Land - Co-ownership (4) Flashcards
What is co-ownership?
Co-Ownership: Co-ownership is the status of an estate in land being owned by more than one person, either in legal or beneficial title (s34 LPA). This page deals with express co-ownership, see trusts for implied co-ownership of land.
(1) Express Co-Ownership: This means the land is held by at least two legal owners as recorded on the title, or there is an express declaration of trust over the property in writing.
(2) TOLATA 1996: Co-owned land is treated as a trust setup, and governed by TOLATA 1996 (below).
How can land be co-owned?
Tenancies: Co-owners are referred to as ‘tenants’ (different to leasehold tenants). These can be joint tenants, or tenants-in-common.
(1) Joint Tenants: Joint tenants collectively share the land as one undivided share. This is simpler, but means on death, their interest in the property is taken by the other joint tenants (Re Caines).
>This is known as the ‘Right of Survivorship’.
(2) Tenants in Common: Tenants in common each hold their own share in the property, and can do with it as they wish. This should be recorded on title. Their interest passes with their estate on death.
How many legal co-owners can there be of property?
Legal Co-Owners: Legal co-owners, i.e. trustees, can only hold the legal title as joint tenants. This cannot be severed.
(1) Number: There can be up to 4 legal owners of land.
(2) Determining Legal Owner: Where more than 4 individuals purchased land, it is the first four named on the deed that are its owners, provided they were sui juris and capable (s36 LPA).
How many beneficial co-owners can there be?
Beneficial Co-Owners: Beneficial co-owners can hold the legal title as either joint tenants or tenants-in-common. The former can be ‘severed’ to become the latter.
How can beneficial interests be identified?
Beneficial Co-Owners: One must first determine how beneficial interests were held on acquisition of the property, using four sequential tests. If any test is conclusive, do not move on to the next.
(1) Four Unities: The following four unities are required for beneficial joint tenancy to exist (AG v Vaughan).
Interest: Co-owners had the same interests with the same duration.
Title: Co-owners received their interests through the same deed of title.
Time: Co-owners interested vested simultaneously, and were subject to the same conditions.
Possession: Co-owners were entitled to use and occupation not to the exclusion of any other co-owner.
(2) Express Declaration: If the deed of title expressly declares how beneficial interests are held, this is conclusive until severed (Goodman v Gallant).
(3) Words of Severance: Otherwise, the parties may have used words that indicate severed interests, such as ‘we shall hold in equal shares’ or ‘the property is to be divided’ (Payne v Webb; Fisher v Wigg).
(4) Presumption of Tenancy in Common: If not expressly declared, tenancy in common is presumed in partnerships and where tenants contribute unequally to the purchase price (Bull v Bull).
(5) Lack of Presumptions: Where all else fails, joint tenancy is presumed.
How is beneficial co-ownership severed?
Beneficial Co-Owners (Current): If the property was held as joint tenants on acquisition, one must ascertain whether any act has since ‘severed’ a joint tenant’s share to make them a tenant in common. The following acts of severance exist:
(1) Written Notice: Tenant serves unilateral written notice on the other equitable tenants, expressing an immediate intention to sever (s36 LPA).
>Need not be signed.
>Cannot indicate a conditional or future intention to sever (Harris v Goddard).
Service: Service can include first-class post or courier, and is served when ‘ordinarily’ expected. It can be left at an address or last known address as well.
>There is no requirement for tenants to read the notice. It is effective even if it is destroyed on delivery (Kinch v Bullard) and where the severing party signs for receipt (Re 88 Berkeley Road NW9)).
(2) Bankruptcy: Bankruptcy of a tenant will sever their share, as it will vest in the Trustee in Bankruptcy.
(3) Mutual Agreement: Joint tenants can mutually agree to sever some or all of the interests, provided it is a full immediate agreement and not merely agreement ‘in principle’.
(4) Alienation: Tenants treating a share in the property as their own severs by alienation, such as taking a loan out on it, attempting to sell it etc.
(5) Forfeiture: Tenants who kill another joint tenant sever their share, to prevent them from taking by survivorship (Re K).
(6) Course of Dealing: Tenants who act as tenants in common over a number of years may be held by the court to be as such.
What is the effect of severance?
Effect of Severance: The effect of an act of severance will differ.
(1) Severing Party: The severing party becomes a tenant in common. Their share is taken proportionate to the number of joint co-owners, not their initial investment.
>(A) severs their interest in property worth £100,000, shared with 4 others. Their share is now £20,000.
(2) Other Parties: The other joint tenants remain joint tenants unless there is only one other person, in which case they also become a tenant in common.
(3) Notice of Severance: Severance should be recorded as a restriction on the proprietorship register, or as a Memorandum of Severance in the bundle of unregistered deeds.
What rights and restrictions are trustees of land subject to?
Trustees: Trustees (legal owners) have a number of rights and restrictions.
(1) Rights: Trustees have the right to deal with the land as an absolute owner (s6).
Disposal: They can dispose of the estate, but should consult with adult beneficiaries and comply with the wishes of the majority in value, unless it is not in their best interests to do so (s11).
Purchase: They can purchase land in England and Wales for investment, occupation of beneficiaries, or otherwise (s6).
(2) Restrictions: Trustees are restricted in a number of ways.
Beneficiaries: Trustees must have regard to beneficiaries when exercising power (s6).
Rules of Law: Trustees cannot act in contravention of the rules of law and equity (s6).
Instrument: Trustees must act within the confines of the conferring trust instrument (s8).
What rights are beneficiaries of land subject to?
Beneficiaries: Beneficiaries (equitable owners) have a number of rights.
(1) Consultation: Adult beneficiaries with immediate interests have the right to consultation (s11).
(2) Trust Instrument: Beneficiaries may have certain extra powers if conveyed by trust (s8).
(3) Occupation: Beneficiaries have right to occupy trust land, provided they have an immediate interest in the land, and the purpose of trust or ability of trustees to hold land for occupation exists (s12).
Occupied Land: If trust land is in occupation, the current tenant’s rights prevail.
Unsuitable Land: Trustees can refuse occupation of unsuitable land.
Rent and Bills: Trustees can require beneficiaries to pay bills and outgoings (s13).
Compensation: Trustees can require beneficiaries to compensate other beneficiaries who lost out on occupation due to the beneficiary’s occupation (s13).
(4) Consent to Sale: Trust instruments can require beneficial consent to exercise sale. If the purchaser is aware of this right, only two consents are required (s10).
Children: Any requirement to obtain consent of a child can be ignored (10).
How do trustees and beneficiaries of land resolve disputes?
Dispute Resolution: Trustees and beneficiaries may apply to court to resolve any issues.
(1) Application: Adult parties with immediate interests in the land may apply to court to resolve a dispute, or acquire permission of a named trust individual who is missing or uncooperative (s14).
(2) Considerations: Alongside any other relevant factor, the court must consider four factors (s15).
The purpose of the trust;
The intention of the settlor on constitution;
The welfare of any minor who currently or may in the future occupy the land; and
The interests of any secured creditors of a beneficiary.
(3) Court Powers: Courts may award as they see fit at their discretion.
Powers: May relieve obligations, but cannot appoint or remove trustees under this provision. They can also compel functions.
