Co-Ownership Flashcards
Whenever land is co-owned a trust is imposed by statute
s. 34 LPA 1925
- this known as a trust of land
- this separates legal and equitable title to the land between the trustees and the beneficiaries
Expressly creating a trust of land
- two or more people buy the land
- A sole owner declares in writing that they now hold the land on trust for someone else (s. 53)
- A transfer of legal title to two or more people
Expressly creating a trust of land through aquisition
Lloyds Bank v Rosset
Variation or quantification dispute
Stack v Dowden
- Still unknown in reality if they apply for acquisition as opposed to declaration
Barnes v Phillips
- obiter says it’s the same
Impliedly created Trusts of land
- no need for writing s. 53 LPA Three Ways of impliedly creating a trust of land - Resulting Trust - Constructive Trust - Proprietary Estoppel
Resulting Trust
Remedy: a proprietary share
The share of your interest is directly proportional to the share of the property
- best for someone who paid more for the property
- Dyer v Dyer
Resulting Trust. Need to look for:
- Intention
- Payment
- Contribution
RT: Intention
- presumption of intention from the payment of the money.
RT: Payment
of money or equivalent
- Mumford v Ashe
RT: Contribution
To the purchase price at the time or via mortgage
Mortgage value count’s as RT contribution
Laskar v Laskar
Ancillary obligations do not count as RT contribution
Curley v Parkes
RT contribution does not include normal household costs
Wadziki v Wadziki
The essence of a resulting trust is that you get what you paid for:
More usual to have an RT in a domestic situation
- Stack v Dowden
No resulting trust with housewives - they don’t pay
- Burns v Burns
Constructive Trust
- Common Intention Constructive Trust (CICT)
Shared intention of the owner and the claimant or the two parties to the existing
Remedy: a proprietary share
The share of a CICT is related to the agreement made
Best for someone who has been mislead
- Midland Ban v Cooke
To establish a CICT you need
- Common Intention
- Reliance
- Detriment
Common Intention
Inference of a common intention can be from the whole course of the parties dealings.
- Stack v Dowden
Four Ways to establish a CICT
- Express Assurances
- Inferred Common Intention
- Stack v Dowden
- x
CICT: Express Assurances
Verbal assurances from the legal owner to the claimant
Lloyds Bank v Rosset
CICT express assurances can include
statements by the defendant about the property
- ‘this house is as much yours as mine’
even if they are lying
- ‘I would give you my house if my brother would let you’
CICT express assurance claims
usually from a claimant of a bigger interest or share of the interest than they already have
e.g. Eves v Eaves
CICT: Inferred Common Intention
An inference is a true intention of the facts
The end result is not tied to how much you pay
- in contrast with a resulting trust.
Have to prove two things to infer a CICT
- Payments towards the purchase price
2. the payments give rise to the inference of the intention
CICT Inferred: Payments made that can reasonably be relating to the principle of the house
Midd B v Cooke
e. g. wider than the scope fo the resulting trust
- indirect payments, solicitor costs, mortgage costs etc.
CICT: Stack v Dowden
You can have an inferred intention by looking at the whole course of the parties dealings with each other and the land
- Barned v Phillips
What qualifies under the Stack v Dowden inferrance of a CICT
An ‘ambulatory test’: constantly walking/changing
- CPS v Piper
Proving a Stack v Dowden CICT inferrance
All depends on the facts of the case
- Marr v Colie
Cannot impute the intention under Stack v Dowden
i. e. cannot say ‘if you had thought about it there could have been an intention’
- Barnes v Phillips
Working out the size of the share in a CICT?
Implied Intention:
- The house is as much yours as mind = 50%
Decided on the amount of money paid
- Stack v Dowden
If you can’t prove the court will impute that both have a fair share
- not an equal share - fair in the eyes of the judge.
Reliance
Need to look for timing
- i.e. redecorating before the common appliance does not matter
The existence of mixed motives does not destroy reliance
Chan v Ho
The court is entitled to presume reliance as an explanation for the detriment and the burden of proof is on the defendant to prove otherwise.
Gready v Cooke
Detriment
Equity should not support a volunteer
Have to have done something relying on the common intention that you would not have otherwise done
Has to be related to the property
- e.g. paying more of the mortgage or doing up the house
Course of conduct can also infer detriment
Do not value the size of the detriment
even if you pay off the whole mortgage you may only get a 50% share in the property.
Proprietary Estoppel
The creation of equity
Remedy: money; license; proprietary share or nothing at all
Legal title of co-ownership can only be held by way of:
Joint Tenancy (s. 1 LPA 1925) - it cannot be severed to create a tenancy in common
The maximum number of legal owners
Four (s. 34 Trustees Act 1925)
- if more than 4 owners, the first four names mentioned on the conveyance will hold the legal title.
Trustees of a legal title must be
- of full age (18) (s. 1 LPA 1925)
- of sound mind (s. 22 LPA 1925)
In order to be Joint Tenants, the four unities must be present
AS Securities v Vaughn
- Possession
- Interest
- Time
- Title
How is the property held in equity at initial acquisition
- either a JT or a TiC
- Four Unities
- Express declarations
- Words of severance
- Equitable presumptions
- Trusts
Express declarations at initial aquisition
Express words prevail over any presumptions of JT or TiC ( Pink v Lawrence)
Where there are no express declarations, consider words of severance in the grant
Words such as
- ‘in equal shares’ (Payne v Webb)
- ‘to be divided between’ (Fisher v Wigg)
indicate a TiC (Malay v Credit)
If any equitable presumption exists against a JT
e.g the purchase money is provided in unequal shares.
The tenants are presumed to own a TiC in proportion to their payments
- Bull v Bull
Equitable presumptions do not apply to domestic situations
unless there is evidence to the contrary
- Stack v Dowden
Commercial situations are presumed to be
A Tenancy in Common, unless rebutted by express words
Lake v Craddock
Equity abhors a beneficial vacuum in regards to initial acquisition
therefore the equitable interest is a JT
Constructive and Resulting trust can be used to vary the property interest
But can’t do this if there is writing
- Stack v Dowden
When you can use Constructive and Resulting trusts for initial acquisitions.
As per Lord Kerr in Marr v Collie
- to show an intention to vary the interest
- not a presumption that if you paid more then there is an increase in interest in property
A Joint Tenancy
The tenants/ co-owners constitute one legal owner
In the death of a joint tenant
his ownership immediately passes to the other joint tenants by right of survivorship (Gould v Kemp)
- Not by will as these operate after death (Re Caines)
Severance will result in a
Tenancy in Common
- sever to equality, regardless of who pays for it.
A Tenancy in Common
Each co-owner has a distinct but undivided share in the land, and shares can be unequal.
- no right of survivorship applies
- It is possible to be both a JT and a TiC
Severance of a Joint Tenancy
A JT can never be severed at law
- only off the equitable interest and only affects the severing tenant
- The severing party becomes a TiC
Shares of a Joint Tenancy
In the absence of an express agreement, the shares arising from a severance of a JT are always equal
Goodman v Gallant
Unilateral Severance
- Anyone of the tenants may sever
- taking yourself out of the JT
Mutual Severance
- All of the JT’s must agree
Exploding the Joint Tenancy
- Ending the JT for everyone
Severance by Written Notice
Written notice given to all tenants stating an irrevocable intention to sever immediately
s. 36 LPA 1925
- must be a unilateral declaration
- must be an immediate action to sever (not just talking about it).
A written notice on behalf of a disabled person is allowed
Quigley v Masterton
Modes of Severance
- Written Notice
- An Act Operating on own share
- My mutual agreement or conduct
- Unlawful Killing
Written notice must be served to all other JT’s by being left at the tenants last known home or business address
s. 196 LPA 1925
If a written notice is posted
It shall be deemed delivered, even if not read by the tenant
Re 88 Berkeley
Once served, a notice cannot be revoked
Kinch v Bullard
An Act Operating on Own Share (AOOS)
Enacted Unilaterally
Needs to be done in writing
aka Williams v Hansman severance
AOOS: Total alienation
The disposition of a tenant’s share to a 3rd party
s. 53 LPA 1925
AOOS: Partial alienation
e.g. taking out an equitable mortgage
First National Securities v Hegerty
AOOS: Involuntary alienations
i.e. bankruptcy
Re Gorman
Issue of leasing out part of the premises
Some Australian cases say that is severs
Severance by Mutual Agreement or Conduct (MAC)
An agreement amongst all the JT’s to bring the JT to an end
Re Goodchild
i.e. a mutual intention to sever is inferred form actions
- does not need to be legally enforceable
- Everyone has to be party to this as it explodes the JT
MAC: inconclusive negotiations may be sufficient to sever
Nielson-jones v Fedden
- not conclusive
Burgess v Rawnsley
- was conclusive
MAC: you must look at what passes between the parties, paying little attention to what was simply in each of the parties minds
paying little attention to what was simply in each of the parties minds
Davis v Smith
MAC: Reaching an agreement to deal with a property in a way that involves severance
This is sufficient to sever
Hunter v Babbahe
MAC: It is possible for the courts to prevent a severance
if the court finds an agreement not to sever
Roy v Roy
Unlawful Killing
Murder or Manslaughter severs the murderer’s share
- does not explode the JT.
- Re Krippen
Beneficiaries under TOLATA
The beneficiaries have the right to occupy the land if that is the purpose of the trust (s. 12 TOLATA)
Termination of Co-Ownership
When sold, the proceeds of sale are split equally between the beneficiaries.
A JT ends if there is union in the sole surviving tenant, or if one tenant acquires all the beneficial interests.
If the land is sold where the sale was not ordered by the court
The trustees have the power of sale as if they were absolute owners (s. 6)
- they must consult with and have regard to the rights of the beneficiaries
Court orders under TOLATA
Anyone interested party can apply for a court order s.14 TOLAT
Must give regard to (s. 15) criteria
- intention, purpose, circumstances, wishes and the welfare of creditors and minors
S. 14 TOLATA
Allows the court to make any order in relation to co-owned land
s. 14 TOLATA: Co-ownership
Stack v Dowden
s. 14 TOLATA: Selling the property
Bank of Ireland v Bell
s. 14 TOLATA: Not to be sold
Holham v Howes
s. 14 TOLATA: Making an order that one pay rent to the other
Murphy v Guinness
s. 14 TOLATA: Excluding someone from the property
Chun v Ho
TOLATA converts trust for sale into trust of land
The mortgage Corp v Shaire
- any lender with priority does not need s. 14
S. 15 TOLATA factors now extend beyond mere purpose to include:
- the s. 15
- any criteria that the court would like to consider
s. 15: Even though the property was still being used asa family home, the interest of the secured creditor was powerful enough to force a sale.
Bank of Ireland v Bell
The court can postpone a sale to allow:
- The other co-owners to buy one out of his share
(Ali Hussein) - To sell the property themselves
(Putnam v Taylor)
Application for Sale
- arising from
- Disputes between co-owners
- Creditors / Mortgagee’s
- Bankruptcy
Application for sale: Creditors
The court’s turn a personal debt into a charge on the land
- a personal debt into a property claim
Bank of England v Bell
- Innocent people will get their money first
Mortgage Corp v Shaire
- In some cases the courts don’t order a sale
Disputes between Co-Owners
The court has discretion:
Chan v Ho (Suspended the sale)
Holman v Howes (No sale
AfS: Bankruptcy
Severs a JT, giving a TiC, which then vests in the trustee-in-bankruptcy (s. 306 Insolvency Act)
While the bankrupt trustee remains on the legal title, only the equitable interest vest in the trustee-in-bankruptcy.
In order to sell the land, the TiB must seek a s. 14 court order.
Will potential buyers be bound by an equitable interest?
s. 28 + 29 LRA 2002
The conditions for overreaching equitable interests
S. 2 LPA 1925
Mortgage Express v Lambert
- It only occurs when there is a conveyance of a legal estate (selling, mortgaging or leasing it)
- Only overreach-able rights can be overreached. (e.g. shares in co-ownership or an estoppel)
- Can only occur when you have at least 2 trustees and all trustees must agree
Equitable rights are not binding on the bank
City of London v Flegg
A court ordered sale under s. 14 TOLATA will always constitute an overreaching event
s. 2 LPA 1925
Attaching the beneficial interest to the purchase monies (Williams and Glynn v Boland)
A Lender with priority does not need s. 14 TOLATA
Really only needed when a lender does not have priority.
e.g. a lender in trouble with the bank and so resorts to TOLATA as a last resort: Alliance v Slayford.
