Co-ownership MCQs Flashcards
A couple own a house as joint tenants in law and equity. The relationship falls apart and both parties instruct solicitors. The man’s solicitor issues divorce proceedings and makes an application to the court for the house to be sold and the proceeds split evenly.
Which of the following statements best describes the severance of the joint tenancy in equity?
The issuing of proceedings may amount to severance of the equitable joint tenancy by written notice.
The joint tenancy has been severed by mutual agreement.
The issuing of proceedings amounts to a ‘unilateral act operating on a share’ and the joint tenancy has been severed.
The instruction of solicitors indicates a common mutual intention to sever the joint tenancy (i.e. severance by mutual conduct).
The man’s interest only has been severed in equity by the issuing of the proceedings.
The issuing of proceedings may amount to severance of the equitable joint tenancy by written notice.
This is correct. Whilst not definite, following (Re Drapers Conveyance) it is likely that the issuing of proceedings will amount to severance by written notice under s.36(2) of the Law of Property Act 1925.
Although it may be possible to infer mutual agreement from the issuing of and engagement in legal proceedings (see Hunter v Babbage), here we do not know enough about the other partner’s position to establish mutual agreement, implied or otherwise, to sever. Further, whilst the instruction of solicitors may a persuasive factor in establishing whether there is severance by mutual conduct, it is unlikely to be determining factor in its own right.
If severance occurs, both parties will become tenants in common, it is not possible to have a single joint tenant.
Four journalists are the legal and equitable joint tenants of a registered freehold property. One of the journalists is seconded to Ottawa. Six months into the secondment, the journalist writes an unsigned letter to the other three journalists which is sent to the freehold property. The letter says:
‘I am thinking I want my share in the property sold in a year’s time.’
Which of the following options best describes whether severance has occurred on the facts?
Severance has not occurred because the letter has not been correctly served on the equitable joint tenants
Severance has not occurred because the letter is unsigned
Severance has occurred by notice in writing
Severance has not occurred because the notice does not show a desire to sever with immediate effect.
Severance has occurred by an partial alienation
Severance has not occurred because the notice does not show a desire to sever with immediate effect.
This is correct. The notice in writing must demonstrate an unequivocal and immediate intention to sever - Harris v Goddard [1983] 1 WLR 1203. Here the desire to sever does not show an intention to bring about the result immediately, it says for the property to be sold in a year’s time. The letter would otherwise comply with the requirements of a ‘notice in writing’ - it is in writing, addressed to the other equitable joint tenants and correctly served on them at their place of abode. It does not matter that the letter is unsigned (Re Draper’s Conveyance [1969]).
Two trustees (A and B) hold property on trust for three beneficiaries in equal shares (C, D, and E), who live at the property. The property is mortgaged to a bank and the payments are up to date. E has just turned 18, and wants the property to be sold to use the share of the proceeds to take a gap year and travel the world. C and D are trainee doctors working at the local hospital and do not wish the property to be sold.
Which of the following statements best describes whether E’s application for an order for sale is likely to be successful?
E’s application for an order for sale is likely to be granted because the purpose for which the property is held, as a joint home, is no longer capable of continuing.
E’s application for an order for sale is likely to be granted because the combined interests of E and the bank outweigh those of C and D
E’s application for an order for sale is likely to be granted as the property is mortgaged and the court gives greatest weight in practice to the interests of the secured creditor.
E’s application for an order for sale is likely to be refused by the court because C and D oppose the sale and the combined value of their interests is greater than E’s.
E’s application for an order for sale is likely to be refused because the welfare of a minor who occupies the property will outweigh all other considerations.
E’s application for an order for sale is likely to be refused by the court because C and D oppose the sale and the combined value of their interests is greater than E’s.
This is correct. TLATA 1996, s 15(3) allows the court to take into account the circumstances and wishes of the beneficiaries aged 18 and over and give effect to the wishes of the majority by value. The interests of the bank will not weigh heavily as the payments are not in arrears and the bank will continue to be paid monthly instalments.
Five friends (all aged over 18) purchase a restaurant with the intention of running it as a business. The friends contribute equally to the purchase price and the property is conveyed to all of the friends in the same document. There is no express declaration of trust and there are no words in the transfer deed as to how the property is to be held.
Which of the following statements best explains how the friends hold the property in equity?
The friends can only hold the property as tenants in common as only unity of possession is present in the circumstances
The first four of the five friends named in the transfer deed will hold the property as joint tenants
There is a presumption that the friends hold the property as joint tenants as there are no words of severance
As there is no express declaration of trust, equity presumes that the friends hold the property as tenants in common
Given the nature of the property and purpose of the purchase, there is a presumption that the friends hold the property as tenants in common
Given the nature of the property and purpose of the purchase, there is a presumption that the friends hold the property as tenants in common
This answer is correct as it states that the friends wish to use the property for business purposes. Equity is therefore likely to presume a tenancy in common. See cases such as [Lake v Craddock] [Stack v Dowden] and [Jones v Kernott] as to equitable presumptions commercial situations where there is no express declaration of trust or words of severance.
Four siblings (A, B, C and D) are the legal and equitable owners of a registered freehold property. When the property was purchased, they made an express declaration to hold the property ‘on trust for themselves as equitable joint tenants’. Last month, C was declared bankrupt and a trustee in bankruptcy was appointed. Last week, A died. In A’s will, A left everything to E.
Which of the following options correctly describes the equitable ownership of property?
B and D hold 75% as equitable joint tenants. C holds 25% as a tenant in common.
E holds 25% as a tenant in common. B, D and C hold 75% as equitable joint tenants.
B, C and D hold 100% as equitable joint tenants.
B and D hold 50% as equitable joint tenants. C holds 50% as a tenant in common.
B, D, C and E each hold 25% as tenants in common.
B and D hold 75% as equitable joint tenants. C holds 25% as a tenant in common.
This is correct. A died as an equitable joint tenant, and therefore the right of survivorship operated and A’s interest in the property passed to the remaining joint tenants, B and D.
C’s interest had already been severed at this point. When C was declared bankrupt this automatically severed C’s interest, which vested in C’s trustee in bankruptcy. On severance, C got an equal share, which at the time was 25% (Goodman v Gallant). The subsequent death of A had no effect on this.
Three colleagues (E, F and G) run a business together and are the registered freehold owners of their commercial premises which they hold as beneficial joint tenants.
Two weeks ago, F told G and H that F would like to retire in six months’ time. All three discussed what would happen to the premises when F retired. F wanted G and H to buy out F’s share for £230,000. G and H felt that this might be a good idea in principle, but did not want to commit itself and wanted to think about other ways of dealing with the situation. Last night F died. Nothing further had been done about buying F’s share. In their will, F has left all of their property to their partner, H.
Which of the following statements best describes the position regarding ownership of the property?
E and G hold the legal title as joint tenants; E and G hold 2/3 equitable title as joint tenants and H holds 1/3 as tenant in common
E and G hold the legal title as joint tenants and H holds the equitable title
E H and G hold the legal title as joint tenants; E and G hold 2/3 equitable title as joint tenants and H holds 1/3 as tenant in common
E H and G hold the legal and equitable titles as joint tenants
E and G hold the legal title and equitable titles as joint tenants
E and G hold the legal title and equitable titles as joint tenants
This is correct. The legal joint tenancy cannot be severed (Law of Property Act 1925, s 36(2), and E F and H have not reached a mutual agreement to sever the equitable joint tenancy: Burgess v Rawnsley as they had not reached the point where all joint tenants regarded one person’s share as separate. Their further deliberations need not necessarily involve severance. As F died as a legal and equitable joint tenant, survivorship applies meaning that the interest accrues to the survivors, E and G.
Five friends (A, B, C, D and E) purchased property together as beneficial joint tenants. At the time of the purchase C was 17 years old. Six months after the purchase, D died in a car accident and by D’s will, F inherited all of D’s property.
Who currently holds the legal title?
A, B and C
A, B, C and F
A, B, E and F
A, B, C and E
A, B and E
A, B and E
This is correct. Originally, the legal owners were A, B, D and E as joint tenants. C could not hold legal title as legal owners must be aged 18 or over. On D’s death, the rule of survivorship applies and the joint tenancy continues to be held by the survivors, A, B and E.
Four people purchase a registered freehold property for use as office premises to run their architect firm. The four people hold the property as joint tenants. The equitable interest of one of the people (the ‘partner’) is subsequently mortgaged with a local bank. On examining the related paperwork, the partner notices that the mortgage contract has not been signed by the bank.
Which of the following statements best represents the legal position in respect of the partner’s equitable interest?
The partner’s equitable interest has been severed by partial alienation
All of the four people now hold an equitable interest as tenants in common, 25% each
The partner now holds a 50% interest in equity as a tenant in common
The partner’s equitable interest has not been severed as the contract has not been signed by both parties.
The partner’s equitable interest automatically vests in the bank
The partner’s equitable interest has been severed by partial alienation
This is correct. A mortgage of an equitable interest has been created on the facts. The necessary formalities for this mortgage are as per s. 53(1)(c) Law of Property Act 1925, which have been complied with on the facts (it does not matter that the lender has not signed the mortgage, it only needs to be signed by the grantor - the partner). Such a mortgage has the effect of severing the interest of the mortgagor in equity - it is an ‘act operating on your own share’, a form of partial alienation (First National Security v Hegarty [1985]).
Question 1
A solicitor acts for a husband and wife in the purchase of a freehold property (‘the Property’) for £350,000. The wife contributed £150,000 and the husband contributed the remaining £200,000. The Property is transferred to them as express beneficial joint tenants in equity.
Which of the following best describes how the Property is held?
A The Property is held as a tenancy in common due to the unequal contributions made to the purchase price.
B The Property is held legally and beneficially as joint tenants due to the express declaration of trust.
C The Property is held as a joint tenancy as the four unities are present.
D The equitable interests are held in a tenancy in common as the presumption for a joint tenancy has been rebutted by unequal contributions.
E The equitable interests are held as a joint tenancy as the express declaration of trust is conclusive.
Answer
The correct option is B.
The husband and wife hold the legal estate as trustees as joint tenants (s 1(6) LPA 1925). The four unities are present which would indicate a joint tenancy (or a tenancy in common). Option C is correct but is not the best answer as it does not reflect the express declaration.
There is an express declaration that the husband and wife hold the equitable interests as joint tenants. Option E is, therefore, correct, but not the best answer as it does not take account of how the legal estate is held.
The express declaration is conclusive, notwithstanding the unequal contributions made to the purchase price. Options A and D are, therefore, wrong.
Question 2
Four students (a chemistry student, an economics student, a geography student and a music student) purchased a property (‘the Property’) for them to live in whilst they studied at university. The chemist, economist and geographer each provided 20% of the purchase price. The musician contributed the remaining 40% of the purchase price. The Property was transferred to them as beneficial joint tenants in equity.
The economist 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 chemist 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 economist holds 25% as a tenant in common, with the geographer and the musician holding the remaining 75% as joint tenants.
B The economist, the geographer and the sister hold 20% each, with the musician holding 40% as tenants in common.
C The economist and the sister each hold 25% as tenants in common with the geographer and the musician holding 50% as joint tenants.
D The economist holds 20% as a tenant in common, with the geographer and the musician holding the remaining 80% as joint tenants.
E The economist holds 20% as a tenant in common with the musician and the geographer holding a joint tenancy, with the musician holding 50% and the geographer
holding 30%.
Answer
The correct option is A.
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 A is, therefore, correct.
* When the economist mortgaged his interest, this severed the joint tenancy in relation to the economist. The effect was that the economist 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 D is, therefore, wrong.
* When the chemist 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 geographer and the musician, survived her. Options B and C are, therefore, wrong as the sister has no interest in the Property.
* Option E is incorrect as identifying shares is inconsistent with a joint tenancy. Plus, the maths is wrong in that the economist holds 25%.
Question 3
A father gifts his house (‘the Property’) to his children (a son, a step-son, a daughter and a step-daughter) as beneficial joint tenants. The Property is transferred to them. At the time of the transfer, the step-daughter is 17 years old.
The son 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 son retires as a trustee.
At the step-daughter’s 18th birthday party, the step-son (knowing he is terminally ill) gives the daughter and step-daughter a written notice stating that he wishes to immediately sever his joint tenancy. Subsequently, the step-son dies and, in his will, leaves his interest in the Property to his wife.
Which one of the following best describes how the Property is held?
A The trustees are the daughter and step-daughter who hold for the friend, the wife and themselves as joint tenants in equity.
B The daughter is the remaining trustee and she holds for the friend as a tenant in common as to 25% and the step-son, the daughter and the step-daughter as joint tenants of the remaining 75%.
C The daughter and step-son are the trustees holding for the friend and the wife as tenants in common (25% each) and the daughter and step-daughter as joint tenants of the remaining 50%.
D The trustee is the daughter holding for herself and the step-daughter as joint tenants of 50% and the friend and the wife as tenants in common of 25% each.
E The trustees are the daughter and step-daughter who hold for themselves and the friend and wife as tenants in common as to 25% each.
nswer
The correct option is D.
Looking at the facts chronologically: Legal estate
The original trustees were the son, the step-son and the daughter who held the legal estate as a joint tenancy. The step-daughter 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 A and E are wrong. After all the events, the daughter 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 son sells his interest
The son selling his interest to the friend severs the joint tenancy in relation to the son’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 son resigns as a trustee. This means that the remaining trustees of the legal estate are the step-son and the daughter.
The step-son’s notice
This is formal severance (s 36(2) LPA 1925) and complies with the requirements as it is in writing, is given to the other joint tenants and expresses the necessary immediacy. This severs the step-son’s equitable interest so that he holds 25% as a tenant in common.
Option B is, therefore, wrong as it does not take account of the severance by written notice.
The step-son’s death
In relation to the legal estate, the daughter survives the step-son and becomes the sole trustee. Option C is, therefore, wrong as the step-son has died and cannot, therefore, be a trustee.
In relation to the equitable interest, the step-son had severed the joint tenancy and, at the time of his death, was a tenant in common. Survivorship does not occur and the step-son’s interest goes to the wife. The equitable interests are held as follows:
The wife = 25% as a tenant in common
The friend = 25% as a tenant in common
The daughter and step-daughter = 50% as joint tenants.
Question 3
A married couple purchase a registered freehold property with the help of the wife’s parents. The parents contributed half the purchase price and occupy the property. One year after their purchase, the married couple obtain a loan in return for the grant of a mortgage in favour of a lender. The married couple default on the loan and the lender seeks to exercise its power of sale.
Is the lender bound by the interests of the wife’s parents?
A Yes, the wife’s parents have an overriding interest which is binding on the lender.
B Yes, the wife’s parents have actual occupation which is binding on the lender.
C Yes, because the lender has failed to overreach the wife’s parents’ interest.
D No, because the occupation by the parents occurred after the mortgage was created.
E No, because the lender has overreached the parents’ beneficial interest under a trust.
Answer
The correct option is E.
The lender paid capital money to two trustees (the married couple). This had the effect of lifting the beneficial interests of the parents (as a consequence of their contribution to the purchase price) from the property and to the proceeds of sale (ie the loan advance from the lender). Option C is, therefore, wrong.
Option A is wrong because although the parents may have a beneficial interest under a trust protected as an overriding interest, such an interest has been overreached by the lender.
Option B is wrong as occupation alone does not create an overriding interest. This must be coupled with a proprietary interest in land.
Option D is wrong because the facts clearly indicate that the parents were in occupation prior to the advance by the lender.
A commercial property is purchased by A and B who each contribute half of the purchase price. The legal title is registered in A’s name only. What is the position regarding A and B?
A holds the property on constructive trust for A and B
A holds the property on resulting trust for B
A holds the property on constructive trust for B
There is no trust as A is named as legal owner
A holds the property on resulting trust for A and B
A holds the property on resulting trust for A and B
Which of the following best describes the position of the legal owners where there is a trust of land?
They are able to sign transfer deeds and mortgage documents
They are the registered owners in the proprietorship register
They are entitled to an equal share of the sale proceeds
They are trustees acting in an administrative capacity
They are the absolute owners of the land
They are trustees acting in an administrative capacity
This is correct. The legal owners are named as the proprietors in the register, but have duties of trusteeship. They have the power to sign transfer deeds, contracts and mortgage documents but they hold the property on trust for the beneficiaries
According to the case of Burgess v Rawnsley what is required for a beneficial joint tenancy to be severed by mutual agreement?
All equitable owners must reach a specifically enforceable agreement to sell one person’s share
All equitable owners must show expressly or impliedly that they agree that one person’s share is severed
All legal and equitable joint tenants must reach a specifically enforceable agreement to sever one person’s share
All equitable joint tenants must show expressly or impliedly that they agree that one person’s share is severed
All equitable joint tenants must reach a specifically enforceable agreement to sever one person’s share
All equitable joint tenants must show expressly or impliedly that they agree that one person’s share is severed
This is correct. The only people who must reach mutual agreement are the people affected by severance: the equitable joint tenants. They need not go as far as to make their agreement specifically enforceable, but there must be a point in time where the joint tenants agree, expressly or impliedly, that one person’s share is held separately.
