Co-ownership of Land

Question 1

How is co-owned land held?

Answer 1

All land that is co-owned is held in trust.

Whenever you have two or more people holding the legal title of property, you always have a trust in land. Simply, whenever you have co-ownership you have a trust in land.

Question 2

What is co-ownership of land?

Answer 2

Co-ownership of land is when two or more people own the legal title of a freehold or leasehold in land at the same time.

Question 3

How is a trust of land held?

Answer 3

Trustees hold the legal title.

Beneficiaries hold the equitable title.

Trustees have duties of ownership and management over the property. The beneficiaries are the ones who actually own the land. So although legal title may be held in the trustees names, the property will actually belong to the beneficiaries.

Question 4

How is the legal title held in a co-ownership setting?

Answer 4

Legal title is always held by two or more individuals (trustees).

That legal title is always held at law as a joint tenancy (regardless how how it is beneficially held).

The right of survivorship applies to the legal title. When one legal joint tenant owner dies, their legal ownership dies with them. You cannot pass a legal joint tenancy in a will.

Question 5

What are the four unities for a joint tenancy to exist at law?

Answer 5

1. Unity of possession: all co-owners are entitled to possession of the land
2. Unity of interest: the co-owners hold the same legal estate
3. Unity of title: the co-owners derive their title from the same document
4. Unity of time: the co-owners’ interests must vest at the same time (ie from same transaction or document)

Question 6

How can the equitable title be held in a co-ownership?

Answer 6

Equitable title can be held either as a joint tenancy or a tenancy in common.

• Therefore need to distinguish between how title is held at law and how ownership is held at equity
• Holders of the title at law and equity may be the same but can be different.

Question 7

What is a joint tenancy?

Answer 7

If the equitable interest is held as a joint tenancy, then:

• The equitable interests are held equally between the beneficiaries as one; and
• Survivorship applies to the beneficial interest (if one of the beneficiaries dies, their interest dies with them, and it cannot be passed down in a will).

Question 8

What happens to a joint tenancy if one of the unities is not present?

Answer 8

If any one of the unities in not present (possession, interest, title, time), you will have a tenancy in common.

Question 9

What is a tenancy in common?

Answer 9

If the beneficial interest is held as a tenancy in common, the beneficiaries each have a separate share, which they can do what they like with: sell or hand down in a will.

Doctrine of survivorship does not apply.

Question 10

What can be used to determine if property is held as a JT or TiC?

Answer 10

Express declaration of trust: the parties state that the property is to be held in equal or unequal shares

Words of severance: words are used which indicate how the property is to be held - e.g. indicating that the shares are to be split or divided

Have the parties contributed money in unequal amounts?

In a family situation, the presumption is a JT (even if money has been given in equal amounts.

Question 11

How can an equitable joint tenancy be severed?

Answer 11

1. By written notice served on all other equitable JTs, with the immediate desire to sever expressed in the notice.
2. JT operating on their own share (transferring it to a third party, being bought out, mortgaging their interest or bankruptcy)
3. Severance through mutual agreement: all JTs agree to sever

Question 12

What happens after a JT has severed their interest?

Answer 12

After a severance, the JT who severed their interest will hold it as a TiC. The remaining JTs will still hold their equitable interest as JTs in equal shares.

B/c the equitable share is now held as a TiC, it can be passed down in a will.

Question 13

How can a co-ownership trust come to an end?

Answer 13

Co-owned land owned by one JT: Under the doctrine of survivorship, if all the JTs die, they pass their share on to the other JTs. If one is left, the trust comes to an end

Overreaching: Purchaser pays the purchase money to 2 or more trustees. Trust over the land comes to an end

Partition of co-owned land: Land is physically divided between co-owners

Court order of sale under s14 and s15 Trusts of Land and Appointments Act 1996 (TOLATA):

A trustee or beneficiary can apply for an order of sale under s14 where the owners cannot agree what to do with the property.

The court under s15 will look at a range of factors to see if the home should be sold (ege are there children living in the home)?

Question 14

What is needed for an express trust of land?

Answer 14

Trust must be evidenced in writing and signed by the declarants.

Question 15

What are the two types of implied trusts of land?

Answer 15

1. Resulting trust - commercial relationships
2. Constructive trust - domestic relationships

Question 16

When might a resulting trust arise?

Answer 16

A resulting trust may be implied if, eg, a property is bought in A’s name, but B makes a financial contribution. So B paid 25% of the price. A will hold the property on trust for A and B in a 75:25 ration.

Question 17

When might a constructive trust arise?

Answer 17

Constructive trusts arise in a wider range of circumstances, but all respond to unconscionability. They will therefore be imposed in cases where it is unconscionable for the legal owner of the land to deny the interest of another person.

Question 18

Which statute governs the operation of trusts in relation to co-owned land?

Answer 18

Trusts of Land and Appointment of Trustees Act 1996

Question 19

What formalities must be complied with in order to create an implied trust of land?

Answer 19

No formalities are necessary for the creation of a trust of land.

Question 20

What is a joint tenancy?

Answer 20

Where there is a joint tenancy all co-owners are deemed to constitute one single entity and own the whole property as one collective entity. Where a joint tenancy exists the right of survivorship applies. Four unities must be present.

Question 21

What are the features of a joint tenancy?

Answer 21

1. Single entity
2. No shares: composite ownership
3. Level of contribution is irrelevant
4. Must have 4 unities
5. Survivorship applies

Question 22

What is a tenancy in common?

Answer 22

A tenancy in common requires only unity of possession, although the other unities may be present.

Tenants in common are not viewed as a single entity but as each having a distinct but undivided share in the land. Each has a clearly quantified share of the whole. Right of survivorship does not apply.

Question 23

What are the features of a tenancy in common?

Answer 23

1. Each person has own share
2. Individual but ‘undivided’ shares
3. Share can be proportionate to contribution
4. Must have unity of possession
5. No survivorship: share passes with Will

Question 24

What are the four unities?

Answer 24

1. Unity of possession
2. Unity of title
3. Unity of interest
4. Unity of time

Question 25

What is unity of possession?

Answer 25

Each co-owner is as much entitled to possession of any part of the land as the others. No co-owner can be excluded from any part of the land.

Question 26

What is unity of title?

Answer 26

All co-owners must acquire their title from the same document. This will be satisfied if they all obtain title from the same transfer deed or lease.

Question 27

What is unity of interest?

Answer 27

The interest in land held by each co-owner must be of the same nature and duration.

For example, in a leasehold context, all owners must hold the lease for the same length of time, with joint obligations. In a freehold context, the owners must hold the same freehold interest, such as legal fee simple or an equitable freehold.

Question 28

What is unity of time?

Answer 28

The interest of each co-owner must vest at the same time. This does not mean that they must all sign the document at the same time or move into the property at the same time.

To have unity of time, the interest of each co-owner must take effect at the same time.

Question 29

When does survivorship apply?

Answer 29

When property is held as joint tenants. Not tenants in common.

Question 30

How many legal owners can their be?

Answer 30

Maximum of four legal owners.

If land is transferred to more than four people the first four names who are sui juris will be the legal holders.

Question 31

What is sui juris?

Answer 31

Trustees must be sui juris which means they are of full age and sound mind.

Question 32

How many people can hold equitable title?

Answer 32

There is no limit on the number of people who can hold an equitable interest in a piece of land.

No requirement to be sui juris.

Equitable owners can choose whether they hold the equitable title as joint tenants or tenants in common.

Question 33

When is there a rebuttable presumption of a tenancy in common?

Answer 33

Where land is a business asset; and

The purchase price of a non-domestic property has been paid in unequal shares.

Question 34

What if the four unities are present but there is an express declaration that the owners hold as tenants in common?

Answer 34

An express declaration that the owners hold as tenants in common will prevail.

Falling short of an express declaration: words such as ‘in equal shares’ or ‘equally’ may be present which indicate that the parties intend to have shares.

Question 35

What is severance?

Answer 35

The process of separating off the share of a joint tenant so that the concurrent ownership will continue but the right of survivorship will no longer apply. The parties hold separate shares as tenants in common.

It changes the basis on which the equitable co-owners continue to hold the equitable title - will remain as legal joint tenants.

Question 36

Can you sever a joint tenancy in a will?

Answer 36

No. Making a will does not sever a joint tenancy as it take effect after death, whereas survivorship takes place immediately on death.

Question 37

How does severance of an equitable joint tenancy take place?

Answer 37

LPA 1925, 36(2) Either:

1) notice in writing;

or

2) ‘other acts or things’

Three ‘other acts or things’:

1) Unilateral act by one joint tenant: (no need for other tenants to know or agree)
- total alienation: disposes of equitable interest permanently such as sale or gift
- partial alienation: mortgage or lease
- involuntary alienation: bankruptcy (will vest in trustee in bankruptcy)

2) Mutual agreement: when all equitable jt agree one person’s interest is servered (need not be formal contract)

3) Mutual conduct

Question 38

If a joint tenant successfully severs the equitable joint tenancy how will they will hold a tenancy in common?

Answer 38

They will hold it in an equal share based on the number of former joint tenants (not on the proportion of contributions made the initial price).

The remaining tenants (if more than one) will continue to hold as joint tenants.

Question 39

What are the conditions for a notice in writing to sever an equitable joint tenancy?

Answer 39

Give notice in writing to ALL of the other equitable joint tenants.
- does not have to be read, even if not read and destroyed before it is read it will still take effect
- no distinction between ‘giving’ and ‘serving’ notice.
- will be deemed served if left at ‘last known place of abode or business’
- severance takes place the moment the notice is served

No formalities, and does not need to be signed.

BUT needs to demonstrate an unequivocal and irrevocable intention to sever the equitable joint tenancy immediately.

Note: requisite intention may be inferred in the circumstances e.g. An application to court for an order that the matrimonial home be sold immediately and the proceeds of sale split equally.

Question 40

How can severance occur by ‘other acts or things’?

Answer 40

Three ways (Williams v Hensman):

1. A unilateral act by a joint tenant operating on its own share
2. Mutual agreement of the joint tenants
3. Any course of dealing which indicates that the interests were mutually treated as constituting a tenancy in common (mutual conduct)

Question 41

What is an act of total alienation?

Answer 41

Acts of total alienation occur when the severing owner disposes of the interest permanently by way of sale or gift of the interest.

Question 41

What are unilateral acts by one joint tenant that amount to serverance?

Answer 41

Unilateral: means there is no requirement for the other tenant(s) to know or consent to the act for serverance to take place.

Can be subdivided into: total alienation, partial alienation; and involuntary alienation

Question 42

What are acts of partial alienation?

Answer 42

Acts of partial alienation occur where the severing owner temporarily disposes of the interest by way of mortgage or lease. This is partial alienation because when the loan is repaid or the lease expires the holder will take the interest back unencumbered.

mortgage over an equitable interest is deemed to be a mortgage/sale of their equitable interest only. This will have the effect of severing their equitable interest in the property.

Question 43

What is an act of involuntary alienation?

Answer 43

This occurs when the joint tenant is declared bankrupt by the court. It is ‘involuntary’ as this will happen against the will of the joint tenant.

Question 44

What is severance by mutual agreement?

Answer 44

Will occur only when all equitable joint tenants agree that one person’s interest is severed, thereby creating a tenancy in common.

Closely linked to mutual conduct.

The agreement need not go as far as being a specifically enforceable contract to sell the interest; but it must amount to an agreement that one person’s interest is separate or severed.

• doesn’t matter if agreement is never acted upon. E.g. an informal agreement to buy share of the property from the other
• significance of the agreement is not that it binds the parties; but that it serves as an indication of a common intention to sever something which it was indisputably within their power to do so.

Question 45

What is mutual conduct?

Answer 45

Most likely to arise where the parties have not reached a point where there could be said to be a ‘mutual agreement’ to sever, but there may still be severance by ‘mutual conduct’

e.g. negotiating over a period of time suggests that they do recognise and are treating one person’s interest as being separate - but difficult to prove (negotiations more likely to show is there is no agreement)

• found that making mirror wills which treated property as held as t-in-c was evidence of a course of conduct that their property was not be held jointly

Question 46

What must be present in order for the joint tenancy to be severed by mutual agreement?

Answer 46

An express or inferred agreement to change the basis on which co-ownership will continue

Question 47

Who can apply to the courts under s14(1) TOLATA regarding disputes which involve co-owned land?

Answer 47

Anyone with an interest in the land can apply.

Any person who is a trustee of land or has an interest in property subject to a trust of land may make an application to the court for an order under this section.

E.g. trustees, beneficiaries, mortgagees of the legal or equitable title; trustees in bankruptcy; people who hold charging orders

Question 48

What powers does the court regarding disputes of co-owned land?

Answer 48

May order trustees to do something, e.g. sell; or allow a beneficiary into occupation

It cannot order one beneficiary to ‘buy out’ the other.

Orders: orders for sale (which may be postponed); orders as to who occupies; and orders as to the nature or extent of a beneficiary’s interest.

Question 49

What matters must a court have regard to when making a decision regarding a s14 application?

Answer 49

All factors must be considered equally.

• intentions of the person or persons (if any) who created the trust; (only applies to lifetime trusts or will trusts)
• the purposes for which the property subject to the trust is held;
• the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home
• the interests of the secured creditor of any beneficiary
• the circumstances and wishes of any beneficiaries of full age (or if in dispute) of the majority according to the value of their combines interests.

Question 50

S15 factors: the purposes for which the property subject to the trust is held

Answer 50

The court will look at the purpose for which the property was bought and whether that purpose is still continuing.

If the purpose is still continuing it will weigh against an order for sale being made.

e.g. a family home - if still being used as a family home has a continuing purpose (especially where the children are minors - father told to make application when the children were older)
- in a diff case where there were no children and the wife applied for an order for sale found that it would be granted because the purpose of the family home was no longer continuing: and a joint purpose cannot be carried out unilaterally (and the wife was no longer living there)

Question 51

S15: welfare of any minors

Answer 51

Heavily depends on circumstances.

Younger children may have greater weight attached to welfare than a young person who is 17 and is independent and working.

Question 52

S15: interests of the secured creditor of any beneficiary

Answer 52

Interests of creditors are just one consideration. There is no presumption for or against sale at the start. Recent cases however have given more weight to the creditor.

• ordered sale where purpose for family home was continuing but wife had enough equity to purchase a smaller house
• ordered even though children’s education at a specialist school would be disrupted. The court stated commercial interests should take precedence over the residential security of the family (but did postpone a year to give family time to relocate)

Question 53

s15: wishes of beneficiaries over 18

Answer 53

If there is a dispute the court shall have regard to the majority in respect of value of interest held