Chapter 5: Co-ownership of land

Question 1

What is the only way in which co-owners can hold the legal estate?

Answer 1

Co-owners can only hold the legal estate as joint tenants

Question 2

What is the maximum number of trustees who can hold the legal estate?

Answer 2

The maximum number of legal owners / trustees is four

Question 3

Can owners of legal estate be any age?

Answer 3

No, they must be at least 18

Question 4

How can co-owners hold the beneficial interest in property?

Answer 4

Equitable interests may be held as joint tenants or tenants in common

Question 5

When would a tenancy in common be appropriate?

Answer 5

• Parties do not wish for survivorship to apply
• Parties contributed unequal portions to purchase price
• Parties have entered commercial transaction

Question 6

Does the doctrine of survivorship apply to tenancies in common?

Answer 6

No, the doctrine of survivorship only applies to joint tenancies

Question 7

What is a declaration of trust?

Answer 7

A document setting out the agreement between co-owners and how their beneficial interests will be held

Question 8

Are declarations of trust conclusive?

Answer 8

Yes, a declaration of trust will be conclusive

Question 9

What should tenants in common be advised to prepare?

Answer 9

1. A will
2. Declaration of trust

Question 10

Can joint tenants change their tenancy to a tenancy in common. If so, how?

Answer 10

Joint tenants can convert there interests to a tenancy in common via severance

Question 11

What are the ways in which severance can occur?

Answer 11

1. Written notice
2. By dealing e.g. disposing of interest or mortgaging it
3. Mutual agreement
4. Course of dealings e.g. one co-owner agrees to buy other’s share
5. Forfeiture e.g. if one joint tenant killed the other
6. Bankruptcy

Question 12

How can a joint tenant sever an equitable joint tenancy by written notice?

Answer 12

• Providing notice which shows a clear intention to sever
• Leave notice at last known place of abode or business in UK
• Sent notice to last known place of abode or business in UK

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

How might a party treat their share as separate?

Answer 14

By attempting to sell it in spite of the doctrine of survivorship and the fact that joint tenants all enjoy the whole

Question 15

In the registered system, how will behind the scenes beneficial interest typically be evidenced?

Answer 15

By a Form A restriction on the proprietorship register

Question 16

What will happen if the Court is unable to determine whether parties have created a joint tenancy or tenancy in common?

Answer 16

A court will presume that equity follows the law and that the beneficial interest are the same as the legal interests. I.e. that the equitable interest is held as joint tenants

Question 17

How does a buyer take free of someone with a behind the scenes interest in the property?

Answer 17

Via a legal process called overreaching

Question 18

What is overreaching?

Answer 18

A process which automatically transfers the beneficiaries’ interests from land to the funds used to buy land

Question 19

When will overreaching automatically occur?

Answer 19

• If the purchase money is paid to two or more trustees; or
• If the purchase money is paid to a trust corporation

Question 20

What should be done to ensure successful overreaching if there is only one legal owner / trustee?

Answer 20

• A second trustee should be appointed; or
• The buyer may obtain a written release from the beneficiary (this will usually be the non-owning party)

Question 21

Can overreaching still occur if a purchase is unconscionable?

Answer 21

Yes, but there would be an equitable right for the bargain to be set aside

Question 22

If parties are unable to agree how to dispose of property, which statute can assist?

Answer 22

Section 14 and Section 15 of the Trust of Land & Appointment of Trustees Act 1996 (TLATA 1996)

Question 23

What is Section 14 of the Trust of Land & Appointment of Trustees Act 1996 (TLATA 1996)?

Answer 23

Allows one co-owner (or any person with an interest in property subject to trust) to apply to Court for an order relating to trustees duties (including an order to sell), relieving the trustee of need to obtain consent or declaring the nature of the person’s interest

Question 24

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

Answer 24

Appoint or remove a trustee

Question 25

What is Section 15 of the Trust of Land & Appointment of Trustees Act 1996 (TLATA 1996)?

Answer 25

Sets out the factors a court must consider in determining an application under s14:

• Intentions of those who created the trust
• Purpose for which the property was held
• Welfare of any minors who occupy property

Question 26

If a relationship breaks down, what is the presumption regarding the legal and equitable ownership?

Answer 26

There is a presumption that no distinct interests were intended. It will be for the challenger to prove a different common intention regarding shares

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

If multiple parties purchase a property together for business purposes, will they be joint tenants or tenants in common?

Answer 28

Where land is held by partners, there is a presumption in favour of them holding land as tenants in common

Question 29

Can a will sever a joint tenancy?

Answer 29

No, a will is insufficient to sever a joint tenancy

Question 30

When will a course of dealings sever a joint tenancy?

Answer 30

It covers only acts of the parties, including negotiations which, although not otherwise resulting in any agreement, indicate a common intention that the joint tenancy should be regarded as severed.