Co-ownership
- Created by: suesquena
- Created on: 16-05-17 16:28
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- 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
- Joint tenants
- 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
- LPA 1925
- 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...
- Facts
- Bull v Bull 1925
- 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
- LPA 1925
- restriction on capability to create an undivided share in land (tenancy in common)
- 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
- A fee simple absolute to A & B
- 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
- is there unity of possession?
- 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
- Goodman v Gallant 1986
- if no express declaration in transfer, the third test must be applied
- under second test wording of declaration transferring land to co-owners is considered
- 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
- partnership property
- 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
- Test 1 - are all 4 unities present?
- 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
- Kinch v Bullard 1999
- 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
- three methods of severing a joint tenancy in equity:
- Williams v Hensman 1861
- 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
- Nelson-Jones v Fedden 1975
- 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)
- Burgess v Rawnsley 1975
- 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
- Re K 1985
- 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
- on B's death legal estate & equitable vested in A by survivorship
- A & B continued to hold equitable interest as joint tenants
- 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
- however, B's equitable interest was held as tenant in common
- on B's death legal estate would vest in A by survivorshipd
- legal estate would still have continued to be held by A & B as joint tenants
- 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
- A holding land on trust for himself & beneficiaries under B's will or intestacy
- 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
- 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
- if not severed
- Basics
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