Chapter 5: Co-ownership of land Flashcards
What is the only way in which co-owners can hold the legal estate?
Co-owners can only hold the legal estate as joint tenants
What is the maximum number of trustees who can hold the legal estate?
The maximum number of legal owners / trustees is four
Can owners of legal estate be any age?
No, they must be at least 18
How can co-owners hold the beneficial interest in property?
Equitable interests may be held as joint tenants or tenants in common
When would a tenancy in common be appropriate?
- Parties do not wish for survivorship to apply
- Parties contributed unequal portions to purchase price
- Parties have entered commercial transaction
Does the doctrine of survivorship apply to tenancies in common?
No, the doctrine of survivorship only applies to joint tenancies
What is a declaration of trust?
A document setting out the agreement between co-owners and how their beneficial interests will be held
Are declarations of trust conclusive?
Yes, a declaration of trust will be conclusive
What should tenants in common be advised to prepare?
- A will
- Declaration of trust
Can joint tenants change their tenancy to a tenancy in common. If so, how?
Joint tenants can convert there interests to a tenancy in common via severance
What are the ways in which severance can occur?
- Written notice
- By dealing e.g. disposing of interest or mortgaging it
- Mutual agreement
- Course of dealings e.g. one co-owner agrees to buy other’s share
- Forfeiture e.g. if one joint tenant killed the other
- Bankruptcy
How can a joint tenant sever an equitable joint tenancy by written notice?
- 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
After a party disposes of or treats their share as separate, are they completely out of the picture?
No, they still hold the legal estate on trust for the purchaser of their share, because severance only concerns the equitable interest
How might a party treat their share as separate?
By attempting to sell it in spite of the doctrine of survivorship and the fact that joint tenants all enjoy the whole
In the registered system, how will behind the scenes beneficial interest typically be evidenced?
By a Form A restriction on the proprietorship register
What will happen if the Court is unable to determine whether parties have created a joint tenancy or tenancy in common?
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
How does a buyer take free of someone with a behind the scenes interest in the property?
Via a legal process called overreaching
What is overreaching?
A process which automatically transfers the beneficiaries’ interests from land to the funds used to buy land
When will overreaching automatically occur?
- If the purchase money is paid to two or more trustees; or
- If the purchase money is paid to a trust corporation
What should be done to ensure successful overreaching if there is only one legal owner / trustee?
- 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)
Can overreaching still occur if a purchase is unconscionable?
Yes, but there would be an equitable right for the bargain to be set aside
If parties are unable to agree how to dispose of property, which statute can assist?
Section 14 and Section 15 of the Trust of Land & Appointment of Trustees Act 1996 (TLATA 1996)
What is Section 14 of the Trust of Land & Appointment of Trustees Act 1996 (TLATA 1996)?
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
What does section 14 not give the court the power to do?
Appoint or remove a trustee
What is Section 15 of the Trust of Land & Appointment of Trustees Act 1996 (TLATA 1996)?
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
If a relationship breaks down, what is the presumption regarding the legal and equitable ownership?
There is a presumption that no distinct interests were intended. It will be for the challenger to prove a different common intention regarding shares
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?
Each party will receive the proportion the court considers fair, considering all the circumstances and not just those surrounding the purchase
If multiple parties purchase a property together for business purposes, will they be joint tenants or tenants in common?
Where land is held by partners, there is a presumption in favour of them holding land as tenants in common
Can a will sever a joint tenancy?
No, a will is insufficient to sever a joint tenancy
When will a course of dealings sever a joint tenancy?
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.
