Land 6

Question 1

In what circumstances is co-ownership created expressly?

Answer 1

• Transfer* Conveyance (purchase or gift)* Under a will or through intestacy The terms upon which the co-owners have acquired the land are specified in the document by which they obtained their interest.

Question 2

What will the court do where, e.g. two parties buy a property, each contributing to the purchase price, but legal estate is conveyed to only one?

Answer 2

Infer a resulting trust, with the legal owner holding the estate on trust for both

Question 3

What options are available to the court where two parties buy a property, the legal estate is conveyed to only one, and the contributions are (1) equal and (2) unequal?

Answer 3

1. Equal: Joint tenancy2. Unequal: Tenancy in common

Question 4

What is the difference between the legal estate and the equitable interest?

Answer 4

A trust arises automatically when land is held by a person or persons ‘upon trust’ for another.* The person who holds the legal estate is on the deed/register as the proprietor and is the trustee. * The equitable interest belongs to those who are entitled to the sale proceeds if the land is sold (the beneficiaries ‘behind the curtain’).In many cases, both the legal estate and equitable interest will be held by the same people but note, it is possible for the trustee not to have any entitlement to the sale proceeds at all.

Question 5

What way must the legal estate be held, and why?

Answer 5

As joint tenants, because tenancy in common cannot exist at law

Question 6

What does the doctrine of survivorship provide?

Answer 6

If a joint tenant dies, their interest automatically passes to the surviving tenant(s)

Question 7

How is a joint tenant’s ownership described?

Answer 7

They do not have a share in the land, but are each entitled to possess the whole

Question 8

What is the impact of the doctrine of survivorship?

Answer 8

Any attempt to gift or leave a joint tenancy upon death will fail, and it will revert automatically in the surviving joint tenants

Question 9

What is the maximum number of trustees that can hold the legal estate?

Answer 9

Four (note, all must be over 18 and of sound mind)

Question 10

A and B are married. B has documentation showing she has provided all of the money to buy their house but the legal title is held in the sole name of A. Who holds the legal estate and who holds the beneficial interest?

Answer 10

A will hold the legal estate on trust for B (as a bare trustee). When the house is sold, B is entitled to all the sale proceeds and A is not entitled to any of the sale proceeds. Here co-ownership has arisen by operation of law, as B has acquired an equitable interest by virtue of her contribution and her interest arises under an implied trust.

Question 11

A and B buy a house together. They contribute equally to the purchase price. Who holds the legal estate and who holds the beneficial interest?

Answer 11

The legal title is held in their joint names. They are holding the legal estate on trust for the two of them. When the house is sold, they are both equally entitled to the sale proceeds. Here, co-ownership has been created deliberately, as the property was transferred to A and B as co-owners.

Question 12

A, B, and C buy a house together. They have documentation showing they have all contributed equally to the purchase price. The legal title is held in the joint names of A and B. Who holds the beneficial interest?

Answer 12

They are holding the legal estate on trust for all three of them. When the house is sold, A, B, and C are all equally entitled to the sale proceeds.

Question 13

A, B, and C own a parcel of land together as joint tenants. B dies and leaves all of her property to her son D. What is D entitled to?

Answer 13

Nothing, B’s interest in the jointly owned parcel passes to the other joint tenants (A and C) by virtue of the doctrine of survivorship; B has no interest in the property to leave to D.

Question 14

What are the two ways an equitable interest can be held?

Answer 14

1. Joint tenancy2. Tenancy in common

Question 15

What is the limit on the amount of people that can hold the behind-the-scenes equitable interest?

Answer 15

No limit

Question 16

Does the doctrine of survivorship apply to joint tenancies in equity?

Answer 16

Yes

Question 17

Does the doctrine of survivorship apply to tenancies in common?

Answer 17

No, a tenant in common is entitled to a specific share of the property which can be disposed of or left by will or on intestacy

Question 18

When will a tenancy in common be appropriate?

Answer 18

When the parties:1. Do not wish for survivorship to apply2. Contributed unequally to the purchase3. Enter into a commercial transaction where a joint tenancy would be inappropriate

Question 19

If co-owners contribute to the purchase price in unequal shares, what 3 things will they be advised to do?

Answer 19

• Hold the beneficial interest as tenants in common* Prepare/update their will (in the absence of a will, the interest will pass based on the intestacy rules)* Make a declaration of trust

Question 20

A and B are not married and buy a house together. They decide to hold the beneficial interest as tenants in common because they contributed to the purchase price unequally (A contributed 30% and John 70%). A wants B to take her share in the property on her death. A does not sign a will to this effect. A has three children. On her death, what happens to her interest in the property?

Answer 20

On A’s death, there is no survivorship due to the tenancy in common, so A’s children take her share in the property by virtue of the strict application of the intestacy rules.

Question 21

What is a declaration of trust?

Answer 21

A conclusive agreement between co-owners as to how their beneficial interest is to be held

Question 22

A and B buy a house together and contribute to the purchase price in unequal shares (A contributed 30% and B contributed 70%). They are advised to enter into a declaration of trust setting out their contributions and agreeing that, on eventual sale, the proceeds will be split in the proportion of their contribution to the purchase price. They do not take this advice and decide to hold as joint tenants. How are the sale proceeds split upon sale?

Answer 22

On sale, the sale proceeds will be divided equally between them, and so B will lose out on his extra purchase contribution.

Question 23

What is severance in the context of a beneficial interest?

Answer 23

Bringing the equitable joint tenancy to an end and converting it to a tenancy in common. The legal interest must always be held as joint tenants and will not be affected by severance

Question 24

What are the seven ways a equitable joint tenancy can be severed?

Answer 24

1. Written notice2. Treating a share as separate3. Disposal of equitable interest4. Mutual agreement5. Course of dealings6. Forfeiture7. Bankruptcy

Question 25

What are the two requirements for severance by written notice?

Answer 25

1. Show clear intention to sever in the written notice to the other tenant2. Be sufficiently served

Question 26

One of what two things will cause a written notice of severance to be sufficiently served?

Answer 26

1. Left at last known home or business address, or2. Sent there by registered post

Question 27

How might a party treat their share as separate?

Answer 27

By contracting to sell it

Question 28

After a party disposes of or treats their share as separate, are they completely out of the picture?

Answer 28

No, they still hold the legal estate on trust for the purchaser of their share

Question 29

A, B, and C own a piece of land together and hold the beneficial interest as joint tenants. A sells his equitable interest in the land to D. What is the effect of this sale on the beneficial ownership of the land?

Answer 29

This sale has the effect of severing the joint tenancy as to A’s interest, as he has treated his interest as a divisible ‘share’. Note that A continues to hold the legal estate as trustee with B and C following the sale of his beneficial interest.

Question 30

Can course of dealings, e.g. oral agreement by one joint tenant to buy the share of the other co-owner, effect severance even if the agreement is not enforceable?

Answer 30

Yes, provided the parties indicate a shared intent to sever i.e. are thinking of their interest in terms of ‘shares’.| Burgess v Rawnsley [1975] 1 Ch 429

Question 31

When does severance by forfeiture occur?

Answer 31

If one tenant kills the other, the right of survivorship will not apply - perpetrator of a crime should not benefit from that crime

Question 32

Why does the bankruptcy of one joint tenant sever a joint tenancy?

Answer 32

Because the bankrupt’s share is transferred to the trustee

Question 33

What is the starting point for the court in determining whether a joint tenancy or tenancy in common has been created?

Answer 33

Intention of the parties

Question 34

If the intention of the parties regarding co-ownership cannot be determined, what will the court assume?

Answer 34

That equity follows the law, and the beneficial interests reflect the legal interests, (i.e. joint tenancy, because tenancies in common cannot exist at law) unless there is clear evidence to the contrary.

Question 35

What is overreaching?

Answer 35

A process under which a buyer may take property free of a beneficiary’s interest under a trust * This requires the purchase money to be paid to all trustees (minimum of two or one if a trust corporation).* The payment transfers the interest of the beneficiary from the land and attaches it to the purchase money. The beneficiaries can pursue the trustees (sellers) for any share of the proceeds they are entitled to

Question 36

How many trustees should purchase money be paid to and how does this allow overreaching?

Answer 36

When purchase money is paid to all trustees (minimum of two or one if a trust corporation). The payment transfers the interest of the beneficiary from the land and attaches it to the purchase money| LPA s27

Question 37

What should a buyer do if there is only one trustee, to ensure they take property free of the interest?

Answer 37

• Ensure that a second trustee is appointed to receive the money, or * Obtain a written release from the beneficiary (usually by having the non-owning party sign the contract prior to exchange)

Question 38

A and B bought a house together and they contributed in unequal shares to the purchase price. As a result of this, they held the beneficial interest as tenants in common and a Form A restriction was placed on the register. B has died and A is selling as the sole surviving co-owner. The legal estate can be transferred into A’s sole name, as the legal estate was held as joint tenants and, because B has died, title vested in A through the doctrine of survivorship. However, the Form A restriction will remain on the proprietorship register. What must the buyer do?

Answer 38

The buyer from A will need to ensure that a second trustee is appointed to overreach the beneficial interest (because it is possible that B’s interest may have vested in someone other than A). The appointment of the second trustee can either be by separate trust deed or, more typically in a conveyancing transaction, the second trustee will be appointed by adding an extra clause to that effect in the transfer document.

Question 39

In the registered system, how will behind the scenes beneficial interest typically be evidenced?

Answer 39

By a Form A restriction on the proprietorship register

Question 40

If there are 4 trustees holding the legal interest in co-owned property, how many of them must be paid the purchase price in order to overreach the beneficial interest?

Answer 40

All 4

Question 41

What considerations must a solicitor give to a trustee’s duty to consult beneficiaries?

Answer 41

A solicitor acting on sale of trust property where adult beneficiaries are involved must have regard to the trustee’s duty to consult and take into account the wishes of those beneficiaries or a majority of them

Question 42

What should you look for to tell if there’s a beneficial interest in property different to how the legal estate is held?

Answer 42

• Form A restriction on proprietorship register* Declared in conveyance if unregisteredHints* Unmarried couple * Business element * Unequal contribution to purchase price* Delisre to leabe share to someone other than co-owner

Question 43

When will sections 14 and 15 of the Trusts of Law & Appointment of Trustees Act 1996 help co-owners?

Answer 43

If they cannot decide how or when to dispose of property

Question 44

What does section 14 of the Trusts of Law & Appointment of Trustees Act 1996 allow?

Answer 44

It allows a trustee or any other person with an interest in property subject to a trust to apply to the courts for an order relating to the trustee’s duties including:* an order to sell * an order relieving the trustee of the duty to obtain the beneficiaries’ consent or to consult with beneficiaries regarding the exercise of the trustee’s functions or declaring the nature or extent of a person’s interest in property.

Question 45

A and B, two unmarried persons, purchased a home together and lived in it for five years. Although A paid 75% of the purchase price (and later most of the expenses of upkeep), the property was registered in both parties’ names and did not contain any details on each party’s share of ownership. After five years, the couple has an argument. B wants the house sold and half the proceeds. A does not want to sell the home and thinks it would be unfair for B to receive half the proceeds of a sale in any case. Can A do anything to stop B?

Answer 45

The normal presumption among co-owners absent an agreement otherwise is that they each have an equal share. Section 14 allows A to apply to the court for an order that she does not have to sell the home and regarding the extent of her share versus B’s share.

Question 46

What does section 14 of the Trusts of Law & Appointment of Trustees Act 1996 not give the court the power to do?

Answer 46

Appoint or remove a trustee

Question 47

What does section 15 of the Trusts of Law & Appointment of Trustees Act 1996 provide?

Answer 47

Factors for the court to consider in determining an application under section 14 including:1. Intentions of those who created the trust2. Purpose for which the property subject to the trust is held3. Welfare of any minor who occupies or might reasonably be expected to occupy4. Interests of any secured creditor or beneficiary

Question 48

If property is transferred to parties jointly, what is the presumption as to how it is held upon breakdown of the relationship, and who bears the burden of displacing that presumption?

Answer 48

Legal and equitable joint tenancy is presumed, and it is for the party claiming otherwise to prove this

Question 49

If the court does have to make a split upon the breakdown of a relationship, what proportion will each receive and what will the court consider?

Answer 49

The court will look at the common intention of the parties first and give effect to that (could have existed at time of purchase or later, and can be inferred from conduct)Otherwise, each party will receive the proportion the court considers fair, considering the whole course of dealings and not just those surrounding the purchase