to themselves as joint tenants.

Was the property held as joint tenants or on trust for themselves as tenants in common?

Tenants in common

Unequal outgoings showed that the property had been taken in unequal shares, rebutting the express wording of the conveyance

Reference (https://webstroke.co.uk/law/cases/malayan-credit-v-jack-chia-mph-1986) 

Severance is the conversion of an equitable JT into a TIC.

When a JT severs his beneficial interest:

·      Becomes a TIC in equity with an equal share of the value of the property whenever it comes to be sold regardless of any initial unequal contributions (Goodman v Gallant (1986)).

·      Right of survivorship will cease to apply to him which means that:

o   His beneficial interest will pass to his heirs on his death; and

o   His beneficial interest in the property will not increase automatically on the death of any other tenants.

A legal JT cannot be severed (S.36(2) LPA 1925).

3 methods of severance of a JT in Equity

1.    Statutory severance: notice in writing under s.36(2) LPA 1925

2.    Common law severance: 3 methods from Williams v Henderson (1861)

a.    By ‘an act of one of the parties interested operating on her own share;

b.    By mutual agreement (Burgess v Rawnsley [1975])

c.     By a ‘course of dealings’ (mutual conduct) which shows a common intention to sever (Greenfield v Greenfield))

3.    Severance by operation of law: forfeiture

‘Where… any tenant desires to severe the JT in equity, he sall give to the other joint tenants a notice in writing of such desire…’

Neither a unilateral unstated intention to sever nor verbal notice is sufficient to sever a JT.

Issue 1: its form (Re: Draper’s Conveyance [1967] must be a written document

Issue 2: its content: (Harris v Goddard [1983] expressing the intent to sever using words to that effect, the JT. Can be written even on the back of an envelope if properly served.

Issue 3: its service must state:

• The addressee
•  The method of service – s.196 LPA 25

o   S.196(4) LPA 25, Notice can be sent by registered or recorded delivery to the last known place of abode or business of the person to served.

o   S.196(3) LPA 25, notice can be left at, or affixed to, the last known place of abode or business of the person being severed. (first class post falls within this section Kinch v Bullard [1999]).

• Lack of receipt by the addressee (Re: 88 Berkeley Road [1971])
•  Change of mind by the sender (Kinch v Bullard)

Expressing a wish to sever JT in future will not be sufficient (Re: Draper’s Conveyance [1969] and Harris v Goddard [1983]).

Upon instruction by a wife, a letter was sent by a solicitor to the wife’s husband purporting to sever the  joint tenancy of the home

The wife signed for the letter, intercepting it such that her husband (the other joint tenant) would never read it

Had the joint tenancy been severed? Yes.

‘Notice in writing’ in s 36 of the Law of Property Act 1925 is to be interpreted in accordance with s 196 of the same Act, such that it is effective whenever it would usually have been delivered, had the wife not intercepted it.

Reference (https://webstroke.co.uk/law/cases/re-88-berkeley-road-1971) 

A wife sent to her husband a notice effective to sever the matrimonial joint tenancy, but destroyed upon its delivery so that her husband would never read it

Was the notice effective? Yes. 

Reasoning was by following Re: 88 Berkeley Road 

(Reference https://webstroke.co.uk/law/cases/kinch-v-bullard-1999) 

If a JT assigns his share during his lifetime, the assignee will take it as a TIC with any remaining JT. 

Granting a mortgage or charge over his interest will also sever it. However, leaving the interest to a 3^rd party does not sever a JT.

Where a JT is declared bankrupt, title to his property is automatically transferred to his trustee in bankruptcy.

Requires agreement of all JT. Agreement does not have to be capable of specific performance.

Burgess v Rawnsey [1975] ‘significance of an agreement is not that it binds the parties, but that it serves as an indication of a common intention to sever’.

Severance will be inferred from the conduct of the parties. In Burgess v Rawnsley ‘if it is sufficient there is a course of dealings in which one party makes clear that their shares are no longer to be held jointly, but in common’.

Argument failed in Greenfield v Greenfield [1979].

Conversion of house into two self-contained maisonettes did not cause severance. 

Where a JT kills another JT (if right of survivorship operated in such circumstances the killer would be ‘profiting from his own wrong’).

Trusts of Land and Appointment of Trustees Act 1996 (TOTALA)

S.6 ‘For the purpose of exercising their functions as trustees, the trustees of land have… all the powers of an absolute owner’ e.g. powers of sale, leasing, mortgaging.

When exercising their powers:

S.6(5) the trustees must have regard to the rights of the beneficiaries and

S.6(6) must not act contrary to any rule of law or equity

S.10 – Consent: an expressly created trust can impose a requirement for consent from named parties to dealings with the land.

S.11 – Consultation: there is a duty on trustees to consult with adult beneficiaries entitled to an interest in possession

·      So far as practicable

·      Giving effect to the wishes of the majority by value – so far as those wishes are consistent with the general interest of the trust.

A beneficiary with an interest in possession has a right to occupy the trust property.

S.12: the right arises if:

• The purpose of the trust include making the trust land available for occupation

OR

•  The trustees hold the land so to be available

AND

• The land is suitable for occupation

S.13 (1) where +1 beneficiaries are entitled to occupy, the trustees, can exclude 1 or more but not all of the beneficiaries.

They:

•  Must act reasonably 13(2)
• And take into account the matters set out in 13(4)
•   And cannot exclude a beneficiary already in occupation 13(1)

S.13.3 trustees can impose reasonable conditions on the occupying beneficiaries.

S.13(6) an occupying beneficiary may be required to pay compensation to an excluded beneficiary.

S.14(1) who can apply to the court for an order

•  Any trustee of land
•  Any person who ‘has an interest in property subject to a trust of land’

 S.14(2) orders the court can make

•  Any other it thinks fit in relation to

-       The exercise by the trustees of any of their functions

-       For the purpose of declaring the nature or extent of any person’s interest

o      A dispute between trustees over whether or not to sell the trust property

o      A dispute because 1 or more beneficiaries want to prevent or force a sale of trust property

o      An application by secured creditors to try and force a sale

o      An application by a trustee in bankruptcy to try and force a sale

S.15(1):

a)    The intentions of the person(s) who created the trust

b)    The purposes for which the property is held

c)    The welfare of any minor who occupies or who might reasonably be expected to occupy the land

d)    The interests of any secured creditor of any beneficiary

S.15(2) in occupation disputes:

The wishes of any beneficiaries who would be entitled to occupy (or who would/were it not for a tenants decision to allow another beneficiary to occupy)

S.15(3) in other matters:

The wishes of the majority, by value, of beneficiaries who are of full age and entitled to an interest in possession.

Mrs Shaire and Mr Fox jointly owned (in law) a house as tenants in common (equity), with shares 25% and 75% respectively

Mr Fox mortgages his 25% share, and defaulted on payments

His mortgagee (bank), the Mortgage Corporation, sought an order so sale to allow them to recoup their losses

Could a sale, under section 14 of the Trusts of Land and Appointment of Trustees Act (TOLATA) 1996, be ordered? No. 

Reasoning: The 1996 Act replaced the trust for sale with the trust of land, and clearly altered the factors which were to be taken into account before a sale was ordered (s 15 TOLATA. There was no longer a presumption of sale, and the courts now have a much wider discretion in which to protect families from mortgagee. Instead, Mrs Shaire was to take over the payments of interest on the loan in return for a sale not being ordered – that way the mortgagee would not be kept out of its money indefinitely. 

Reference (https://webstroke.co.uk/law/cases/mortgage-corporation-v-shaire-2001)

A husband defaulted on mortgage payments and had divorced his wife

The ex-wife and husband had one child living in the house, who was nearly 18 years old

Could a sale be ordered under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 on the application of the mortgagee bank? Yes. 

Reasoning: The husband’s mortgage loan had remained unpaid for over 8 years, with a debt-owing exceeding £300,000 (greater than the value of the house). This debt was much more significant than a consideration of a nearly 18 year old minor, who would not suffer undue hardship if a sale order was made. The new discretionary judging criteria, as set out in Mortgage Corporation v Shaire [2001] was approved. 

Reference (https://webstroke.co.uk/law/cases/bank-of-ireland-home-mortgages-v-bell-2001)

This was an application by Fred Perry (Holdings) Ltd for an order for possession and sale of the first defendant's property under the Trusts of Land and Appointment of Trustees Act 1996.

Ivan Genis and Ayelet Haim Genis occupied the property with their two children.  The property was the family home and was registered in Mr Genis's sole name.  The parties married in 2007 and Mrs Genis subsequently registered her rights in the property under s.30 of the Family Law Act 1996. 
Fred Perry (Holdings) Ltd had three charging orders on the property.    

The High Court gave priority to the commercial creditor's charging orders over the wife's registered home rights and made an order for sale of the property.  The operation of the order for sale was deferred for 12 months to enable the family to obtain alternative accommodation and arrangements for new schools without interruption to the children's studies during the next school year.

Reference (http://www.familylawweek.co.uk/site.aspx?i=ed132172)

•       Remember: bankruptcy automatically severs any beneficial joint tenancy

•       The trustee in bankruptcy must

o   Apply to court under s.14 TOLATA

o   Then court will apply the criteria in s.335A Insolvency Act 1986, not those in s.15 TOLATA

The courts shall make such order as it thinks reasonable having regard to

• The interests of the bankrupt’s creditors
• All the circumstances other than the needs of the bankrupt

In addition where the property was the home of the bankrupt or the bankrupt’s spouse/civil partner:

• The conduct of the spouse so far as contributing to the bankruptcy
• The needs & financial resources of the spouse
• The needs of any children

BUT AFTER 1 YEAR   ‘THE COURT SHALL ASSUME, UNLESS THE

CIRCUMSTANCES OF THE CASE ARE EXCEPTIONAL, THAT THE

INTERESTS OF THE BANKRUPT’S CREDITORS OUTWEIGH ALL

OTHER CONSIDERATIONS’   Re: Citro (a bankrupt) 1991 Ch 142