co-ownership Flashcards
1
Q
what is the key feature of co-ownership?
A
simultaneous entitlement - a situation where 2+ people are simultaneously entitled to the same parcel of land
2
Q
what are some common situations of when co-ownership occurs
A
- family or de facto relationships
- trusts
- maori land
- cross leases
- commercial relationships
3
Q
can co-ownership interest exist in equity
A
yes, a person may have an equitable interest in land even if the legal title does not reflect this interest.
4
Q
does legal incapacity prevent a holding of a co-ownership interest
A
no, minority age, mental disorder etc. do not prevent this
5
Q
what are the 3 types of co-ownership
A
- joint tenancy
- tenancy in common
- joint family homes
6
Q
what are the key features of what a joint tenancy is
A
- co-owners holding an interest in land as JTs together constitute, and appear to the outside world as, a single owner
- each co-owner is entitled to the entire property
- co-owners technically do not hold shares, each is invested with the whole interest in the land due to being deemed a single owner - they have interests
- each JT has an inalienable right to sever their interest during their lifetime. severance renders interests as tenants in common with equal shares
7
Q
what is survivorship
A
if one of the joint tenant’s dies, the other takes the whole of the property
8
Q
what type of co-ownership does NZ law presume
A
presumption of Joint Tenancy under the Land Transfer Act 2017 - “two or more persons named in an instrument as transferees, mortgagees, or owners of an estate or interest in land must be treated as joint tenants’ (s47). Tenancy in common requires an express decision or indication. However, this assumption does not apply to Maori land and can be overriden by “words of severance.”
9
Q
how do you convey a JT
A
Grant “to A and B” - avoid using language that could imply that the grantees would own separate shares - otherwise it could be a tenancy in common so avoid language that would create the owners taking separate shares
10
Q
what are the 2 main features of joint tenancy
A
- presence of the 4 unities
2. right of survivorship (just accrescendi)
11
Q
what are the 4 unities for joint tenancy
A
- title: each co-owner’s title must be derived from the same instrument.
- time: all the co-owner’s titles must become vested at the same time - rights commence simultaneously.
- interest: all JTs own a single estate, the interest of which is held by each in the same extent, nature and duration.
- possession: no JT has an exclusive right to any particular part of the land. each is entitled equally to all of it.
12
Q
what are some exceptions to the unity of time
A
- does not apply to wills
- does not apply to trusts
13
Q
what are some unity of interest nuances
A
- cannot be a joint tenancy between people holding interest of: a different nature or a different duration.
- any legal act must be effected by all JTs if it is to bind the entire estate
14
Q
what are some unity of possession nuances
A
Each JT is just as much entitled to possession of all or any part of the land as the other(s). Where fewer than the total number of JTs is in possession of the land, it is possible for those in possession to be in adverse possession against the others. A JT who has failed voluntarily to exercise their right of possession ordinarily cannot claim an occupation fee from the JT in possession.
15
Q
what is the right of survivorship
A
it is a key feature and is a distinguishing characteristic of a joint tenancy. when 1 JT dies, their interest is extinguished and it accrues to the remaining JTs, who interests are correspondingly enlarged. the entire estate survives to the living JT(s). A JT may avoid the right of survivorship by severing their interest during their lifetime. I.e. the last person standing gets the entire property.
16
Q
what happens in the case of simultaneous deaths of survivors
A
- if both/all die simultaneously, the property will devolve as if it were held as a tenancy in common with equal shares. division of the property will occur according to the deceaseds’ wills or intestacies
17
Q
what happened in Wright v Gibbons
A
Sisters A, B and C owned a property as joint tenants. A and B wanted to end the joint tenancy so transferred their interests to each other in one document. C survived A and B and sought a declaration that the memorandum of transfer did not effect a severance of the joint tenancy. It was held that when a JT alienates their interest to another party (including another JT) it severs the original joint tenancy. A, B and C became tenants in common at that point.
18
Q
what are some unity of interest nuances
A
- cannot be a joint tenancy between people holding interest of: a different nature or a different duration.
- any legal act must be effected by all JTs if it is to bind the entire estate
19
Q
what are some unity of possession nuances
A
Each JT is just as much entitled to possession of all or any part of the land as the other(s). Where fewer than the total number of JTs is in possession of the land, it is possible for those in possession to be in adverse possession against the others. A JT who has failed voluntarily to exercise their right of possession ordinarily cannot claim an occupation fee from the JT in possession.
20
Q
what is the right of survivorship
A
it is a key feature and is a distinguishing characteristic of a joint tenancy. when 1 JT dies, their interest is extinguished and it accrues to the remaining JTs, who interests are correspondingly enlarged. the entire estate survives to the living JT(s). A JT may avoid the right of survivorship by severing their interest during their lifetime. I.e. the last person standing gets the entire property.
21
Q
what happens in the case of simultaneous deaths of survivors
A
- if both/all die simultaneously, the property will devolve as if it were held as a tenancy in common with equal shares. division of the property will occur according to the deceaseds’ wills or intestacies
22
Q
what is the current approach on the right of survivorship in the case of homicide of one joint tenant over another
A
Under the Succession (Homicide) Act 2007 s8, the killer is not entitled to any interest in any property that the killer jointly owned with the victim and that otherwise would have passed to the killer. in respect of the jointly owned property, it is to be distributed or passed as if the killer predeceased the victim.
except where the property was owed in joint tenancy between the victim, the killer and any other person. in this situation, the property devolves at the death of the victim as if the property were owned by each as tenants in common with equal shares.
23
Q
what happens if ‘no survivorship’ is entered on the register to the right of survivorship
A
under the land transfer act 1952, a transferor of land to two or more people who will jointly hold the land could request that ‘no survivorship’ be noted on the register under sections 130-133.
the aim is to protect the trust’s interests and minimise the risk to beneficiaries from the acts of a surviving sole trustee because if all the trustees except for one dies, they might not manage the property on behalf of the beneficiaries’ best interest.
the effect is that it is not lawful for a lesser number of joint proprietors than the number registered to transfer or otherwise deal with the land, estate, or interest without obtaining sanction from the High Court.
the protection provided by ‘no survivorship’ is limited and is “rather quixotic and cumbersome in its practical operation” (Re Bayly).
an entry of no survivorship does not prevent the operation of the right of survivorship - the word do not covert a joint tenancy into a tenancy in common (Re Denniston and Hudson). Instead the transmission of title to the surviving joint tenant requires sanction of the high court.
the land transfer Act 2017 repeals the ‘no survivorship’ provisions and does not replace them. IT IS NO LONGER POSSIBLE TO MAKE ‘NO SURVIVORSHIP ENTRIES ON THE REGISTER
24
Q
how can a joint tenancy be determined (come to an end)
A
- union in a sole tenant or destruction of one of the 4 unities - results in a conversion into a tenancy in common to avoid the right of survivorship
25
how is a joint tenancy determined by union in a sole tenant
when there is a single owner, co-ownership is clearly at an end. this may occur:
- through the operation of survivorship
- where all existing JTs transfer the land to a 3rd party
- where JTs agree to transfer and release their interests to a single co-owner
- where a court order is made under the property (relationships) act 1976 - may arise in a divorce or break up of a de facto relationship where one partner has a significantly higher income/standard of living to make it more fair)
26
how can joint tenancies be determined by destruction of one of the 4 unities
unity of time cannot be destroyed, but unities of possession, title and interest can. destruction may be desirable to convert a joint tenancy into a tenancy in common, thereby avoiding the right of survivorship. the means of destruction include one JT acquiring a greater interest, partition and severance
27
how can the unities be destroyed by acquiring a greater interest
where one JT acquires a greater interest than the other JTs, the unity of interest is destroyed and the JT is severed. a classic example is one of several JTs for life purchases or inherits the reversion (life estate vs fee simple)
28
how can the unities be destroyed by partition
division of jointly-held land into separate holdings reflecting each owner's respective share. this destroys the unity of possession. In NZ< this is known as 'division' under the Property Law Act 2007.
29
how can the unities be destroyed by severance
this destroys the unity of interest or title. the size of the severed share depends on the number of JTs - each is entitled to an equal fraction of the whole estate. this effects only the severed share and the others remain JTs with each other while the severed shares and the parties in the joint tenancy become tenants in common.
several methods:
1. unilateral action
2. mutual agreement
3. course of dealing
4. acquisition of a greater interest
5. court order under the Property (Relationships) Act 1976
30
what are the 5 methods of severance
1. unilateral action
2. mutual agreement
3. course of dealing
4. acquisition of a greater interest
5. court order under the Property (Relationships) Act 1976
31
what are some ways severance can come about by unilateral action (voluntary alienation)
1. transfer to 1 (or more) of the other JTs
2. transfer to oneself as a TIC
3. sale by 1 JT of their interest
4. gift by 1 JT of their interest
5. transfer of legal interest alone to be held on trust by a third party
6. assignment to a 3rd party (not sublease)
7. granting of a lease to a 3rd party
8. spouses (cannot sever if living in a registered joint family home)
9. bankruptcy (title becomes vested for adjudication)
32
how can severance come about by mutual agreement
this is where all JTs together agree to sever the JT. It is effective at law when the memorandum of transfer giving effect to the agreement is registered. Legal title will then be held as tenancy in common. If the agreement is not registered, the equitable JT may still be severed, resulting in a specifically enforceable contract between co-owners.
33
what happened in Gateshead Investments Ltd v Harvey
Mr and Mrs H owned a family home as JTs. Mrs H's separate business was probably going into bankruptcy so they entered a relationship property agreement to say the Coatesville property was Mr H's and the business was Mrs H's. Mr H died less than 2 years later and creditors claimed they should be entitled to the whole property due to survivorship.
Property (Relationships) Act 1976, s47: "Any agreement ... between spouses or partners with respect to their relationship property and intended to defeat creditors of either spouse or partner is void." Though this was a pretty clear use of such an agreement, the court found the JT had been severed. There was clear evidence the parties had a mutual intention to sever - Mr H was giving up his shares in the business and Mrs H gave up her interest in the property. They said the provision shouldn't void severance because at the time of the agreement, creditors only had a claim to Mrs H's interest in the property because Mr H was still alive. They didn't know he was going to die and creditors shouldn't be entitled to windfall by getting the whole property because of Mrs H's management of the business. If Mrs H had died and severance hadn't occurred the creditors would've been entitled to nothing so this was just.
34
why can the unity of time not be destroyed
you cannot go back in time and change the dates
35
do JTs have to have consent from other JTs to do things
yes, for any legal action to be able to occur with the property - e.g. one JT cannot sell their interest against the will of the other JTs. transactions could be blocked by other JTs in certain transactions, but a JT can always voluntarily alienate their share by transferring to themselves as a TIC
36
how can severance occur due to course of dealing
where there is no express mutual agreement between JTs to sever, but intention to sever may be inferred based on their behaviour, where interests of all are mutually treated as constituting a TIC. the course of dealing must be known to all JTs and must affect all of their interests. the course of dealing must indicate that they were treating the property as a TIC.
37
what did Williams v Hensman say about severance by course of dealing
"when the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to any particular share, declared only behind the backs of the other persons interested. You must find in this class of case a course of dealing by which the shares of all the parties to the contest have been affected"
38
what happened in Williams v Hensman
- a trust scenario in which the beneficiaries were all children of a widow and acted in different ways with their shares and no unified action.
- a course of dealing was found that was enough to indicate the holders of this JT were acting in a way that demonstrated that they were treating the property owned as a TIC
39
what happened in Burgess v Rawnsley
H and R met at a scripture rally in Trafalgar Square. While she originally described him as 'looking like a tramp' they later became friends and bought a house in their joint names "as joint tenants," each providing 50% of the purchase price. H wanted to marry her but she wasn't keen and the relationship soured. R made an oral agreement to sell her share for £750 to him but later refused to sell.
the course found the initial oral agreement was enough to indicate a course of dealing which amounted to a severance. they had intention to treat the property as TIC's. the court had to look for evidence of what the parties were intending to do.
40
what are the nature and characteristics of a TIC
- co-owners holding property as TICs hold undivided shares in the property, which may or may not be equal
- only essential unity is unity of possession - all co-owners are equally entitled to possession of the whole of the property
- right of survivorship does not apply
41
what are the 3 ways a tenancy in common can be created
1. expressly
2. by implication of equity
3. by the severance of a joint tenancy
42
how can TICs be created through express creation
this is where words of severance are included in the transfer instrument. these words demonstrate an intention that the co-owners are to take separate shares. examples include: equally, equally divided amongst, to be divided, share and share alike, between, among, to be distributed in joint and equal proportions
43
what are some problematic examples of express creation words for TICs and what do these show
- joint and severallyL held to create a JT in a deed but a TIC in a will
- to hold in fee simple as beneficial joint tenants in common in equal shares - held to create a JT in a deed
these examples show that it is important to look at the words in the transfer instrument and to try understand whether the intention during the transfer was to create separate shares
44
how are TICs created by implication of equity
1. where purchasers provide purchase money in unequal shares
2. where 2 or more persons jointly lend money on a mortgage
3. when land is purchased as part of partnership assets
45
how are TICs created by implication of equity where purchasers provide purchase money in unequal shares
- equitable presumption that purchasers take as TICs
- presumption may be rebutted - burden on party claiming beneficial interest was a JT
- where there is no evidence as to shares, prima facie the owners will be treated as JTs, absent circumstances indicating that a JT was not intended or was severed, `
46
what happened in Malcom v R
persons were registered as JTs having contributed unequally. the solicitors had discussed the differences with the purchasers and they chose a JT. Even because of that, the court chose that a JT was never actually intended despite their evidence. this equitable presumption can be pretty powerful
47
how can tenancies in common be created by implication of equity where 2 or more persons jointly lend money on a mortgage
- equity dictates that interest on the loan should not be subject to survivorship
- although they take a joint security, each lender means to lend, and take back, their own contribution
- unless there is evidence to rebut presumption, when one mortgagee dies, legal title "contracts" by survivorship, but the remaining mortgagee(s) hold mortgage on trust for the personal representatives of the deceased co-owner.
- under the Land Transfer Act 2017, s 47 - if 2 or more persons are named as mortgagees on a registered mortgage, they will be deemed joint tenants, unless expressly stated otherwise. however, this does not displace the equitable presumption of a tenancy in common
(you can have a legal default, but at the same time a court can still find tenancy in common - the balance of equities that a court does trying to create a fair result for all parties matters and the courts equitable determination is probably what will matter overall as they don't want the mortgagee to get a windfall on a situation where each lender is intending to give a certain amount and get it back plus reasonable interest
48
how can TICs be created by implication of equity when land is purchased as part of partnership assets
- historically, where partners in a commercial venture acquired land as part of partnership assets, they were assumed to hold the land as TICs
- underlying rationale of equity is that right of survivorship has no place between merchants
- under partnership act 1908, s23 - partnership property devolves according to the general rules of law, but in trust, for the persons beneficially interested in the property
49
what happened in Stirling v Stirling
Brian and Graham Stirling were brothers who operated a quarry business as an equal partnership. the quarry land was held by the brothers as JTs. B died, ostensibly leaving his half-share of the land to his wife Margaret. G brought an action seeking a half-share in the land. the issue was whether the land was partnership property under the Partnership Act 1908 and therefore subject to a trust in favour of Margaret. The court held it was and the fact the brothers had entered into a JT when they purchased the land did not mean that it was not partnership property. Under the Partnership Act 1908, the land had to be presumed to be partnership land unless Graham could show to the contrary and he could not
50
what does a course of dealing have to be to be recognised
it has to be a course of behaviour. a court will not recognise that a Joint Tenancy could be severed in the heat of the moment. it happens over time in the way they are dealing with each other
51
there is an equitable presumption that purchasers who contribute unequal shares take as ?
TIC's, but there are reasons why couples etc might want to take as JTs instead
52
what things get taken into account when determining whether the land should be treated as partnership land
- status of the land on acquisition
- resources used to secure the ;and
- how the partners treat the land
53
how can a tenancy in common be determined
- union in a sole tenant (all TICs transfer to a 3rd party, all TICs agree to transfer and release their interests to a single coowner or where a court order is made in accordance with the Property (Relationships) Act 1976 in deciding that one party should be the single owner in a relationship or marriage break up for equity.
- conversion into a joint tenancy where under the property law act 2007, TICs declare themselves JTs by deed (s55) - where they want survivorship to apply
- partition: division of jointly held land into separate holdings reflecting each owner's respective share, destroying the unity of possession
54
what do common terms of co-ownership agreements cover
- each co-owner's contribution to the price
- who is responsible for costs (like maintenance, rates, insurance etc)
- what happens in the event of a default
- how to deal with decision making (renovations, improvements etc)
- transfers of ownership interest/shares (including sales)
- relationships with third parties (e.g. leases)
- dispute resolution
55
what does having a co-ownership agreement help to do
for the parties to get on the same page at the outset of the co-ownership relationship. everything to do with how the property will be managed, what they should do if there's a dispute or parties want to dispose of their separate interests are covered. they can anticipate possible changes and courts can use it to make a determination easily where required
56
all co-owners are equally entitled to enjoy ?
the whole of the property, including physical occupation and proportionate share of rents and profits resulting from the management of the property
57
can a co-owner in possession be evicted by other co-owners
no
58
if one co-owner takes sole occupation of the property, are they generally liable to pay compensation to the others simply by being in sole ocupation?
no
59
what is the law from McCormick v McCormick about a co-owner paying compensation just because they are in sole occupation
"... one co-owner cannot by failing to exercise his right of use and occupation establish a claim for compensation against another co-owner for the lawful exercise of his own equal right"
60
where may an ouster be found
where there is "destruction" of the common property (the viability of it e.g. so that the co-owners can all benefit from it)
or there is complete exclusion of a co-owner from possession
61
what happened in Wilkinson v Haygarth
it was held that the removal of 1,000 cartloads of turf, peat and soil from a property amounted to an ouster, because the inability of the turf to grow destroyed the ability for the soil to regenerate and would negatively impact the profits to which the tenants in common are entitled
62
what is the key question to ask when looking to see whether something is an ouster due to destruction
was something done to destroy the benefit of the other co-owners in the property?
63
what is complete exclusion for an ouster
the occupying co-owner is actively doing things to prevent the other co-owner coming onto the land - treating them like a tresspasser
64
if an occupying owner has secured sole enjoyment by ouster of the co-owners, what may they be liable for and what remedies can the court give
may be liable in trespass (under tort) for damages or liable to pay an occupation rent.
court can make an order for possession or damages reflecting the plaintiff's proportionate share in the property
65
when may liability for occupation rent by imposed by a court
as part of equitable accounting between co-owners, which arises where there is some kind of change in the ownership of the property so they parties account for their expenses and liabilities they have incurred so the co-owners leave on the same food. a common situation this occurs is where a marital or de facto relationship has broken down, and the party who leaves the property may be regarded as excluded
66
what happened in Dennis v McDonald
a de facto relationship had broken down, with Mrs D leaving the property because of violence and threats of further violence.
Ex-partner Mr McD remained in occupation and was ordered to pay an occupation rent calculated as 50% of the "fair" [market] rent of the property.
If they hadn't have had 50% interests, the rent would be calculated and the different percentage
67
what are the rights of co-owners in regards to leases
- if one co-owner occupies as tenant of the other's share, rent will be payable during tenancy and any hold-over period - a lease formalises this and sets out the terms.
JTs and TICs can also lease their interests to 3rd parties. whether a lease executed by only one co-owner effects a severance is unclear - there is no authority on this. It is suggested, as speculation, that there may be a temporary severance at lease as between JTs.
it is clear that because of the unity of possession, the lessee cannot exclude the co-owner who has not granted the lease
68
what happened in Catanzariti v Whitehouse
Husband and wife were registered as JTs of a leasehold property. When the wife left, husband leased the property for 12 months to a third party. Wife returned during that 12 months, and, without objection from the lessee, occupied one room. However, she interfered with the lessee’s goods and he sued her and sought damages.
Federal Court of Australia held that as the husband had only bound or leased his “share”, the wife was entitled to occupy the whole of the property because of the unity of possession, but at the same time she could not prevent the lessee from occupying as well because the husband had granted his share to the lessee and thus she was liable for the damage to his goods.
69
does a landlord/tenant relationship affect rights that exist between the two as co-owners
no
70
can one co-owner oblige others to contribute to their expenditure on repairs/improvements generally?
no, not whilst the co-ownership is ongoing
71
what expenses can be accounted for as part of equitable accounting at the end of co-ownership
- expenditures on repairs and improvements
- mortgage repayments (including principal and interest)
- payment of rates and other outgoings
72
what is an action of wast
one co-owner may be liable to pay damages to others for losses arising from acts or omissions. this is where an affirmative act or omission by a party causes waste
73
can co-owners alienate their interests
yes, they have a right e.g. to lease to a 3rd party. it is possible to restrict this right by contract among the co-owners. however, this is a restraint on alienation and should be treated carefully
74
it is contrary to what for land owners to restrict the right to alienate between themselves or through other forces
public policy
75
what is partition
the division of co-owned land into separate parcels held in severalty by the individual owners. it destroys the unity of possession and is a means of terminating both JTs and TICs
76
what are the methods of particion
1. voluntary
2. compulsory (no longer the law in NZ)
3. court orders under the PLA 2007
77
what is voluntary partition
- agreement between co-owners to partition must be in writing (PLA 2007 s24)
- partition will be completed at law upon registration of a memorandum of transfer. at this point, co-ownership will end
- parties probably cannot contract out of the right to apply to court in future for either partition or sale
78
what is compulsory partition
at common law, co-owners had no inherent right to compel partition; such right was given by statute (e.g. Partition Act 1539)
In NZ, under the PLA 1952, a party seeking partition was prima facie entitled to it, and court could only order partition or sale
- under PLA 2007, this is no longer the law in NZ
79
what is partition through a court order under PLA 2007
- today, courts in NZ have expanded their discretion where a co-owner applies for partition or sale. the court may order or refuse a sale or partition or may compel one or more co-owners to purchase the other co-owners shares at a fair and reasonable price (buyout)
- application for a court order may be made by a co-owner, mortgagee (if entitled to exercise power of sale), or a person with a charging order (a court order that allows a creditor to obtain/secure debt against the property). this includes both legal and equitable co-owners
80
what must a court consider for the granting of a court order under the PLA 2007 for partition
- in granting or refusing order, court must consider (s 339(4)):
- extent of applicant co-owner's share in the property
- nature and location of the property
- hardship that would be caused to the applicant by refusal of the order, in comparison with the hardship that would be caused to any other person if order were granted
- value of co-owners' contributions to improvements/maintenance
- any other matters the court considers relevant
81
what additional orders can the court make in regards to partition (ss 339(4) & 343)
- require payment of compensation by one or more co-owners to other co-owner(s)
- fix a reserve price for property sale
- direct how expenses of sale/division will be borne
- direct how proceeds of sale/interest on purchase amount will be divided/applied
- allow co-owner to make offer on property for sale
- require payment by any person of a fair occupation rent for all or any part of the property
82
what happens to proceeds of sale in partition
division of proceeds should reflect parties' beneficial interests in the property, subject to equitable accounting because the legal title may not accurately reflect parties' beneficial entitlement. where this is the case, rights of co-owners should be adjusted in an equitable manner - e.g. if one person contributed more to mortgage payments, improvements etc. the same approach is taken whether co-owners are JTs or TICs.
83
what happened in Bayly v Hicks
facts: dispute over a division of a unique property owned by Ms B in an undivided 1/2 share and Mr and Mrs H in a second 1/2 share/ Ms B sought order of the HC dividing the jointly owned property under PLA 2007 - she wanted to sell, subdivide and develop while Mr and Mrs Hicks wanted to continue to use the property for agricultural purposes and they were living there.
the HC created a three way division based on a thorough understanding of the property and how they saw things breaking down naturally to create a balanced outcome so both sisters could benefit. the issue for the court of appeal is whether the Court had the discretion to determine any division different to that proposed by the parties.
the ca held they did - the narrow jurisdiction of the prior Partition Acts and the PLA 1952 had been replaced by a broad discretion under PLA 2007, including the ability to make orders and give directions different from those sought by the parties. judges are cautioned to use this discretion only as necessary
84
what happened in Robertson v Robertson
2 brothers had a boatbulding partnership at a boatyard they owned as TICs. they had a falling out 25 years ago and dissolved the partnership. Conrad continued the boatbuilding business and leased the land from himself and Martin. Conrad wanted to buy out Martin's share, while Martin wanted to redevelop the land.
the HC outcome was that the land should be sold at public auction with proceeds divided. the issue was whether the judge was wrong not to order partition, or not to make an order requiring C to purchase M's share at a fair and reasonable price?
the court held no - the court of appeal will not interfere with a s 339 order unless the lower court judge had:
- made an error of law or principle
- failed to take into account some relevant matter
- taken into account an irrelevant matter; or
- otherwise been plainly wrong
