Co-Ownership

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Joint Tenancy - Rights and Interests, Not Shares!

There are two crucial distinguishments between joint tenants having rights and interests (which they do) and saying they hold shares (which they do not):

1.      Right of Survivorship

a.       On death of a joint tenant his interest does not pass under the law of succession, but rather passes to the surviving JT’s, even if the will of the dead person says otherwise.

b.      This is sometimes referred to as the survival of the fittest idea, in that the last one standing becomes the sole owner and then passes his interest on by succession.

2.      Four Unities

a.       Unity of Possession

b.      Unity of Interest

c.       Unity of Title

d.      Unity of Time

For co-owners to be joint tenants, the four unities must be present. Unity of Possession is the cornerstone of co-ownership (without it, co-ownership does not exist), if even one of the other three are missing then co-owners will be tenants in common.

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Co-Ownership Reform in 1925

This came about as due to the laws of succession, property could end up with many different owners (e.g 4 tenants in common, each leave their shares of the land to their three children means you would now have 12 owners, all of whom could be in different countries).

Reforms were passed in SS34-36 of the Law of Property Act 1925, which ensured that where land is co-owned a maximum of four signatures if required on convenayncies or any other transaction affecting land.

34Effect of future dispositions to tenants in common.

(1)An undivided share in land shall not be capable of being created except as provided by the Settled Land Act, 1925, or as hereinafter mentioned.

(2)Where, after the commencement of this Act, land is expressed to be conveyed to any persons in undivided shares and those persons are of full age, the conveyance shall (notwithstanding anything to the contrary in this Act) operate as if the land had been expressed to be conveyed to the grantees, or, if there are more than four grantees, to the four first named in the conveyance, as joint tenants in trust for the persons interested in the land.

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Effect of SS34-36 Reforms

The provision in effect imposes a statutory trust where an estate or interest in land is conveyed to co-owners as tenants in common. This allows the overreaching of multiple beneficiaries by the signatures of the trustees, and so less signatures and time is required to transfer land.

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Stack v Dowden [2007]

Lord Neuberger however felt imputing intention was wrong, as they are inventing an intention which wasn’t ever really there. His view was not represented by the majority however.

Hale said “the search is to ascertain the parties shared intentions, actual, inferred or imputed with respect to the property in light of their whole course of conduct in relation to it”.

Hale and Walker Concluded: "Their common intention is to be deduced objectively from their conduct: "the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party" (Lord Diplock in Gissing v Gissing)"

Principle: 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.

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The Effect of Imposing Trusts

The Effect of Imposing a Trust Upon Co-Owners

1.      A co-ownership trust like any other trust is subject to the maximum of four limit on the number of trustees

2.      While a CO trust, can validly exist with only one trustee, a disposition requires two trustees if it is to overreach the rights of non-trustee CO’s. 

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Tenant's in Common From Implied Trusts

Where the relevant land is unregistered title, a constructive trust cannot be registerable as a land charge. It is well established that where a disposition is made by a sole trustee, the doctrine of notice must be applied (as seen in Kingsnorth Finance Co v Tizard [1986]).

Registered title applies Boland, thus if X is in actual occupation at the relevant time, they will have an overriding interest within Sch 3 Para 2 LRA 2002 (subject to the normal exclusions).

The owner of a constructive trust who is not in actual occupation will have a minor interest (which can be protected by entering restriction S40 LRA 2002, Elias v Mitchell [1972]).

The appointment of a second trustee to a lone trustee could change the position dramatically. It will override anyone’s interest who contributed to the purchase price.

Overreaching – if the land is sold the rights of beneficiaries of a trust cannot bind the purchaser, provided the purchase price is paid to the correct persons, the purchaser, irrespective of whether he had notice of the beneficiaries rights, will take the land free of those rights. 

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Written Notice of Severance

Must be in writing but does not need to be signed (Re Drapers Conveyance [1969])

Must convey an unequivocal and irrevoacable intention to sever immediately (Harris v Goddard [1983])

The criticism that divorce documentation should never amount to effective written notice as it is not sufficiently irrevocable in Nielson-Jones v Fedden [1975] has never held much weight. 

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Severance by Mutual Agreement

Must be between all beneficial joint tenants (Wright v Gibbons [1949])

Can be oral or in writing 

Need not be contained within a specifically enforceable contract (Burgess v Rawnsley [1975])

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Severance by Bankruptcy

Re Pavlou [1993] - where a CO is declared bankrupt, his beneficial interest will vest in his trustee in bankruptcy. This severs his beneficial interest. 

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