Chapter Two: Co-ownership and Trusts

Question 1

What is co-ownership?

Answer 1

Where more than one person owns land at the same time.

Question 2

What does s1 TOLATA do?

Answer 2

Where there is a concurrent sharing, it creates a trust of land.

Question 3

When does a trust of land arise?

Answer 3

• a landowner intentionally sets uo a trust of their land by transferring title to the land to trustees for the benefit of others (an express trust)
• a person acquires an interest in land owned by another due to their conduct (an implied trust)
• land is acquired by more than one owner jointly (co-ownership)

Question 4

What must be done when trust property is sold?

Answer 4

The trustees must execute the deed to transfer the legal title
The beneficiaries are entitled to receive the proceeds of the sale

Question 5

What is meant by ‘A legal estate is incapable of “subsisting or of being created in an undivided share”’ s1(6) LPA

Answer 5

This means that:
The legal estate MUST be held as a joint tenancy and
The joint tenancy (relating to the legal estate) cannot be severed

Question 6

Who can be trustees of land?

Answer 6

Aged 18+

Question 7

How many trustees can there be?

Answer 7

Minimum 1
Maximum 4- if more than 4 are named, the first four will be deemed as trustees

Question 8

What powers do trustees have?

Answer 8

s6(1) TOLATA- trustees have all the powers of an absolute owner
s11 TOLATA- trustees powers are limited by their duty to consult the beneficiaries. The duty applies only to beneficiaries of full age and who have an interest in possession.
The trustees must comply with the wishes of the beneficiaries.

Question 9

What are the two forms of co-ownership?

Answer 9

Joint tenancy
Tenancy in common
The legal estate must be held as a joint tenancy.
The beneficiaries can hold their equitable interests either as joint tenants or tenants in common.

Question 10

What is joint tenancy?

Answer 10

Right of Survivorship
Undifferentiated ownership, (not by shares)
Nothing is owned individually.
The four unities must be present
Dealing with a ‘share’ will operate as severance

Question 11

What is a tenancy in common?

Answer 11

No right of survivorship
Undivided shares, (done by shares)
Only unity of possession is required
A tenancy in common will arise where:
expressly declared
presumed on acquisition
subsequent acts of severance

Question 12

How can we decide whether it is a joint tenancy or a tenancy in common?

Answer 12

First test- are the four unites present?
Second test- does the deed transferring the land to the co-owners contain an express declaration?
Third test- does the deed transferring the land to the co-owners contain words of severance?
Fourth test- does equity presume a tenancy in common?

Question 13

What is the four unities test?

Answer 13

The presence of the four unities indicates presence of a joint tenancy in equity.
Unity of POSSESSION- each co-owner has the right to possession of all of the land. (Required for joint tenancy and tenancy in common)
Unity of INTEREST- Each co-owner must have identical rights over the land (joint tenancy)
Unity of TITLE- each co-owner must have acquired their interest from the same document.
Unity of TIME- the co-owners receive their interests at the same time

Question 14

What is the ‘does the deed transferring the land to the co-owners contain an express declaration’ test?

Answer 14

An express declaration of trust (complying with the formalities of s53(1) LPA is conclusive. The document of transfer sets out how the property is to be held (regardless of the size of contribution made by any of the co-owners)
Eg; ‘transferred into their joint names as express. beneficial joint tenants in equity’
‘conveyed to them as express beneficial joint tenants in equity’.
‘The transfer contained a declaration that all four owners were beneficial joint tenants’
All three statements mean that the property has been transferred to the co-owners as joint tenants in equity.

Question 15

What is the ‘does the deed transferring the land to the co-owners contain words of severance’ test?

Answer 15

Where the conveyance or transfer does not contain an express declaration or words of severance, the court and last test must be applied

Question 16

What are words of severance?

Answer 16

This means any words in the document of transfer that indicate that the co-owners are to have a distinct share.
Severance is the method by which a joint tenancy in equity can be converted into. tenancy in common. Severance only applies to the equitable interests, not to legal estates.

Question 17

What is the ‘does equity presume a tenancy in common’ test?

Answer 17

There is a presumption that the co-owneres will be joint tenants in equity on the basis that equity follows the law.
The legal estate is always held as a joint tenancy, so it is therefore presumed that the equitable interest will also be a joint tenancy. This can be rebutted by:
- when the property is acquired for business use
- unequal contributions to the purchase price
-post acquisition money management

Question 18

What can severance be effected by?

Answer 18

Formal severance by written notice
Informal severance

Question 19

What is written notice?

Answer 19

A joint tenant can sever their share by giving written notice to the other co-owner stating their intention to sever, either expressly or impliedly.
No specific form of writing and it does not need to be signed.
It is a unilateral act and does not require consent from other other joint tenants.

Question 20

For effective severance, what must the notice do?

Answer 20

• use appropriate wording- a desire to end the joint tenancy immediatley
• be received by all other tenants
  Registered Post- as long as not deemed undelivered
  Ordinary post- as long as left at tenants last known place of abode or business in the UK.

Question 21

What are some INFORMAL methods of severance?

Answer 21

Acts operating on the joint tenants share- unilateral act, when a joint tenant disposes of their equitable interest by sale, gift, lease or mortgage
Mutual agreement- joint tenants must act together, (expressly or impliedly), oral agreement is fine
Course of dealing- do not have to agree to do something but must show through their conduct.
Bankruptcy- form of involuntary alienation
Homicide- wrongdoer should not benefit from their criminal activity.
Post-acquisition money management- when a family home is bought in joint names of an unmarried couple who are both responsible for mortgage payments but there is no express declaration of their beneficial interests:
- the starting point is that equity follows the law and they are joint tenants in law and equity
- this presumption can be rebutted by either party showing they had a different common intention that their shares would change
- their common intention is to be deduced objectively from their conduct

Question 22

What is the effect of severance?

Answer 22

On severance, the joint tenancy in equity becomes a tenancy in common.
When there are TWO joint tenants in equity, they both become tenants in common in equal shares
Where there are THREE or more, only the co-owner who severs their joint tenancy becomes a tenant in common. The others continue as joint tenancy in equity. Their share is proportionate to the number of tenants.

Question 23

What happens in the absence of an express declaration of trust

Answer 23

A trust of land may be IMPLIED as. consequence of the conduct of the parties. This will be either a resulting trust or a constructive trust

Question 24

What is a resulting trust?

Answer 24

A resulting trust will arise when:
- a person, who does not hold legal title to property, makes a contribution to the purchase price of the property
- there is no evidence that the contribution was intended as a gift or a loan and
- the contribution must be of all or part of the purchase price at the date of acquisition
The person then holds a beneficial interest in the property proportionate to the contribution made.

Question 25

What is a constructive trust?

Answer 25

Two stage test for the creation of a constructive trust.
This can be either:
An agreement + detrimental reliance or
Conduct + direct financial contribution

Question 26

What is An agreement + detrimental reliance?

Answer 26

It is irrelevant that the agreement is based on a trick or is deceitful.
This is a question of fact
The non-legal owner must show that they relied upon the agreement to their detriment or simnifically altered their position.
Eg paying for improvements to house in own money.

Question 27

What is conduct + direct financial contribution?

Answer 27

Here, there is no evidence of an agreement or arrangement to share the property beneficially. In the absence of such an agreement, the court look at the conduct of the parties ‘both as the basis from which to infer a common intention to share the property beneficially.’
The required conduct t is payment towards the purchase price initially or payment of the mortgage payments by the non-owning party.

Question 28

What does s14 TOLATA say?

Answer 28

A trusteee or any person who has an interest in the property may make an application to the court for and order.
The court has a wide discretion to make an order:
-relating to the exercise by the trustees of any of their functions
-declaring the nature or extent of the persons interest in property.

Question 29

What does s15 TOLATA say?

Answer 29

s15 TOLATA sets out the factors that the persons who created the trust
b) the purpose for which the property subject to the trust is held
c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home and
d) the interests of any secured creditor of the beneficiary.