Trusts of Land - Co Ownership

Successive and concurrent ownership rights

Successive Ownership

  • Strict Settlements
  • Trusts for sale

In the case of successive interest trusts for sale, there was no need for the special arrangements as to the legal estate which were devised for the strict settlement.

The legal estate was therefore vested in the trustees for sale; it was they who had the powers of management and disposition, although certain powers of management could be delegated to any beneficiary currently entitled in possession under the terms of the trust for sale

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Concurrent Ownership

Co-ownership of land exists where 2 or more persons are simultaneously entitled to the ownership rights in a single parcel of land

At the time when the provisions of the LPA 1925 relating to co-ownership were settled, co-ownership was much less prevalent that it is now.

TOLATA 1996 sought to address the problems that emerged but it has not altered the fundamental nature and structure of co-ownership

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Nature and classification of co-ownership

Joint Tenancy

  • Each of the co-owners is wholly entitled to the whole of a single interest in the land
  • A transfer of land to 2 or more persons as joint tenants 'operates so as to make them, vis a vis the outside world, one single owner'
  • There is no sense in which the joint tenants can be said to have specific shares in the land
  • No co-owner can claim to be entitled to a specific arithmetical or proportional share of the land or its value

Doctrine of survivorship

  • On the death of one joint tenant, the surviving joint tenant(s) continue to be entitled to the whole of the interest that was the subject-matter of the original joint tenancy
  • The deceased never had any 'share' capable of disposition on his death; he simply drops out of the picture and the joint tenancy continues with one fewer joint tenants
  • The one survivor becomes sole owner of the interest in land. As the survivor was always entitled to the whole of the interest, he has no greater interest than when the joint tenancy was first created, excepted he is no longer subject to the possibility that he might predecease the other joint tenants, ceasing to be entitled to the interest
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Nature and classification of co-ownership 2

The 4 Unities

  • Unity of possession
  • Unity of interest - reflects the requirement that each joint tenant is wholly entitled to the one interest in the land - thus there can be no joint tenancy between persons who own interest different in nature in duration or in time
  • Unity of title and unity of time - reinforce the unity of interests - all the joint tenants must derive their entitlemnt to the land from the same document or from the same act and normally all joint tenants must become entitled at the same time

Burton v Camden LBC

  • A friend executed a deed of release, releasing her legal and beneficial interest under the joint tenancy to the claimant, with the intention that the claimant should be the sole tenant under the secure tenancy. It was held that the transaction amounted to an assignment.
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Nature and classification of co-ownership 3

Tenancy in common

  • Involves unity of possession since that characteristic distinguishes co-ownership of a single parcel land from individual ownership of separate land
  • Each tenants in common can claim to be entitled to a specific share of the land or its value
  • Surivorship does not operate on the death of a tenant in common - his share devolves upon the person entitled under his will, who replaces the deceased as tenant in common with the surviving original tenants in common
  • Only unity of possession is required between tenants in common

Conversion of joint tenancy into tenancy in common by severance

  • 1 or 2 joint tenants can become sole owner provided he survives the other joint tenant, he can lose all entitlement to land if he predeceases the other joint tenant
  • It has always been possible for a joint tenant to sever the joint tenancy and convert it into a tenancy in common
  • The doctrine of survivorship ceases to be applicable and each co-owner has a guaranteed share in the property of if its value
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Structure of co-ownership

Co-ownership (at law) of the legal estate Pre 1926 position - more recently, the preference has been based on the simplification of conveyancing consequent upon the simplification of title to land where ownership rights are not fragmented. Presumption of joint tenancy subject to - - absence of unities - words of severance - such 'to be divided between in equal shares', such words were deemed to indicate an intention, characteristic of tenancies in common, that the co-owners should have specific shares in the land. Post 1925 position - co-ownership necessarily involves the trust machinery and the co-ownership of the legal estate by the trustees necessarily takes the form of a joint tenancy. The joint tenancy/tenancy in common is only relevant in the context of the equitable interest of the beneficiaries under the trust.

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Structure of co-ownership 2

Co-ownership (in equity) of the equitable interest -Express declaration in transfer/conveyance - Presumption of equity - equity presumed that the equitable ownership takes the form of a tenancy in common because a joint tenancy, with the inherent doctrine of survivorship, would be regarded as incompatible with the essentially commercial nature of the relevant transaction. - Partnership assets - Where 2 or more business partners acquire land as part of their partnership assets, although they necessarily hold the legal estate as joint tenants, as between themselves they are presumed to be tenants in common of the equitable interest. Presumption was held to be rebutted where the partners demonstrated a clear intention that the partnership property was to be held beneficially as joint tenants (Bathurst v Scarborow)

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Co-ownership in equity

Joint mortgagees Where 2 or more persons lend money on the security of a legal mortgage, the mortgage is necessarily granted to them as joint tenants, but as between themselves they are presumed to be tenants in common in equity Business tenants Where 2 or more persons are granted a lease of business premises, which they use for their several individual business purposes, they necessarily hold the lease as joint tenants at law; but as between themselves they are presumed to be tenants in common in equity (Malayan Credit v Jack Chia-MPH) Purchasers contributing in unequal shares Where the property is transferred to the parties as joint tenants at law, the traditional equitable presumption was reversed; even though the parties made unequal contributions to the purchase price, they are presumed also to be joint tenants in equity (Stack v Dowden)

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Severance of joint tenancies

- Nature of severance The purpose of severance is usually to exclude the operation of survivorship on the death of a joint tenant and the consequent loss of entitlement of the deceased's estate to any share in the co-owned land - Severance of equitable joint tenancies only Since 1925 severance has operated only on equitable co-ownership. LPA 1925 prohibited both the direct creation of legal tenancies in common and their indirect creation through the severance of legal joint tenancies; but the Act did not affect the right to sever equitable joint tenancies - Timing of severance Severance can only be affected before the doctrine of survivorship operates at the moment of death of the joint tenant. It can only be effected during the liftime of the joint tenant and cannot be effected by his will. Where severance is an issue, the dispute arises because one former joint tenant has died and his estate is seeking to argue that there was severance of the joint tenancy before the death. - Burden of proof It is on the person seeking to establish that the joint tenancy has been severed

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Methods of severance - Written Notice

Severance of a beneficial joint tenancy produces a tenancy in common in equal shares. Each joint tenant as a general rule takes an equal share in the land or its vale, irrespective of the contributions of the joint tenants to the original purchase price. (Goodman v Gallant) Severance by notice in writing was an entirely new method, although there remains disagreement and/or uncertainty as to whether it is confined to land. (Re Draper's Conveyance) Severance is the process of separating off the share of a joint tenant, so that the concurrent ownership will continue but the right of survivorship will no longer apply. The parties will hold separate shares as tenants in common. (Harris v Goddard)

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Methods of severance - Delivery

Notice in writing may be effective to sever a joint tenancy even where the notice is not actually received by the other joint tenant(s). The courts have equated 'giving notice' under s 36(2) with 'serving notice' under s 196 LPA 1925 Once the notice has been served it will be effective and will sever the joint tenancy, even if the co-owner does not in fact receive it. Where notice is sent by registered post or recorded delivery, there is no requirement that it should have been delivered at the relevant address: unless it is 'returned by the post office undelivered' it is deemed to have been validly given s 196(4) Provided that the s 36(2) notice is delivered by hand or by ordinary post to the last known address of the other joint tenant(s) the notice is validly given s 196(3)

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William v Hensman Catalogue

Act of joint tenant operating on his own share - Transfer/mortgage of 'share' - Specifically enforeceable contract for transfer/mortgage Severance is effected where one joint tenants concludes a specifically enforceable contract to mortgage or charge his own equitable itnerest. (Thomas Guaranty v Campbell) - Involuntary alienation The bankruptcy of a joint tenant severs the joint tenancy when the estate of the bankrupt vests in the trustee in bankruptcy. The precise time of such vesting may be crucial to the question of severance and the operation of the doctrine of survivorship Mutual agreement Course of dealing

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William v Hensman Catalogue 2

A course of dealing is 'merely being material from which an agreement is to be inferred'. Negotiations did not amount to a sufficient course of conduct as to lead to the implication of an agreement to sever, and hence a severance and that a mere declaration of an intention to sever does not effect a severance. (Walton J, Nielson-Jones v Fedden) The joint tenants of property had been in the process of negotiating, but had not finalised a financial settlement involving unequal division of the proceeds of sale of the property. (Hunter v Babbage)

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Rights of co-owners

- The doctrine of conversion - Right of occupation Pending a sale, equitable tenants in common are each 'entitled concurrently with the other to the possession of the land and to the use and enjoyment of it'. Where the land is intended for occupation by the beneficiaries, there is a right of occupation. (Denning LJ, Bull v Bull) The defendant was an equitable tenant in common of the bungalow and was entitled to remain in possession. (Barclay v Barclay) Endeavoured to reconcile the right of occupation with the imposition of the trust for sale and the doctrine of conversion. (Oliver L, City of London v Flegg) Parties should exercise their powers as trustees under s 13 by dividing the premises into 2 units and restricting their right of occupation to their respective units. (Rodway v Landy)

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Disputes between the trustees

If the trustees were not unanimous in agreeing to postpone sale, they must perform their duty and sell the property. Thus one co-owner who wished to sell could compel the other to do so against their wishes. (Re Mayo) The applicant was seeking an order for sale but the application was resisted by the other 3 co-owners. (Re Buchanan-Wollaston's Conveyance) Court ordered a sale on the application of a charge under a charging order, holding that there was no difference in principle between the position of such a chargee and that of a trustee in bankruptcy. (Lloyds Bank v Byrne) The strict approach that applied in the context of bankruptcy cases should also be applied to the 'almost identical position' of a mortgagee of the equitable interest of one co-owner. (Hirst LJ Abbety National v Moss)

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Intervention of the trustee in bankruptcy

Save in exceptional circumstances, sale would be ordered on any application by a trustee in bankruptcy and that a similar approach was adopted in dealing with applications by mortgagees or chargees. (Re Citro)

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Impact of the Human Rights Act 1998

It has been suggested that where the application for an order for sale is made by a trustee in bankruptcy, the HRA 1998 may provide the basis of an argument for the refusal or postponement of a sale. Convention rights are not absoloute and that interference is permissable provided that the aim of the legislation is legitimate and the interference is proportional. (Barca v Mears)

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Termination of co-ownership

Partition Joint tenancies and tenancies in common may be terminated by physical partition of the land, where each of the co-owners becomes sole owner at law and in equity of a separate and specific parcel of co-owned land. Partition destroys the unity of possession that characterises all forms of co-ownership. Property vested in sole owner It will be terminated where the land becomes vested in one of the co-owners. In the case of joint tenancies, this is the effect of the doctrine of survivorship where one of two joint tenants dies. Sole ownership of the land may be effected by voluntary trasnfer of the land to one of the co-owners. A conveyance of the land by all the co-owners to a sole 3rd party purchaser will also terminate the co-ownership of the land and transfer the co-ownership to the proceeds of sale provided that the purchaser complies with the overreaching requirements.

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