Land Law - Co-ownership Flashcards
Co-ownership
Two or more people holding an interest in land
Trust of Land
Arises automatically when 2 or more people acquire land together
Holders of legal estate = trustees (e.g. two people who have contributed equally to the purchase price) - trustees do not have any entitlement to the sale proceeds
Holders of behind-the-scenes beneficial interest = beneficiaries (this beneficial interest can be held as joint tenants or as tenants in common) - beneficiaries enjoy the benefit of the property
Beneficial interests will show up as a Form A restriction on proprietorship register
Bare trustee = holds legal estate on trust for a beneficiary (e.g. if they have not contributed to the purchase price but registered in their name)
Two forms of co-ownership
- Joint tenancy
- Tenancy in common
Joint Tenancy
- No co-owner is entitled to a defined share in the property - they are entitled to possess the whole property
- Survivorship: if one co-owner dies their share passes to surviving co-owners automatically. Can’t be left in a will to pass to someone else
- Legal estate must always be held under a joint tenancy
- Maximum number of people who can hold the legal estate is 4 (must all be of a sound mind and be over the age of 18)
Tenancy in Common
- No survivorship
- May only apply to beneficial interest
- Tenants in common should be advised to prepare a will and a declaration of trust
Severance of Joint Tenancy
- Converts joint tenancy to tenancy in common
- Only applies to beneficial interests held as joint tenants (as the legal estate can only be held as joint tenants)
Methods of Severance:
- Sending written notice to the other joint tenant (must show a clear intention to sever and be sufficiently served);
- Treating a share as separate (e.g. by contracting to sell it)
- By dealing with the equitable interest (e.g. disposing of their interest, leasing it or mortgaging it)
- Mutually agreeing to sever joint tenancy;
- If one joint tenant has been made bankrupt or disposes of thier interest; or
- A course of dealing between parties which makes it look like they intended to sever
- Forfeiture
Overreaching
- A way for the buyer to take the land free of interest of beneficiaries
- Buyer pays money to 2 or more trustees and interest of beneficiaries transfers from land to the sale proceeds
- If there is only one trustee a second trustee will need to be appointed to overreach any beneficial interest
Creation of a Joint Share in Land
Intention of the parties is crucial
If the intention of the parties cannot be deduced the court will presume a joint tenancy
This is because the Court will presume that equity follows the law and the beneficial interests reflect the legal interests in the property (which can only be held as joint tenants)
Section 14 Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996)
Allows a trustee or any other person with an interest in the property to apply to the Court for an order relating to the trustee’s duties
E.g. an order to sell or an order relieving the trustee of the duty to obtain the beneficiaries’ consent
Section 15 Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996)
Factors for consideration in determining an application under section 14
- Intentions of the person(s) who created the trust
- Purpose for which the property subject to the trust was held
- Welfare of any minor who occupies or might reasonably be expected to occupy
- Interests of any secured creditor of any benficiary
If there is a declaration of trust or the property this will usually be conclusive
If the property was transferred to the parties jointly it will be presumed that a legal and equitable joint tenancy was intended unless the challenger can prove otherwise
A different common intention can be shown to have existed at the time the property was purchased/later, by the conduct of the parties
The Court will give each party it considers fair having regard to the whole course of dealings between the parties
