Co-Ownership Flashcards
Quick Q:
Four students (a physics student, a philosophy student, a history student and a classics student) purchased a property (‘the Property’) for them to live in whilst they studied at university. The physicist, philosopher and historian each provided 20% of the purchase price. The classics student contributed the remaining 40% of the purchase price. The Property was transferred to them as beneficial joint tenants in equity.
The philosophy student struggled financially and mortgaged his interest in the Property to a bank. He subsequently received a large inheritance and managed to pay off the mortgage.
The physics student was killed in a car accident and, in her will, left her interest in the Property to her sister.
Which of the following best describes how the equitable interests in the Property are now held?
A-The philosopher, the historian and the sister hold 20% each, with the musician holding 40% as tenants in common.
B-The philosopher holds 20% as a tenant in common with the classics student and the historian holding a joint tenancy, with the classics student holding 50% and the historian holding 30%.
C-The philosopher holds 25% as a tenant in common, with the historian and the classics student holding the remaining 75% as joint tenants.
D-The philosopher and the sister each hold 25% as tenants in common with the historian and the classics student holding 50% as joint tenants.
E-The philosopher holds 20% as a tenant in common, with the historian and the classics student holding the remaining 80% as joint tenants.
The correct option is C.
Looking at the facts chronologically:
The transfer of the Property to the co-owners contained an express declaration of trust. The equitable interests were, therefore, held as a joint tenancy at the outset, despite the unequal contributions made by the co-owners. Option B is, therefore, incorrect.
When the philosopher mortgaged his interest, this severed the joint tenancy in relation to the philosopher. The effect was that the philosopher held a tenancy in common for 25% (being proportionate to the number of co-owners – four co-owners and, therefore, the economist is entitled to 25%). The other three students continued to hold the remaining 75% as a joint tenancy. Option E is, therefore, wrong.
When the physicist died she was a joint tenant and the rule of survivorship applied. Her will, leaving her interest to her sister, was of no effect. The other joint tenants, the historian and the classics student survived her. Options A and D are, therefore, wrong as the sister has no interest in the Property.
Option B is incorrect as identifying shares is inconsistent with a joint tenancy. Plus, the maths is wrong in that the philosopher holds 25%.
A-
B-
C-
D-
E-
4 Unities Co-owenership
The four unities that must exist between co-owners are: possession, interest, title and time.
1.Unity of Possession
The joint tenants must have the right to possess the property in its entirety. This is somewhat seen as the foundation of co-ownership as the property cannot be divided in a manner that would separate the property or affect the joint tenants’ share. The tenants must have the right to enjoy the property as a whole, concurrently.
2.Unity of Interest
The co-owners must have identical rights over the land. They must have the same share and if they are joint tenants, they must have equal shares in the land. For tenants in common however, they can have unequal shares in the property.
3.Unity of Title
All co-owners must have had their interests outlined in the same document or acquired in the same manner.
4.Unity of Time
The co-owners must have acquired or ‘vested’ their interests at the same time.
LIMIT ON HOW MANY TRUSTEES CAN HOLD THE LEGAL ESTATE
Quick Q:
Five friends, all of whom are over 18 years old, buy a property which is conveyed to them all jointly.
How would the legal estate and the equitable interest in the property be held?
Four of the friends hold the legal estate and hold the equitable interest on trust for themselves and the fifth friend.
Option B is correct. A maximum of four trustees can own the legal estate (s34(2) of the Trustee Act 1924). Where property is conveyed to more than four people, whilst there may be more than four co-owners of the equitable interest, only the first four named adults will be the trustees and owners of the legal estate.
Option A is wrong as it exceeds the maximum number that are permitted to own the legal title.
Options C and D are both wrong because the legal title cannot be held on trust. It is always the owners of the legal estate that hold the equitable interest on trust. Option D is also wrong because the property was conveyed to all five friends and, as indicated above with Option B, all five friends can co-own the equitable interest.
Option E is wrong because the property was conveyed to all five friends and there is nothing in the facts that indicate that only two of the friends would hold the legal estate.
How many and of what age do you need to be to hold legal estate?
A maximum of four trustees can own the legal estate (s34(2) of the Trustee Act 1924) and only those 18 or over can hold the legal estate. Where property is conveyed to anyone under 18, only those aged 18 and over can be the legal owners holding the equitable interest on trust for themselves and the under 18 year old.
Quick Q:
A group of five friends bought a property together six years ago; they all worked locally and it worked out cheaper than each of them buying their own property. The property was registered in the names of the first four friends and the transfer stated that they held the property as tenants in common in equity in equal shares. Two of the friends are now a couple and want the property to be sold as quickly as possible so that they can buy a property just for themselves. In addition, a third friend also wants to sell as she has just accepted the offer of a new job in a city 100 miles away. The remaining two friends insist that the property should not be sold.
Which of the following statements best describes the process for resolving the dispute?
Any of the five friends may apply to the court for an order to determine whether or not the property should be sold and the court may make such order as it thinks fit.
Option B is correct – any person who is a trustee or has an interest in the property subject to the trust may make an application to the court and the court may make such order as it thinks fit (s14 Trusts of Land and Appointment of Trustees Act 1996). The court must have regard to the various factors in s15, but none must be given greater weight than any others (as a result, Option C is wrong). In addition, the application does not require the consent of the trustees (option D is wrong) and the court should consider the wishes of the beneficiaries (option E is wrong). Finally, the two friends in the minority, do not have to agree with those with the majority opinion (meaning that Option A is wrong).
Quick Q:
Two brothers bought a property together and both their names were entered on the proprietorship register. The only entries on the proprietorship register are (1) their details and (2) the purchase price paid for the property. One of the brothers has died (‘the deceased’) and the other brother is selling the property to your client.
Which one of the following statements represents the best advice to give your client about what steps must be taken to enable your client to register his title at the Land Registry.
It will not be necessary to overreach the deceased beneficial interest as the beneficial title was held by both tenants as joint tenants but evidence of the deceased death will be required when your client’s title is registered at the Land Registry.
In the absence of a restriction on the proprietorship register in a co-ownership situation the beneficial interest is held as joint tenants and the rule of survivorship applies. B and E are both correct but E is the best answer as evidence of death will be needed to prove who is the sole surviving legal and beneficial owner. A and D are therefore wrong. C is also wrong as even if it were held as a tenant in common the deceased’s beneficial interest would need to be overreached.
A family bought a cottage together. The arrangement involved a mother, father, brother, and daughter, with the mother and father acting as trustees and all the family members holding their interests as “beneficial joint tenants”. The daughter has correctly served a notice in the valid form on her father and mother, making it clear that she wants to immediately sever her equitable interest.
A-All four family members are now tenants in common in equity as a result of the daughter’s severance by notice.
B-The daughter’s’ actions failed to sever the equitable joint tenancy, so all four family members remain joint tenants in equity.
C-As a result of the daughter’s severance by notice, the mother and father now hold as tenants in common at law but all four family members remain joint tenants in equity.
D-The daughter’s actions failed to sever the equitable joint tenancy so the daughter holds a one quarter equitable share in the property.
E-The equitable joint tenancy has been severed but as a result of a mutual course of dealing rather than by notice.
Option B is correct because the notice has been served on only two of the three other beneficial joint tenants. Service on all three of them would have been required for an effective severance under s36(2) Law of Property Act 1925.
Option A is wrong because the equitable interest would remain as joint tenants as the severance is ineffective on our facts. As indicated above, the notice has not been served on all three of the other beneficial joint tenants.
Option C is wrong because although the family continues to hold as joint tenants in equity as the severance has been ineffective, the joint tenancy of legal estate cannot be severed.
Option D is wrong because severance by notice has not occurred, so the daughter does not have an identifiable share in equity. The equitable interest in the cottage is still held as joint tenants, so all four family members hold the equitable interests as a whole.
Option E is wrong because the daughter’s actions were unilateral and so this could not amount to a mutual course of dealing.
Quick Q:
A mother gifts her house (‘the Property’) to her children (a doctor, an accountant, a banker and a student) as beneficial joint tenants. The Property is transferred to them. At the time of the transfer, the student is 17 years old.
The doctor is offered a well-paid job in Paris and sells his interest in the Property to a friend. The friend immediately moves into the Property. The doctor dies two months later.
At the student’s 18th birthday party, the accountant (knowing he is terminally ill) gives the banker and the student a written notice stating that he wishes to immediately sever his joint tenancy. Subsequently, the accountant dies and, in his will, leaves his interest in the Property to his husband.
Which one of the following best describes how the Property is now held?
The trustee is the banker holding for herself and the student as joint tenants of 50% and the friend and the husband as tenants in common of 25% each.
The correct option is E.
Looking at the facts chronologically:
Legal estate
The original trustees were the doctor, the accountant and the banker who held the legal estate as a joint tenancy. The student could not be a trustee as she was a minor and she is not automatically appointed as a trustee when she reaches the age of 18. Therefore, options D and A are wrong. After all the events, the banker remains the sole trustee (see below).
Equitable interests
There was an express declaration of trust and the four children held as beneficial joint tenants.
The doctor sells his interest
The doctor selling his interest to the friend severs the joint tenancy in relation to the doctor’s equitable interest. The friend therefore holds 25% as a tenant in common (there being four joint tenants). The other children continue to hold the remaining 75% as joint tenants.
The doctor resigns as a trustee. This means that the remaining trustees of the legal estate are the accountant and the banker.
The accountant’s notice
This is formal severance (s 36(2) LPA 1925) and complies with the requirements as it is in writing, given to the other joint tenants and expresses the necessary immediacy. This severs the accountant’s equitable interest so that he holds 25% as a tenant in common.
Option C is, therefore, wrong as it does not take account of the severance by written notice.
The accountant’s death
In relation to the legal estate, the banker survives the accountant and becomes the sole trustee. Option B is, therefore, wrong as the accountant has dielal_coo_02387 d and cannot, therefore, be a trustee.
In relation to the equitable interest, the accountant had severed the joint tenancy and, at the time of his death, was a tenant in common. Survivorship does not occur and the accountant’s interest goes to the husband. The equitable interests are held as follows:
The husband = 25% as a tenant in common
The friend = 25% as a tenant in common
The banker and the student = 50% as joint tenants.
Quick q:
A solicitor acts for two friends – a man and a woman – in the purchase of a freehold property for £250,000. The man contributed £125,000 and the woman also contributed £125,000.
The Property is transferred to them as express tenants in common in equal shares.
Which of the following best describes how the Property is held?
The Property is held legally as joint tenants and beneficially as tenants in common due to the express declaration of trust.
Option C is correct. The legal title can only be held as joint tenants. Notwithstanding the fact the friends made equal contributions, they can still hold the equitable title as tenants in common. The express declaration is (in the absence of fraud) conclusive.
Option A is not the best answer. Whilst it correctly identifies that the legal estate will be held by the friends as joint tenants, the option does not say how the equitable estate will be held.
Option B is wrong. The equitable estate will be held by the friends as tenants in common given the express declaration made.
Option D is wrong as the legal estate can only be held as a joint tenancy.
Option E is wrong for similar reasons. Furthermore, the equitable estate will be held as a tenancy in common given the express declaration.
