Trusts of Land: Co-Ownership

Question 1

What triggers co-ownership in land?

Answer 1

Co-ownership occurs when two or more people have concurrent interests in the same estate in land, arising either expressly (through joint legal ownership or trust) or impliedly (through equitable interests).

Question 2

How is land held in cases of co-ownership?

Answer 2

Land subject to co-ownership is held on trust, governed by ss 34 and 36 of the Law of Property Act 1925, as amended by TOLATA 1996, creating a ‘trust of land.’

Question 3

What are the two forms of co-ownership?

Answer 3

The two forms of co-ownership are joint tenancy and tenancy in common, each with distinct implications for ownership shares, death of an owner, and sale of the property.

Question 4

How does a joint tenancy treat ownership and what happens upon death?

Answer 4

In a joint tenancy, co-owners are treated as a single owner without distinct shares.

Upon the death of one owner, the right of survivorship applies, and the surviving joint tenant(s) become the sole owner(s), bypassing wills or intestacy rules.

Question 5

What characterizes tenancy in common regarding ownership and death?

Answer 5

Tenants in common own distinct shares of the property, which may be equal or unequal.

Upon death, a tenant in common’s share passes under the terms of their will or intestacy rules, not automatically to the surviving co-owner(s).

Question 6

Can co-owners change the form of co-ownership after purchasing a property?

Answer 6

Yes, co-owners can change their form of co-ownership from joint tenancy to tenancy in common through a process known as ‘severance.’

Question 7

How are proceeds from the sale of property divided among co-owners?

Answer 7

For joint tenants, proceeds are divided equally, regardless of the number of tenants.

For tenants in common, proceeds are divided according to each tenant’s distinct share, which may be equal or unequal.

Question 8

Can legal estates in land be owned as undivided shares?

Answer 8

No, under s. 1(6) of the Law of Property Act 1925, a legal estate cannot subsist or be created in an undivided share in land, meaning co-owners must hold the legal title as joint tenants.

Question 9

Is it possible to convert a legal estate from a joint tenancy to a tenancy in common?

Answer 9

No, s. 36(2) of the Law of Property Act 1925 states it is not possible to sever a joint tenancy of the legal estate into a tenancy in common.

Question 10

How can equitable interests in land be held by co-owners?

Answer 10

Co-owners can hold the equitable (beneficial) interest as either joint tenants or tenants in common, with distinct differences in rights and succession.

Question 11

What happens when the title is registered and beneficiaries hold as tenants in common?

Answer 11

If the title is registered and the beneficiaries are tenants in common, a restriction is automatically entered on the proprietorship register by the Land Registry.

Question 12

How many trustees can legally own land and how do they hold it?

Answer 12

A maximum of four trustees can legally own the land, and they must hold the legal estate as joint tenants, as per s. 34(2) of the Law of Property Act 1925.

Question 13

Can minors be trustees of land?

Answer 13

No, trustees must be of full age (18 or over), as minors cannot hold the legal estate in land.

Question 14

How is the legal estate affected by the death of a co-owner?

Answer 14

If co-owners held the legal estate as joint tenants, the legal estate automatically vests in the surviving co-owner(s) due to the right of survivorship.

Question 15

What happens to the equitable interest on the death of a co-owner?

Answer 15

The fate of the equitable interest depends on whether it was held as joint tenants or tenants in common.

Joint tenancy follows the right of survivorship, whereas tenancy in common passes under the terms of the will or intestacy.

Question 16

What needs to be determined to understand the ownership of the equitable interest in a property?

Answer 16

To determine the ownership of the equitable interest, one must find out whether it is held as a joint tenancy or a tenancy in common using the tests for:-

1. the four unities,
2. express declarations,
3. severance, and
4. presumptions.

Question 17

What are the four unities necessary for an equitable joint tenancy?

Answer 17

The four unities are
1. interest: same nature and duration,
2. title: received under the same document,
3. time: interest vested at the same time, and
4. possession: entitled to the whole land, cannot exclude other co-owners.

Question 18

How is an express declaration significant in determining how co-owners hold the equitable interest?

Answer 18

An express declaration in the transfer or conveyance document is conclusive in determining how co-owners hold the equitable interest (joint tenants or tenants in common), as per the case Goodman v Gallant.

Question 19

What indicates words of severance in the absence of an express declaration?

Answer 19

Words indicating the co-owners’ intention to own separate and distinct shares in the property signify words of severance, leading to an equitable tenancy in common.

Question 20

Under what situations does equity presume a tenancy in common?

Answer 20

Equity presumes a tenancy in common when co-owners buy land as partnership property, lend money on mortgage, or make unequal contributions towards the purchase price.

Question 21

What happens if all four unities are present without an express declaration, words of severance, or any equitable presumptions?

Answer 21

If all conditions are met without exceptions, co-owners hold as joint tenants. This principle is summarized as ‘equity follows the law.’

Question 22

What does the registered title look like for co-owners as joint tenants vs tenants in common?

Answer 22

For joint tenants, there’s no restriction on the register.

For tenants in common, a standard restriction is entered in the Proprietorship Register indicating no disposition by a sole proprietor unless authorized by court.

Question 23

How do express declarations of co-ownership appear in registered versus unregistered land?

Answer 23

In unregistered land, express declarations appear in the conveyance document.

In registered land, they’re included in the transfer form, such as Form TR1, and reflected in the title register.

Question 24

Give the name and date of the case described below

A woman with a 50% beneficial interest in a home and a new partner agree to buy out her ex-husband’s share, declaring themselves as joint tenants in the trust declaration. She later claimed a 75% interest based on prior ownership and contributions towards purchasing the remainder. The court held that the declaration of trust was conclusive on ownership rights, making relative contributions irrelevant.

Answer 24

Goodman v Gallant[1986]

Question 25

What is severance in the context of property co-ownership?

Answer 25

Severance is the process by which an equitable joint tenancy is converted into a tenancy in common, allowing co-owners to hold individual shares.

Question 26

How are shares distributed among co-owners after severance?

Answer 26

After severance, co-owners acquire equal shares in the property, regardless of the original proportions of their contributions.

Question 27

What happens when two equitable joint tenants sever their joint tenancy?

Answer 27

If either of the two equitable joint tenants sever their joint tenancy, each will obtain a half share in the property.

Question 28

What is the outcome when three equitable joint tenants sever their joint tenancy?

Answer 28

When three equitable joint tenants sever their joint tenancy, each will receive a one-third share in the property.

Question 29

What occurs if only one of two or more joint tenants wants to sever the joint tenancy?

Answer 29

If in a group of more than two, only the severing party’s share is treated as tenancy in common, while the rest remain joint tenants.

Question 30

What are the four methods of severance of an equitable joint tenancy?

Answer 30

The four methods are severance by:-
1. Notice,
2. Alienation,
3. Mutual agreement, and
4. Homicide.

Question 31

What is the writing requirement for a valid notice of severance under s 36(2) of the Law of Property Act 1925?

Answer 31

The notice of severance must be in writing; however, there is no requirement for the notice to be signed.

Question 32

What is required to show the intention to sever an equitable joint tenancy immediately according to s 36(2) LPA 1925?

Answer 32

The notice must unequivocally demonstrate an intention to sever the joint tenancy immediately. Ambiguous or future-oriented intentions are insufficient.

Harris v Goddard [1983]: A prayer in a divorce petition failed as it did not demonstrate an immediate intention.

Re Draper’s Conveyance [1969]: An affidavit stating entitlement to a share of the property showed the required immediate intention to sever.

Question 33

How do Kinch v Bullard and Re 88 Berkeley Road NW9 illustrate the importance of correctly serving a notice of severance?

Answer 33

Kinch v Bullard [1999]: Shows that a notice is valid if it’s proven delivered, even if destroyed by the sender afterward. The act of delivery fulfills the service requirement.

Re 88 Berkeley Road NW9 [1971]: Confirms validity even if the sender signs for the notice, emphasizing the delivery to the intended location over the recipient’s acknowledgment.

Question 34

What are the requirements under s. 196(3)-(4) LPA 1925 for the service of a notice, and how do these sections ensure the effective service of severance notices?

Answer 34

s. 196(3) LPA 1925: Notices can be served by leaving them at the last-known place of abode or business, on the land/building involved, or, for mining leases, at the mine’s office.

s. 196(4) LPA 1925: Notices sent by registered post to the last-known address are effective if not returned undelivered. Service is assumed at the usual delivery time.

Question 35

Give the name and date of the case described below

In this case, a letter indicating a desire to sever a joint tenancy was sent by first class post to the matrimonial home. The sending party, intending to retract their desire to sever due to the other’s terminal illness, destroyed the letter after delivery but before it could be read. The court had to decided that the tenancy was effectively severed by the delivery of the letter as per s36(2) Law of Property Act 1925, as it was the intent at the time of delivery, rather than subsequent actions which determined severance.

Answer 35

Kinch v Bullard [1999]

Question 36

Give the name and date of the case described below

This case involved a matrimonial property where one party initiated divorce proceedings and demanded the sale of the home, stating ‘‘I am entitled to a half share in the matrimonial home” in the affidavit. The court was tasked with deciding whether these actions demonstrated a clear and immediate intent to sever the joint tenancy under s36(2) Law of Property Act 1925, especially considering the other party’s death before the divorce was finalized.

The courts held that the joint tenancy was effectively severed by the issuance of the summons and the sworn affidavit, indicating an immediate intention to sever.

Answer 36

Re Draper’s Conveyance [1969]

Question 37

Give the name and date of the case described below

A notice of severance was sent to a joint tenant’s home by recorded delivery, which the sender, being at the recipient’s home, signed for upon delivery. The court had to determine whether the notice was effectively served, given the unconventional manner of receipt acknowledgment by the sender themselves.

The notice was deemed effectively served, and the joint tenancy was severed, highlighting that the service of notice is crucial, not the act of acknowledgment by the recipient.

Answer 37

Re 88 Berkeley Road NW9 [1971]

Question 38

Give the name and date of the case described below

During divorce proceedings, one spouse included a prayer to sever the joint tenancy of the matrimonial home, questioning if a petition’s prayer could effectively sever a joint tenancy when the court’s future discretion under s24 Matrimonial Causes Act 1973 was invoked, rather than an immediate severance under s36(2) Law of Property Act 1925.

The court held that the joint tenancy had not been severed as the inclusion of a prayer in the petition did not meet the immediacy requirement for severance under s36(2).

Answer 38

Harris v Goddard [1983]

Question 39

What is known as severance by alienation, and under what circumstances can it occur?

Answer 39

Severance by alienation occurs when a joint tenant operates on their own share by selling, giving, or mortgaging it to a third party. It’s an act of a joint tenant affecting only their equitable interest, not the legal estate.

Question 40

What requirement must be met for the gift, sale, or mortgage of an equitable interest by a joint tenant to be effective?

Answer 40

The act must be in signed writing, as required by s 53(1)(c) of the Law of Property Act 1925, to be effective.

Question 41

Can a joint tenant transfer their interest in the legal estate at the same time as they sell, give, or mortgage their equitable interest?

Answer 41

No, a joint tenant cannot simultaneously transfer their interest in the legal estate due to the prohibition of severing the legal joint tenancy under s 36(2) of the Law of Property Act 1925.

They remain a trustee despite disposing of their equitable interest.

Question 42

How does bankruptcy affect a joint tenant’s equitable joint tenancy?

Answer 42

Bankruptcy results in the automatic severance of the equitable joint tenancy because it involves involuntary alienation of the equitable interest, vesting it in the trustee in bankruptcy.

Question 43

What happens when a joint tenant sells their interest to either a third party or another joint tenant?

Answer 43

When a joint tenant sells their interest, the buyer becomes a tenant in common for the sold share.

If sold to another joint tenant, the buyer cannot combine the newly acquired share with their existing one; they hold it differently, although they’re entitled to a proportionate share of the sale proceeds if the land is sold.

Question 44

What case illustrates severance by mutual agreement, and what is required for such an agreement to be effective in severing a joint tenancy?

Answer 44

Burgess v Rawnsley [1975] highlights severance by mutual agreement.

The case demonstrates that an agreement for severance between joint tenants effectively severs the joint tenancy.

This agreement need not be formally binding but must indicate a clear and common intention to sever, effectively transforming the joint tenancy into a tenancy in common for the involved parties.

Question 45

How does the concept of “course of dealing” contribute to the severance of a joint tenancy, and which case provides a notable example?

Answer 45

The concept, as explored in Burgess v Rawnsley [1975] and further elaborated by Lord Denning, indicates that a “course of dealing” sufficient to imply that all parties treated their interests as constituting a tenancy in common can sever a joint tenancy.

This does not necessarily require an express or implied agreement to sever. Actions and dealings that make it clear both parties intend their shares to be held in common, not jointly, are sufficient for severance.

Question 46

Can severance of a joint tenancy occur without a binding agreement, according to Burgess v Rawnsley?

Answer 46

Yes, according to Burgess v Rawnsley [1975], severance can occur without a binding agreement. Sir John Pennycuick and Lord Denning’s analyses in the case affirm that a mutual or unilateral intention to treat shares as held in common, evidenced through actions or agreements, even if not formally binding, can effectively sever a joint tenancy.

Question 47

How does the act of one co-owner murdering another affect their joint tenancy, as illustrated in Re K??

Answer 47

In Re K [1985], it was determined that when one joint tenant murders another, the murderer inherits the legal estate due to the right of survivorship.

However, this legal estate is held in trust of land, making the murderer and the victim’s estate equitable tenants in common.

This prevents the murderer from fully benefiting from the crime while respecting the legal structure of survivorship.

Question 48

After one joint tenant murders another, how is the victim’s equitable interest in the property handled?

Answer 48

Following the murder of one joint tenant by another, the victim’s equitable interest in the property is distributed according to their will or, in the absence of a will, through intestacy.

This ensures that the victim’s share of the property benefits their intended beneficiaries rather than the criminal co-owner.

Question 49

Two individuals purchased a property as joint tenants with an intention to cohabit, which did not materialize due to a declined marriage proposal. An agreement to sell one’s interest in the property was initially made but not completed due to a change of mind regarding the sale price. Upon one owner’s death, there was a dispute on whether the joint tenancy had been severed by their mutual agreement or course of dealings.

The court concluded that although the agreement was oral and didn’t satisfy s 40 Law of Property Act 1925 for land conveyance, the mutual agreement and course of dealings effectively severed the joint tenancy, allowing for the partition of interests as tenancy in common.

Answer 49

Burgess v Rawnsley [1975]

Question 50

In a marriage troubled by domestic abuse, a wife accidentally killed her husband while intending only to threaten him with a shotgun, resulting in her conviction. The husband’s will bequeathed her a sum, but his estate sought to invoke the Forfeiture Act 1982 to prevent her from benefiting due to her act, raising questions about the severance of their joint tenancy and her entitlement under his will.

The court decided that despite the wife’s conviction, she could be granted relief from the Forfeiture Act 1982’s provisions. The court had discretion to alleviate the forfeiture’s harsh consequences, considering the wife’s financial hardship and the context of domestic abuse.

Consequently, the joint tenancy was not severed by the act of unlawful killing, allowing the wife to retain her interest in the property.

Answer 50

Re K [1985]

Question 51

What is a memorandum of severance, and why is it used in the context of unregistered land titles after severance of a joint tenancy?

Answer 51

A memorandum of severance is a note added to the conveyance documents when the joint tenancy is severed in equity, indicating the property is now held as tenancy in common.

It ensures clarity for future transactions by making the severance obvious to anyone examining the deeds.

While its absence doesn’t invalidate the severance, it serves as a warning to purchasers that co-owners are now tenants in common in equity.

Question 52

How is the severance of a joint tenancy recorded on registered land titles, and what is its purpose?

Answer 52

Severance of a joint tenancy in registered land titles is recorded by placing a restriction on the proprietorship register.

This restriction indicates that the land is no longer held by the co-owners as joint tenants but as tenants in common.

The purpose is to alert and protect future purchasers by informing them of the current co-ownership arrangement, ensuring transparency in property transactions.