Co-Ownership and Trusts of Land Flashcards
When can a trust of land be created?
Express – can arise where a landowner intentionally sets up a trust of your land by transferring title to trustees for the benefit of others
Implied - Where a person acquires an interest in land that is owned by another person by their conduct
Implied – Where land is bought by more than one co-owner at a time
How are the interests in land under a trust held?
Legal estate held by the trustees
Equitable interests which they hold on trust for beneficiaries
Remember that the trustees and beneficiaries can be the same people, as trusts of land arise automatically when a couple jointly buy a house for example
Broadly, how can land be held by co-owners?
Legal estate is always held as joint tenants (maximum of four trustees)
Equitable interests can be held as joint tenants or tenants in common
What does ‘joint tenancy’ mean?
- Each tenant owns the whole share, together with the other joint tenants - Undifferentiated ownership
- The interest passes to the survivor(s) on death – automatically and immediately - Doesn’t pass under the will/intestacy
- The legal estate must be held by joint tenants and cannot be severed
Name the tests used to determine if there is a joint tenancy or tenancy in common in equity
1) Four unities
2) Express declaration
3) Words of severance
4) Presumptions
What does the four unities test involve?
Cannot be a joint tenancy unless all four are present, but it is not conclusive on its own
1) Unity of possession – each co-owner has a right to possession
2) Unity of interest – each co-owner has identical rights over the land
3) Unity of time – co-owners receive their interests at the same time
4) Unity of title – co-owners acquire their interest from same document
What does the express declaration test involve?
If the four unities are present, look for an express declaration of trust as to how the property is held
This is conclusive – ie if the transfer deed says it’s for beneficial joint tenants, then it is
What does the words of severance test involve?
If there is no express declaration, look for words of severance in document of transfer
These are words that indicate the co-owners are to have distinct shares, such as ‘Half to A and half to B; to be divided equally; in equal shares’
How do presumptions work in determining if there is a joint tenancy or tenancy in common in equity?
If there is no express declaration + no words of severance, then there is a presumption of joint tenancy in equity. Rebutted where:
- Property acquired for business use
- Unequal contributions to purchase price
Presumptions only considered as last resort in absence of other evidence
What does ‘tenancy in common’ mean?
Each owner is regarded as having a distinct share in the land - These shares might be unequal
Interest passes by will or intestacy
Only unity in possession is needed for there to be a tenancy in common
What happens when a purchaser under 18 buys a property with others?
They are not old enough to be a legal owner, so they have an equitable interest only
They do not automatically acquire a legal interest on reaching 18 either
Explain the effect of severing the joint tenancy in equity
Equitable interest can be converted to a tenancy in common
Severance must occur during the lifetime of the person who wants to sever – a will couldn’t cause severance
Severing means that the share avoids the right of survivorship
Severing party remains a legal trustee, as the joint tenancy in law cannot be severed
Where there are two joint tenants, they both become tenants in common in equal shares after severance
Where there are three or more joint tenants, only the co-owner who severs their tenancy becomes a tenant in common - The other joint co-owners hold the remaining ‘share’ as a joint tenancy
How can severance be achieved with written notice?
- Doesn’t have to be signed or consented to by others
- Has to be written in a way which intends to sever the interest immediately – future desire insufficient
- Has to be properly served on the other joint tenants
i) If sent by registered post, notice of severance is deemed to have been served if it is not returned undelivered by the post office
ii) Notice is sufficiently served if left at last known place of abode, even if later destroyed
iii) Destroying the letter after it’s been validly served, but before its read, doesn’t negate its validity
In what other ways can severance occur?
Doing something with your own share – unilateral acts (alienation) - Trying to sell share for example
Joint tenants agree to sever by mutual agreement, or a course of dealing implies severance (they assume they are tenants in common for a significant period of time)
Involuntary severance can occur where you murder another joint tenant or bankruptcy of a joint tenant
When does a resulting trust in land arise?
A resulting trust arises where a non-owning party has contributed to the initial purchase price when the land is first bought – this results in an automatic trust
When does a constructive trust in land arise?
A constructive trust can exist where there has been some kind of agreement between the co-owners and the non-owning party has acted to their detriment in reliance on that agreement
Must be express or inferred common intention + detrimental reliance
A constructive trust can be made either at the time of purchase or at any point during the time of ownership by the legal owner
- They may have said ‘treat this house as yours too’ and later paid regular mortgage payments for example
- Paying mortgage alone might also provide the necessary common intention if there is no agreement
How can disputes about co-ownership be settled?
‘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’
Court will usually either grant or refuse the sale of the property after considering the intentions of the people who made the trust, the purposes for which the property was held, welfare of minors etc when deciding how to resolve the dispute
These factors, such as welfare of minors, are not paramount, but the court has regard to them.
