4. Co-Ownership Flashcards
CO-OWNERSHIP: GENERAL PRINCIPLES - JT/TIC
CONCURRENT, not successive Co-ownership
Co-owner land can be owner in TWO ways:
- JOINT TENANCY (JT)
- – viewed as single entity at law
- – four Us are essential
- – JTs have no proportional/identifiable shares, level of contribution is irrelevant
- – right of survivorship applies. i.e. a co-owner’s will is irrelevant, their interest will pass immediately to the other JTs upon their death (Re Caines)
- TENANCY IN COMMON
- – ONLY unity of POSSESSION is required
- – owners own individual but ‘undivided’ shares
- – share of ownership CAN be proportionate
- – the right of survivorship DOES NOT apply. Upon death, their share will pass under their will (or intestacy rules if no will)
CO-OWNERSHIP: GENERAL PRINCIPLES - The FOUR UNITIES
est in (AG Securities v Vaughan)
U of POSSESSION
- each owner owns and is entitled to access the WHOLE of the land.
- REQ for both JT and TIC.
U of INTEREST
- Tenants’ interest in land must be the same. They must all have either a L/h or F/h, the duration of that interest must also be the same.
U of TITLE
- all of JTs must derive title from the same transaction (document, such as the same title deed)
U of TIME
- all JTs interests must START and END on the same date
- NB, if U of TITLE exists, U of TIME usually will as well.
CO-OWNERSHIP: GENERAL PRINCIPLES - RIGHT OF SURVIVORSHIP
ONLY applies where co-owners are JTs. Where one former JT dies, their former interest vests in the other surviving JTs, whether they be surviving T’ees, beneficiaries etc).
CO-OWNERSHIP
Def: the simultaneous ownership of the same estate in land by two or more persons (concurrent ownership)
Co-owned land will AUTO be held under a TRUST OF LAND (s.1 TLATA 1996)
A co-owner will be either a JT, TIC or BOTH
A co-owner may acquire ownership:
- EXPRESSLY, by having their name on the title deed,
- IMPLIEDLY by contributing to the purchase price of the property (Lloyds Bank v Rosset)
Co-ownership: INITIAL POSITION
The ownership status of the co-owned property at the time of initial acquisition can be determined by working out how both LEGAL and E title are held by the co-owners.
LEGAL TITLE
- can ONLY ever be held as a JT (s.1(6) LPA 1925)
- a MAXIMUM of four T’ees (s.34(2) Trustee Act 1925)
- – will be the first four names on the transfer deed (s.34(2) LPA 1925) who are:
- — SUI JURIS (s.22), AND
- — 18 years of age (s.1(6) and s.20 LPA; s.1 Family Law Reform Act 1969)
- ALL 4 Us MUST EXIST
- – NB, in an exam Q, all 4 U’s will generally be present.
E TITLE
- NO limit on number of Bs, NO age/sui Juris req, NO req that Bs be named on the transfer deed.
- may be held as JTs OR TICs, which one will depend on:
- Whether 4 Us exist (AG Securities v Vaughan)
- — if only U of POSSESSION, MUST and CAN ONLY be a TIC.
- If 4 Us do exist, tenants have the CAPACITY to b JTs.
- — whether they are depends on whether an EXPRESS DECLARATION as to their status exists. If one does, it will be determinative (Pink v Lawrence) provided it’s in signed writing (s.53(1)(b) LPA 1925) - because it is an express declaration of trust.
- — if words of severance exist, will be a TIC.
- if NO EXPRESS DECLARATION, JT will exist (“equity follows the law”) UNLESS one of the following presumptions applies, in which case it will be a TIC:
- – the parties intended their UNEQUAL CONTRIBUTIONS represent a TIC (Bull v Bull; Jones v Kernott), OR
- – a commercial/business relationship exists between the parties (Lake v Craddock)
Co-ownership: SEVERANCE
Def: the process of separating the shares of a JT to create a TIC so that the right of survivorship no longer applies (Harris v Goddard per Dillon LJ)
REQ
- The severing tenant must do so WHILST ALIVE. Severance CANNOT take place after death (Re Caines)
- Severance ONLY applies to the BENEFICIAL INTEREST, NOT legal title
EFFECTS OF SEVERANCE
- Ownership status
- – has no effect on other JTs if there were originally 3 or more JTs. Only the JT who severs their interest obtains a TIC. If 4 JTs, the new TIC will have 25% share, 3 JTs then share the rest.
- – HOWEVER, if there are only two JTs, both become TICs.
- Share of Property
- – The co-owners receive EQUAL SHARES in property REGARDLESS of the original contributions (Goodman v Gallant)
- Right of Survivorship
- – the right of survivorship no longer applies between the severing party and the remaining JTs so the severing tenant if free to leave their interest to whoever they wish under a will, or if no will, under the rules of intestacy.
NB, NEVER possible to contract out of the ability to sever a JT (Grindal v Hooper)
Co-ownership: METHODS OF SEVERANCE - NOTICE IN WRITING
A JT may be severed in one of two ways (s.36(2) LPA 1925):
- NOTICE IN WRITING
- DOING ACTS OR THINGS WHICH HAVE THE EFFECT OF SEVERING THE TENANCY
NOTICE IN WRITING
FORM
- The writing does NOT require any particular formalities in order to be valid (s.36(2) LPA 1925)
- – NO signature required (Re Draper’s Conveyance)
- – in theory, writing something appropriate on a napkin could suffice.
- – whilst ‘writing’ is not defined, a degree of permanence will likely be needed.
CONTENT
- The writing must demonstrate an INTENTION TO SEVER to the other JT which is:
- – UNEQUIVOCAL
- – IMMEDIATE (Harris v Goddard cf. Re Draper’s Conveyance), and
- – IRREVOCABLE
- The intention to sever may be EXPRESS or IMPLIED
- – there is NO REQ that the word “severance” is actually used (Re Draper’s Conveyance)
SERVICE (s.196 LPA 1925)
- The notice must be served on ALL JTs
- Notice may be served by either:
- – personally handing it to other JTs, or
- – leaving it at the other JTs last KNOWN place of abode or business (s.196(3) LPA 1925).
- — when notice is posted using ORDINARY post: effective when it ARRIVES at the property (Kinch v Bullard). Irrelevant whether other tenants aware/read it.
- — when RECORDED postage used: effective when POSTED, unless returned undelivered (s.196(4) LPA 1925). Irrelevant whether other tenants are aware of the postage in order for it to be served (Re 88 Berkely Road).
Co-ownership: Methods of Severance - OTHER ACTS OR THINGS
There are three types of other acts that may be sufficient to constitute severance (Williams v Hensman):
- AN ACT OPERATING ON ONE’S OWN SHARE
- MUTUAL AGREEMENT
- MUTUAL CONDUCT
Co-ownership: Methods of Severance - Other acts or things: ACTS OPERATING ON ONE’S OWN SHARE
This is a UNILATERAL ACTION, requiring:
- no agreement or knowledge of the other tenants/mutuality, and
- no service or notice
FIVE types of acts that fit in this bracket
- TOTAL ALIENATION (Ahmed v Kendrick cf. Penn v Bristol and West Building Society)
- Occurs by GIFTING OR SELLING one’s share to a 3rd party
- REQ: severing party must use signed writing (s.53(1)(c) LPA 1925)
- once totally alienated, IMPOSSIBLE for tenant to regain it. - PARTIAL ALIENATION
- includes mortgaging, charging (First National Securities Ltd v Hegerty or leasing one’s interest in the property
- tenant can regain share when mortgage is redeemed - INVOLUNTARY ALIENATION
- Bankruptcy of a JT results in AUTO severance of interest which vests in a T’ee in bankruptcy.
- share is severed as the JT becomes bankrupt
EG: for bankruptcy purposes, husband and wife were held to be JTs despite that no express declaration had been signed (Re Gorman) - CONTRACT TO ALIENATE
- a JT may dispose of his interest by entering into a contract which is SPECIFICALLY ENFORCEABLE to do so (Brown v Raindle) - LITIGATION
- It is possible (Re Draper’s Conveyance), though RARE, that the commencement of litigation can constitute an act operating on one’s own share.
- – HOWEVER, (Nielson-Jones v Fedden), not really sufficiently IRREVOCABLE.
Co-ownership: Methods of Severance - Other acts or things: MUTUAL AGREEMENT
Requires both parties are clearly in agreement at SOME POINT IN TIME that each should own a separate share of the property (Burgess v Rawnsley)
- An agreement on price will help in establishing an agreement, but not conclusive (Burgess v Rawnsley)
- must be an agreement to SEVER, an agreement to merely sell the property will not suffice (Nielson-Jones v Fedden)
- Continuous negotiation/discussion will not suffice (Gore and Snell v Carpenter)
- Enforceability of agreements is not the issue, the question is whether the agreement MANIFESTS an INTENTION that they be TICs. (Davis v Smith)
- No formal legal document required, oral agreement can alone suffice (Burgess v Rawnsley)
- Irrelevant if a party subsequently changes their mind.
If the parties intend to sever JT AFTER they have died, such intentions must be CLEARLY AND CONSISTENTLY reflected in their WILLS (Re Woolnough cf. Carr v Isard)
Co-ownership: Methods of Severance - Other acts or things: MUTUAL CONDUCT
Def: continuous behaviour or a course of dealing which shows ALL the parties consider one another to be TIC.
Negotiations may STILL amount to mutual conduct where:
- inconclusive (Burgess v Rawnsley OBITER), and/or
- long term (Gore and Snell v Carpenter OBITER)
Obtaining legal advice, making an application to court for the division of the property and making an agreement in principal that sale proceeds will be divided equally will WEIGH STRONGLY IN FAVOUR of a court determining that severance has occurred (Davis v Smith)
- The drawing up of a consent order WAS sufficient to constitute severance by mutual conduct (Hunter v Babbage)
It is insufficient to merely:
- physically divide a property (Greenfield v Greenfield), or
- leave the property
Co-ownership: Methods of Severance - Other acts or things: HOMICIDE
Where one JT kills another, the latter’s interest will be severed so that the murderer WILL NOT gain through the right of survivorship (Cleaner v Mutual Reserve Fund)
- criminal law will NOT allow a wrongdoer to benefit from their crimes
Co-ownership: DISPUTE
A dispute can arise when some of the co-owners wish to sell the property and/or when the following are disputed:
- the rights of the co-owners
- actions by the T’ees
- who is permitted to occupy the property
In any of the above situations, the following points should be taken into consideration
- T’EES POWERS AND DUTIES
- APPLICATION FOR A COURT ORDER
Co-ownership: Dispute - T’EES POWERS AND DUTIES
T’ees have the powers of an absolute owner (s.6(1) TLATA 1996)
DUTY TO HAVE REGARD TO THE B’s INTERESTS
- T’ees have a duty, when exercising their powers, to have regard to the rights of the Bs (s.6(5) TLATA 1996)
DUTY OF CONSULTATION
- T’ees have a duty to:
- – CONSULT Bs of full age and beneficially entitled to an interest in possession in the land (s.11(1)(a) TLATA 1996), and
- – give effect to the wishes of those Bs, or, where a dispute exists, the wishes of the majority in VALUE, providing that it is consistent with the general interests of the trust (s.11(1)(b) TLATA 1996)
DUTY TO OBTAIN CONSENT
- T’ees will only have a duty here when exercising their powers IF the trust instrument requires them to do so (s.8(2) TLATA 1996)
- ONLY the consent of TWO Bs need be obtained (s.10(1)TLATA 1996)
Co-ownership: Dispute - APPLICATION FOR A COURT ORDER
Where a dispute has arisen between the co-owners, ANY of the co-owners can apply for a court order in relation to the trust property (s.14 TLATA 1996)
- Where the dispute concerns the SALE of the property, the court will ALWAYS settle the dispute using the s.15 TLATA GUIDELINES below
COURT ORDERS: the court has a wide discretion as to what order they can make:
- Refusal of sale
- ordering of sale (Putnam v Taylor)
- Suspension of sale (Ali v Hussain)
- Partitioning of sale
- Ordering rent payment despite non-occupation of the property (Dennis v Mcdonald)
When deciding, the court must have regard to the following factors (The s.15 Guidelines), (s.15(1) TLATA 1996):
- (1)(a) the INTENTIONS of the person who created the trust
- the fact that at testator ultimately wanted a property to be sold and its proceeds split among Bs was a determining factor in the court deciding to sell the property (Barclay v Barclay). - (1)(b) The PURPOSES for which the property subject to the trust is held
- a single co-owner was unable to sell a piece of land that had been purchased by a number of homeowners for the purpose of preventing developers from building on it, the purpose was CONTINUOUS (Re Buchanan-Wollaston)
- where the purpose is a MATRIMONIAL HOME, this purpose will be brought to an end by the departure of a spouse (Jones v Challenger)
- Where the purpose is a FAMILY HOME, (children live there) will not be brought to an end by the departure of a spouse (Re Inns; Re Evers’ Trust) - (1)(c) The welfare of any MINORS in the property
- (1)(d) The interests of any secured creditors
- these weigh VERY HIGHLY in the courts judgement. Taking precedence over:
- Disabilities of occupants (First National Bank v Achampong)
- The purpose of the trust (Bank of Ireland v Bell)
- The poor health of an occupant (Putnam v Taylor) - (2 and 3) The WISHES OF THE Bs
