5. Co-Ownership of Land

Question 1

What will the court do where, e.g. two parties buy a property, each contributing to the purchase price, but legal estate is conveyed to only one?

Answer 1

Infer a resulting trust, with the legal owner holding the estate on trust for both.

unless relevant presumption of advancement applies.

Question 2

What are the options where contributions are (1) equal and (2) unequal?

Answer 2

1. Equal: Joint tenancy
2. Unequal: Tenancy in common

Question 3

What does the doctrine of survivorship provide?

Answer 3

If a joint tenant dies, their interest automatically passes to the surviving tenant(s)

Question 4

What is the maximum number of trustees that can hold the legal estate in land?

Answer 4

Four

Question 5

What is the limit on the amount of people that can hold the behind-the-scenes equitable interest?

Answer 5

No limit

Question 6

What are the two ways an equitable interest can be held?

Answer 6

1. Joint tenancy
2. Tenancy in common

Question 7

When will a tenancy in common be appropriate?

Answer 7

When the parties:

1. Do not wish for survivorship to apply
2. Contributed unequally to the purchase
3. Enter into a commercial transaction where a joint tenancy would be inappropriate

Question 8

What is a declaration of trust?

Answer 8

A conclusive agreement between co-owners as to how their beneficial interest is to be held.
Box for this on the TR1 form!

Question 9

What is severance in the context of a beneficial interest?

Answer 9

Bringing the equitable joint tenancy to an end and converting it to a tenancy in common

Question 10

What are the seven ways a equitable joint tenancy can be severed?

Answer 10

1. Written notice
2. Treating a share as separate
3. Disposal of equitable interest
4. Mutual agreement
5. Course of dealings
6. Forfeiture
7. Bankruptcy
8. Homicide by one JT of the other.

Question 11

What are the two requirements for severance by written notice?

Answer 11

1. Show clear intention to sever immediately
2. Be sufficiently served
   * Left at last known home or business address, or
   * Sent by registered post - must actually have arrived.

Notice need not be read by the recipient to be valid.

Question 12

How might a party treat their share as separate?

Answer 12

• Selling/gifting thei rhsare
• Mortgaging/leasing their share
• Forfeiture of a lease
• Joint tenant is declared bankrupt

Note - severance does not take effect by will (only severed through course of dealings where both parties make mutual wills covering their shares).

Question 13

After a party disposes of or treats their share as separate, are they completely out of the picture?

Answer 13

No, they still hold the legal estate on trust for the purchaser of their share, because severance only concerns the equitable interest

Question 14

When does severance by forfeiture occur?

Answer 14

If one tenant kills the other, the right of survivorship will not apply

Question 15

Why does the bankruptcy of one joint tenant sever an equitable joint tenancy?

Answer 15

Because the bankrupt’s equitable share is transferred to the trustee

Question 16

What is the starting point in determining whether an equitable joint tenancy or tenancy in common has been created?

Answer 16

• Intention of the parties (note rebuttable presumption in favour of TinC in some contexts)
• Presence of four unities of title- time, title, interest, possession

Question 17

In what contexts does a rebuttable presumption arise that equitable ownership of land is held as a tenancy in common?

Answer 17

a) Land is a business asset
b) Purchase price of a non-domestic property paid in unequal shares.

Question 18

If the intention of the parties cannot be determined, what will the court assume?

Answer 18

That equity follows the law, and the beneficial interests reflect the legal interests, i.e. joint tenancy, because tenancies in common cannot exist at law

Question 19

What is overreaching?

Answer 19

A process under which a buyer may take property free of a beneficiary’s interest under a trust

Question 20

What considerations must a solicitor give to a trustee’s duty to consult beneficiaries?

Answer 20

A solicitor acting on sale of trust property where adult beneficiaries are involved must have regard to the trustee’s duty to consult and take into account the wishes of at least a minority of them

Question 21

When will sections 14 and 15 of the Trusts of Law & Appointment of Trustees Act 1996 help co-owners?

Answer 21

If they cannot decide how or when to dispose of property

Question 22

What does section 14 allow?

Answer 22

It allows a trustee or any other person with an interest in property subject to a trust to apply to the courts for an order relating to the trustee’s duties to sell, obtain consent, or declare the nature of a party’s interest

Question 23

What does section 14 not give the court the power to do?

Answer 23

Appoint or remove a trustee

Question 24

What does section 15 provide?

Answer 24

Factors for the court to consider in determining an application under section 14

Question 25

What are the four factors under section 15?

Answer 25

1. Intentions of those who created the trust
2. Purpose for which the property subject to the trust is held
3. Welfare of any minor who occupies or might reasonably be expected to occupy
4. Interests of any secured creditor or beneficiary

Question 26

If property is transferred to parties jointly, what is the presumption as to how it is held upon breakdown of the relationship, and who bears the burden of displacing that presumption?

Answer 26

Legal and equitable joint tenancy is presumed, and it is for the party claiming otherwise to prove this

Question 27

If the court does have to make a split upon the breakdown of a relationship, what proportion will each receive and what will the court consider?

Answer 27

Each party will receive the proportion the court considers fair, considering all the circumstances and not just those surrounding the purchase

Question 28

Where severance of a JT occurs by written notice, when is it deemed to take effect?

Answer 28

immediately, and notice need not be read by the co-owner, provided there is evidence it has been delivered.

Question 29

What is required for severance to occur via mutual conduct?

Answer 29

High-threshold
- inconclusive negotiation to sell co-owner’s share, and physical division of land were all held not to be instances of successful severance.
- must be clearly obvious from facts.

Question 30

When is the purpose of s.14 of TOLATA 1996?

Answer 30

Gives powers to resolve disputes relating to co-owned land:
1) exercise on their behalf any of their functions as trustees;
2) orders declaring the nature and extent of a person’s interest in trust.
3) orders for sale

anyone with an interest in the land can apply.

• court cannot order one beneficiary to buy-out the other

Question 31

When making an order under s.14 of TOLATA, what factors will the court consider?

Answer 31

s.15(1) of TOLATA
- intentions of the person(s) who created the trust;
- welfare of any minor that might reasonably be exepcted to occupy the land;
- purpose for which property is subject to a trust (ie. is the purpose still continuing?);
- interest of any secured creditor or beneficiary of trust (note - in more recent case law, given great weight to the creditor).

under 15(3) - any wishes of beneficiaries of full age and entitled to an interest in possession.

Question 32

What is a key point to remember for exam if property passes via will, but not all the beneficiaries are of age?

Answer 32

there will be no unity of time, so no JT in equity.
- acquire a vested interest at different times.

Question 33

What are the four unities required to give rise to joint tenancy?

Answer 33

• unity of time, interest, possession, and title

Question 34

What does the case law relating to the factors under s.15 of TOLATA indicate?

Answer 34

generally greater preference is given to creditors’ interests, even if they, in principle are only one of many factors, namely where:
1) Debt has spiralled out of control, and
2) Sufficient equity in the property for its owners to buy a smaller property.