Severance of Joint Tenancy

Question 1

Severance of joint tenancy

Answer 1

• The process of turning an equitable joint tenancy into a tenancy in common
• This can be done intentionally or unintentionally
• Only occurs in equity
• The legal title never changes, it remains the same until there is a reconveyance of the legal title to show new names
  
  • It will always be a joint tenancy
• It must take place inter vivos (while the parties are still alive)
  
  • Cannot be done by simply writing a will, because wills have no legal effect until after you’ve died and by that time it is too late
  • A will does not constitute a notice in writing [s36 LPA]

Question 2

What happens when you seer a JT and there is no agreement about the size of the shares?

Answer 2

• When you sever a joint tenancy and there is no agreement to do otherwise, it will be in equal shares [Goodman v Gallant]
  
  • Hunter v Babbage: divorce sought, the husband died before agreement reaches on property division – here, letters exchanged did not constitute an enforceable agreement but were effective as an indication of a mutual agreement to sever
    
    • If there is an enforceable agreement, severance will give the shares in the proportions agreed
  • Equal shares will not excuse equitable accounting between the parties
  • The ‘equal shares’ principle does not exclude equitable accounting between the parties so as to reimburse the party who has spent money on improving, and thereby enhancing the value of, the property [Re Pavlou (A Bankrupt)]

Question 3

Methods of severance

Answer 3

By written notice

The William v Hensman method - severance by conduct

Alienation

By course of dealing

By mutual agreement

By killing

Question 4

Written notice

Answer 4

• s 36(2) LPA 1925: “provided that, where a legal estate…is vested in joint tenants beneficially, and any tenant desires to sever the JT in equity, he shall give to the other JTs a notice in writing of such desire or do such acts or things as would, in the case of a personal estate, have been effectual to sever the joint tenancy in equity.”
  
  • Must be served to all parties
  • Can be done unilaterally, does not require the consent of all parties
  • NB: writing a will does not affect severance written by notice
• The notice must communicate an immediate intention to sever
  
  • Re Draper’s Conveyance**: application on divorce for property to be distributed under Married Women’s Property Act 1882. Here, application by one party for an order for sale is effective, as intention to sever is immediate, so held the husbands share on trust for his estate
• Notice is validly served when addressed to, and left at, the recipient’s last known abode; actual is irrelevant [s196(3-4) LPA; Kinch v Bullard]
• The intention must be about the ownership and not to the use of the property [Nielson Jones v Fedden]

Question 5

The William v Hensman method

Answer 5

• Severance by conduct
• Outside of s36 notice
• Look at the party’s behaviour – “operating on your ‘share’”
  
  • While the JT is in existence, there are no shares. But if the party starts treating the party as if it is in shares, it may be that they have severed the joint tenancy

Question 6

Severance by alienation

Answer 6

• Giving away or selling your share in the property

Question 7

Severance by partial alienation

Answer 7

• By mortgaging one’s interest or entering into a contract to mortgage it
  
  • The effect in equity is to transfer the now severed equitable interest to the mortgagee (subject to the mortgagor’s equity of redemption), thereby destroying the four unities
• Often, this is done accidently, because mortgage lenders do not ordinarily want to secure a lone on the value of a share of property because selling it would be difficult
• Good for lenders
  
  • If there is no severance, and the mortgagor dies before the other JT, the mortgagee would get nothing (because the right of survivorship means everything goes to the left tenant); although, mortgagees will still be disappointed to find that their security is less valuable than they had thought
• Severance does not occur on the creation of other encumbrances such as easements or covenants
  
  • Only selling, gifting, mortgaging and going bankrupt will sever under William v Hensman

Question 8

First National Securities v Hegerty

FACTS

Answer 8

• H and W buy a home together. Later, H borrows £3k on security of home by forging his wife’s signature on the mortgage agreement. He leaves her and defaults on the loan (W has no knowledge of this). Lender claims H’s ‘share’. He renounces his entitlement under the JT, leaving the wife as the sole owner. W argues that as she did not sign the mortgage agreement, the lender cannot touch the house

Question 9

First National Securities v Hegerty

HELD

Answer 9

• H’s signature was effective to charge his interest, thereby severing it into a half share in equity, which was now subject to the lender’s mortgage
  
  • By creating the mortgage deal, the equitable interest was divided in half and they are both tenants in common

Question 10

Involuntary alienation

Answer 10

• Bankruptcy
• The property is no longer yours, and so all the property vests in the trustee

Question 11

Severance by course of dealing

Answer 11

• Evidence based on conduct
  
  • What the parties do
• All the parties must act together as if somebody is severing

Question 12

What is a course of dealing?

Answer 12

• Gore and Snell v Carpenter*
• A course of dealing à “where over the years the parties have dealt with their interests in the property on the footing that they are interests in common and are not joint”

Question 13

William v Hensman on a course of dealing

Answer 13

• “Course of dealing… sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common”. All parties treat their ‘shares’ as having already been created by severance “When the severance depends on an inference of this kind, without any express act of severance, it will not suffice to rely on an intention with respect to the particular share declared only behind the backs of the other persons interested. You must find in this class of cases a course of dealing by which the shares _of all the parties_ to the contest have been effected”.
• Requires all of the parties to act in a course of dealing or have evidence of some kind of verbal agreement

Question 14

Severence by mutual agreement

Answer 14

• Evidence of an express agreement that both parties hold
  
  • What the parties say
• Mutual agreement only severs, it does not do anything more à when two parties under a joint tenancy agree that one shall buy the other’s ‘share’, they thereby sever the JT into a TC in equal shares
  
  • But, the agreement does not actually transfer the share to the other party [Burgess]

Question 15

Burgess v Rawnsley

Answer 15

• “Any conduct which shows that the interest is being treated as a tenancy in common is sufficient to effect a severance. Once people start haggling about their shares of property, an intention has been shown not to be joint tenants. All that is necessary is that an intention to sever should be evinced”
• An oral mutual agreement is sufficient to sever
• If you have a written notice, you do not need the agreement with the others. If there is no written notice, there must be evidence of a mutual agreement to sever
• “An uncommunicated declaration by one party to the other, or indeed a mere oral notice by one party to the other clearly cannot operate as a severance”
  
  • There must be evidence of agreement

Question 16

Severance by killing

Answer 16

s1 Forfeiture Act

• “One who has unlawfully procured the death of another is precluded from acquiring a benefit as a result of that person’s death”
  
  • The court narrows ‘procure’ to an intention to kill [Re K]
• The Court has discretion to set s1 aside
• Re K (Deceased): the wife causes the death of the husband accidentally, and the court accepts this. She did not have the intention to kill, and so the court set aside s1
• Dunbar v Plant: the girlfriend committed fraud, and so her and her boyfriend to kill themselves. Eventually, the boyfriend successfully killed himself and the girlfriend survived. The girlfriend then wanted to claim the whole house, and the family of the boyfriend challenged that
  
  • The girlfriend never intended to be the sole surviving owner under the joint tenancy, and so the court set s1 aside
• The general rule is that you will sever if you kill the other JT

Question 17

Problems with severance

Answer 17

• Uncertainty
• Case inconsistency
• Equity prefers tenancy in common, which might be why judges tend to find TC in these cases
  
  • Equity prefers bargains to gifts

Question 18

Uncertainty of severance

Answer 18

There is no real difference between a course of dealings and a mutual agreement

Question 19

Case inconsistency with severance

Answer 19

• In Gore and Snell v Carpenter, Blackett-Ord J said that “there were negotiations … but negotiations are not the same thing as a course of dealing” but offers no explanation
• In Burgess, Denning MR said “They entered into negotiations that the property should be sold. Each received £200 out of the deposit paid by the purchaser. That was sufficient.” On the other hand, Pennucuick LJ said “One could not ascribe to joint tenants an intention to sever merely because one offers to buy out the other for £X and the other makes a counter-offer of £Y,” but this is exactly what happened in the case.

Question 20

Equitable joint tenancies

Answer 20

Mary Percival, Conv [1999] 60 at 67

“A closer examination of the joint tenancy suggests, however, that although collectively joint tenants enjoy formal legal and equitable ownership of property, individually no joint tenant has (as against his fellow joint tenants rather than a third party) more than a spes (a hope). In short, his ownership will crystallise only if he either effects a severance (in which case he will be restricted to a share of the property) or if he outlives his fellows and so becomes entitled outright to the whole property. Considered in this light, severance involves not so much the loss of existing property rights but rather the loss of a chance and this in turn, it is argued, accounts for the often-cited preference of equity for the tenancy in common”