Co-ownership

Question 1

What is co-ownership?

Answer 1

When two or more people own the same piece of land

–> s1 TLATA automatically creates a trust of land when more than one person owns land

Question 2

What is the effect of s1 TLATA?

Answer 2

Automatically creates a trust of land when more than one person owns land

The legal owners hold the land on trust for the beneficiaries, who hold equitable title

Question 3

What are the two methods of co-ownership?

Answer 3

Joint Tenancy

• All co-owners are treated as a single legal entity.
• Each has equal ownership and equal rights to the whole property.
• Includes the right of survivorship — if one dies, their share automatically passes to the others.
• No individual shares can be passed by will or intestacy.

Tenancy in Common

• Each co-owner has a distinct share in the property (can be equal or unequal).
• No right of survivorship — on death, the share passes under the deceased’s will or intestacy rules.
• Each owner can deal with their share independently.

Question 4

In a trust of land created by s1 TLATA, how is the legal estate held?

Answer 4

The legal estate is always held as a joint tenancy

The trustees have all the powers of an estate owner

(Beneficial owners can hold their equitable interests as either JTs or TICs)

Question 5

In a trust of land created by s1 TLATA, how is the equitable interest held?

Answer 5

Beneficial owners can hold their equitable interests EITHER as joint tenants or tenants in common

Question 6

What are the three key characteristics of a joint tenancy?

Answer 6

No one person has a specific share (level of contribution is irrelevant)
ie. All the JTs constitute one single owner

Presence of the four unities: possession, interest, title, time

Right of survivorship applies (interest passes to survivor(s) on death)

Question 7

What is the maximum number of people that can hold legal title in a trust of land created by co-ownership?

Answer 7

4

Max. 4 people can hold legal title - they will be the first 4 named on the deed aged over 18 & of sound mind

Question 8

What is the maximum number of beneficiaries in a trust of land created by co-ownership?

Answer 8

No maximum number of beneficiaries - they can hold equitable title as either JTs or TICs

Question 9

What share does a joint tenant have in a property?

Answer 9

No joint tenant has a specific, separate share - all the co-owners together constitute one single owner

Question 10

What are the four unities & which method of co-ownership must they be present for?

Answer 10

Joint tenancy must have the ‘four unities’

1. Unity of POSSESSION

2. Unity of INTEREST
- Interest same in nature (freehold, leasehold) & duration

3. Unity of TITLE
- Must acquire title under same document/act (eg. same conveyance; simultaneously take possession together)

4. Unity of TIME
- Interest must vest at the same time (ie. take effect from the same start date)

Question 11

What are three key characteristics of a tenancy in common?

Answer 11

TICs hold property in ‘undivided shares’

• They each own a specific share (e.g., 50/50 or 70/30),
• But no physical part of the property is exclusively theirs — they all have the right to use and occupy the whole property.
• Can be proportional to contribution made to purchase price, but not necessarily
• Only unity of possession is needed
• No right of survivorship applies
• The interest passes by will or intestacy

Question 12

How can you tell if equitable title is held by the beneficiaries as joint tenants or tenants in common?

Answer 12

1. Has there been an express declaration as to how the parties want the interests to be held?
2. Are the four unities (possession, interest, title, time) present?
   - If yes, presumption in favour of joint tenancy
3. Is there anything to rebut the presumption of a joint tenancy?
   - Words of severance (‘in equal shares’, ‘to be divided between’, ‘equally’ etc.) = TIC
   - If property is bought for commercial purposes = TIC
   - Unequal contribution in price = TIC (in proportion to their respective contributions), but not for family homes

Remember - if there is an express declaration of joint tenancy this is final!

Question 13

When will the presumption in favour of a joint tenancy be rebutted?

Answer 13

If the four unities aren’t present

If the presumption can be rebutted by:
- Words of severance (eg. ‘in equal shares’, ‘divided’)
- Unequal contribution in price
- Commercial purposes

But! This will all be irrelevant if there is an express declaration of a joint tenancy

Question 14

In the absence of an express declaration, is there a presumption of a joint tenancy or tenancy in common?

Answer 14

In the absence of an express declaration (which is conclusive), if the four unities are present, there is a presumption in favour of a joint tenancy

That presumption can be rebutted (ie words of severance or business use)

Question 15

When will an unequal contribution in price not be an indicator of a tenancy in common?

Answer 15

In the context of family homes - unless one of the parties can provide evidence to the contrary (Stack v Dowden)

Question 16

What is the right of survivorship?

Answer 16

On the death of one of the joint tenants, their interest accrues to the survivors

ie. Interest does NOT pass under will/intestacy because the deceased joint tenant never had a separate share

Applies only to joint tenancy

Question 17

Does the right of survivorship apply to joint tenants or tenants in common?

Answer 17

Joint tenants

(A tenant in common’s share passes under will/intestacy)

Question 18

What is severance?

Answer 18

Converting a joint tenancy into a tenancy in common

Can sever in EQUITY ONLY

& only whilst ALIVE

Effect: co-owner severing a joint tenancy in equity holds as a tenant in common (in proportion to the number of co-owners) & the remaining co-owners continue to hold the remainder as joint tenants

Avoids effects of right of survivorship

Question 19

When can a joint tenant sever?

Answer 19

In EQUITY only

Must be alive

Question 20

What is the effect of severance on a joint tenancy?

Answer 20

The co-owner severing a joint tenancy in equity holds as a tenant in common (as an equal share in proportion to the number of co-owners)

The remaining co-owners continue to hold the remainder as joint tenants

Question 21

What is the effect of severance where there are only two joint tenants?

Answer 21

Severance has a bilateral effect - ie. both joint tenants in equity become tenants in common

Question 22

Can a will effect severance?

Answer 22

No - severance must be made whilst the owner is alive

Question 23

What are the 5 ways that severance can be effected?

Answer 23

1. By written notice
2. Unilateral acts
3. Mutual agreement
4. Mutual conduct
5. Involuntary: bankruptcy, homicide

Question 24

How can severance be effected by notice in writing?

Answer 24

1. Written notice which expresses the desire to end the joint tenancy IMMEDIATELY
   - Either expressly, or
   - Impliedly (eg. by requesting order of sale & split of proceeds)
2. Notice received (or deemed received) by all other joint tenants
   - Can be handed to the intended recipient or post
   - If others can’t receiver personally, enough to leave it at last known place of abode / business (doesn’t have to be read or seen)
   - If notice sent by registered post, notice regarded as served if it is not returned undelivered (deemed served on posting)

Question 25

If, when a couple are divorcing, the husband applies for a property adjustment order, will this constitute an implied immediate irrevocable intention to sever?

Answer 25

No - asking the court to exercise its jurisdiction to make some order in future not enough (because court could have implied other things not involving severance, & husband's request was not immediate) Nb. Example of successful implied intention = wife issuing divorce proceedings & applying to court for order for sale of property in writing + split of proceeds

Question 26

Who must a severing joint tenant give written notice to?

Answer 26

All other equitable joint tenants, stating their intention to sever immediately (demonstrated expressly or impliedly)

Question 27

How can written notice of severance be properly served on all other joint tenants?

Answer 27

By handing it to them or posting If other JTs can't receive personally, enough to leave at their last known place of abode / business - Doesn't have to be read or seen If notice is sent by registered post, notice is served if it is not returned undelivered If notice sent by ordinary post, sufficiently served if left at last known place of abode/business

Question 28

If a severing joint tenant cannot hand over their written notice of severance to the other JTs, how can it be served on them?

Answer 28

Enough to leave at last known place of abode/business (doesn't have to be read or seen) If notice sent by registered post, notice regarded as served if it is not returned undelivered

Question 29

When is written notice of severance deemed served if it is sent by registered post?

Answer 29

If it is not returned undelivered

Question 30

Kinch v Bullard: husband & wife held home as joint tenants. Wife sent notice in writing severing but, before it arrived husband had a heart attack & died. Wife destroyed notice when it was delivered to their home. Did severance take place?

Answer 30

Held notice HAD been served because the wife had complied with the statutory rule by serving notice at the husband's last known place of abode

Question 31

What are the 4 other ways a joint tenant can sever if not by written notice?

Answer 31

2. Unilateral act - When JT disposes of their equitable interest by sale, gift, lease or mortgage (in writing & signed) 3. Mutual agreement - JTs acting together (expressly or by implication) to sever 4. Mutual course of dealing (ie. mutual conduct) - JTs don't have to agree but show through their conduct (in relation to the land & each other) that they regard themselves as owning distinct shares 5. Involuntary: bankruptcy / homicide

Question 32

Can a joint tenant sever by a unilateral act?

Answer 32

Yes - severance will take place when the joint tenant disposes of their equitable interest by sale, gift, lease, mortgage (Because it is the disposition of an equitable interest, must comply with s.53(1)(c) LPA - ie. in writing & signed by severing JT)

Question 33

Can joint tenants sever by mutual agreement?

Answer 33

Yes - they must act together (expressly or by implication) in a way that indicates a common intention to sever (Examples of successful severance by mutual agreement: - oral agreement to sell & agreement of price - agreement to sell & split proceeds in unequal shares) (Example of failure of severance by mutual agreement: - agreement 'in principle' to sell - agreement to sell but no agreement re proceeds, ie. only manifested intention to sell property as a whole, not sever)

Question 34

Can joint tenants sever by mutual course of dealings / conduct?

Answer 34

Yes - they don't need to agree to sever, but must show through their conduct (in relation to the land & each other) that they regard themselves as owning distinct shares - Physical division of the property does NOT sever where some parties continued operating between them (Nb. this is a bit of grey area, no decided cases)

Question 35

Will bankruptcy constitute severance?

Answer 35

Yes - if the bankrupt is a beneficial joint tenant, the bankruptcy amounts to severance as their share vests (as TIC) in their trustee in bankruptcy (once bankruptcy discharged, equitable interest reverts to the co-owner, who continues to hold it as a tenant in common)

Question 36

Will homicide constitute severance?

Answer 36

Where one JT kills another JT, it will be severance because public policy that can't benefit from crime

Question 37

What must happen for co-owned land to be sold?

Answer 37

ALL the trustees must execute the deed transferring the legal estate

Question 38

Why will a dispute about sale between co-owners be problematic?

Answer 38

Trustees have the power of sale, but have a duty to consult the beneficiaries For sale, all the trustees must execute the deed transferring the legal estate ie. all need to agree!

Question 39

What kinds of disputes might arise in a trust of land?

Answer 39

eg. Where one co-owner wishes to sell & others don't eg. Who can live in the trust property eg. Whether trustees can act without requisite consent

Question 40

Which statutory provisions should be referred to solve disagreements between co-owners?

Answer 40

ss14 and 15 TLATA s14 allows any interested party to apply to the court for an order & s15 sets out the factors the court must consider

Question 41

What is set out in s14 TLATA?

Answer 41

s14: Any interested party can apply to the court for an order: (a) Relating to the exercise by the trustees of any of their functions or (b) Declaring the nature or extent of the person's interest in property (eg. whether need to obtain consent of beneficiaries, declaration as to extent of beneficiary's interest etc.)

Question 42

What is set out in s15 TLATA?

Answer 42

The factors that the court must take into account when considering a s14 TLATA application (a) Intentions of the person(s) who created the trust (b) Purposes for which the trust property is held (c) Welfare of any minor who occupy or might reasonably be expected to occupy the trust land as their home (d) The interests of any secured creditor of any beneficiary (e) The wishes of the beneficiaries of full age, the view of the majority in value

Question 43

What are the five factors set out in s15 TLATA that the court must give consideration to in exercising its powers under s14?

Answer 43

(a) Intention of the person(s) creating the trust (b) Purposes for which the trust property is held --> Is that purpose still capable of continuing? - If yes, likely to refuse order for sale (c) Welfare of any minors who occupy (or might reasonably be expected to occupy) the trust land as their home (d) The interests of any secured creditor of any beneficiary - Applies where a co-owner mortgages their equitable interest - Interests of mortgagee take priority over interests of others (incl minors) unless exceptional circumstances - ie. Courts tend not to postpone sale where lender is a secured creditor (e) The view of the majority in value - 'The wishes of the beneficiaries of FULL AGE & entitled to an interest in possession in the property'

Question 44

When resolving co-ownership disputes under ss14 & 15 TLATA, what options does the court have?

Answer 44

1. Refuse a sale (likely if purpose of acquisition can still be fulfilled) 2. Order a sale (likely if purpose of acquisition has failed) 3. Refuse a sale but make an order regulating the right to occupy the property (rare) 4. Suspend sale order for limited time to allow those who wish to keep property opportunity to buy shares of those who want to sell 5. In exceptional cases, partition the co-owned property