UNIT 4 - CoOwnership Flashcards
Paul was the owner of a freehold property called “Homelands”. The property is registered at Land Registry.
In February 2015, Paul made a valid will leaving “Homelands” to his sisters, Tracy and Teresa, to hold on trust for the benefit of his wife for life, remainder to his two adult daughters.
Paul died last month. Tracy and Teresa have asked for advice because Paul’s daughters want the property to be sold but his wife wishes to remain living there and Tracy and Teresa do not know how to deal with the situation.
Which one or more of the following statements is or are CORRECT?
A) Paul has created a trust of land under TLATA 1996
B) Tracy and Teresa are trustees and have the power of sale.
C) The trustees have the duty to consult the beneficiaries in possession, in this case Paul’s wife, and to act in accordance with the wishes of the majority, so far as is consistent with the general interests of the trust.
D) If a dispute arises, as seems likely here, only the trustees may apply to court under s.14 TLATA to determine whether or not a sale should take place.
CORRECT ANSWERS A, B & C - A trust of land has been created under s1 TLATA 1996. Section 6 gives the trustees the power of sale and the duty to consult is set out in section 11. Any trustee or beneficiary can apply to court under s.14 TLATA 1996.
Paul was the owner of a freehold property called “Homelands”. The property is registered at Land Registry.
In February 2015, Paul made a valid will leaving “Homelands” to his sisters, Tracy and Teresa, to hold on trust for the benefit of his wife for life, remainder to his two adult daughters.
Paul died last month. Tracy and Teresa have asked for advice because Paul’s daughters want the property to be sold but his wife wishes to remain living there and Tracy and Teresa do not know how to deal with the situation.
A dispute has arisen between the beneficiaries regarding the sale of the house.
Which of the following statements are CORRECT?
A) Tracy and Teresa can apply to court under s.14 TLATA 1996 to determine whether or not a sale will take place.
B) Paul’s wife can apply to court under s.14 TLATA to determine whether or not a sale will take place.
C) Under s.15 TLATA the court is to have regard to the purpose of the trust.
D) Under s15 TLATA the court is to have regard to the settlor’s intention.
E) Under s.15 TLATA the court is to have regard to the interests of any unsecured creditors of any beneficiary.
F) Under s.15 TLATA the court must act according to the trustees’ wishes if they outnumber the beneficiaries.
CORRECT ANSWERS A, B, C & D - Only the wishes of creditors secured on the property are taken into account and the court does not give any greater weight to the wishes of the trustees than it does to the wishes of the beneficiaries.
Paul was the owner of a freehold property called “Homelands”. The property is registered at Land Registry.
In February 2015, Paul made a valid will leaving “Homelands” to his sisters, Tracy and Teresa, to hold on trust for the benefit of his wife for life, remainder to his two adult daughters.
Paul died last month. Tracy and Teresa have asked for advice because Paul’s daughters want the property to be sold but his wife wishes to remain living there and Tracy and Teresa do not know how to deal with the situation.
In which one or more of the following situations will the purchaser take “Homelands” free from the interests of Paul’s wife and daughters?
A) Either Tracy or Teresa can sell the property and the purchaser of the legal estate will take free of Paul’s wife’s and daughters’ equitable interests.
B) The purchaser must pay the money to all the trustees, being at least two in number or a trust corporation, in order to overreach their interests.
C) The purchaser will be bound by Paul’s wife’s and daughters’ equitable interests if they have entered a restriction on the Register.
D) Paul’s wife could have had an overriding interest which was overreached on a sale by Tracy and Teresa.
CORRECT ANSWERS B & D - purchasers of the legal estate do not automatically take the property free of the equitable interests. However, provided that the purchaser pays the money to all the trustees being at least two in number, in this case to both Tracy and Teresa, he or she will overreach all the beneficial interests even where there is a restriction on the register or where the beneficial interest is an overriding interest.
If overreaching does not occur, a restriction will prevent registration of the buyer as the new proprietor.
The maximum number of trustees who can hold the legal title to property is ?
4 under s34(2) LPA 1925.
TRUE OR FALSE?
Land is transferred to A and B as “beneficial joint tenants”; A and B provide the purchase price in unequal shares and so equity will imply a tenancy in common.
FALSE - On the assumption that the four unities are all present, the express declaration will override the equitable presumption- see Goodman v Gallant.
Jessica, Keith, Lionel and Margaret were friends. In 2015 they purchased the freehold property “Cliff Cottage” for occasional use as a holiday home. The conveyance to them contained an express declaration that they were beneficial joint tenants.
In 2019, Keith wrote letters to each of the others saying that he wanted the property sold so that his share could be paid to him out of the proceeds of sale. His letters were properly delivered. The property was not sold.
Keith died leaving all his property to Nicola.
TRUE OR FALSE:
Keith’s letter does constitute notice of severance.
TRUE - Keith’s letter constitutes notice of severance under s36(2) LPA 1925 notwithstanding that the intention to sever is implied rather than express (see Re Draper’s Conveyance, as explained in Harris v Goddard).
Jessica, Keith, Lionel and Margaret were friends. In 2015 they purchased the freehold property “Cliff Cottage” for occasional use as a holiday home. The conveyance to them contained an express declaration that they were beneficial joint tenants.
In 2019, Keith wrote letters to each of the others saying that he wanted the property sold so that his share could be paid to him out of the proceeds of sale. His letters were properly delivered. The property was not sold.
Keith died leaving all his property to Nicola.
Which of the following statements correctly describes the effect of Keith’s severance and death on the ownership of the equitable interest?
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A) Jessica, Lionel and Margaret now hold the entire equitable interest as joint tenants.
B) Nicola becomes a beneficial tenant in common as to one-quarter and the remaining three-quarters are held by Jessica, Lionel and Margaret as joint tenants.
C) Nicola becomes a beneficial tenant in common as to one-third and the remaining two-thirds are held by Jessica, Lionel and Margaret as joint tenants.
D) Nicola, Jessica, Lionel and Margaret now hold one-quarter each as tenants in common.
CORRECT ANSWER B - Only Keith becomes a beneficial tenant in common (as to one-quarter) when he serves the notice, and the remaining three-quarters are held by the other three original parties as joint tenants. When Keith dies, his property passes to Nicola, so she becomes a tenant in common in his place.
Jessica, Keith, Lionel and Margaret were friends. In 2015 they purchased the freehold property “Cliff Cottage” for occasional use as a holiday home. The conveyance to them contained an express declaration that they were beneficial joint tenants.
In 2019, Keith wrote letters to each of the others saying that he wanted the property sold so that his share could be paid to him out of the proceeds of sale. His letters were properly delivered. The property was not sold.
Keith died leaving all his property to Nicola.
Nicola becomes a beneficial tenant in common as to one-quarter and the remaining three-quarters are held by Jessica, Lionel and Margaret as joint tenants.
In 2021 Jessica, by a Deed of Gift, gave her beneficial interest to Nicola. In 2022 Lionel died leaving all his property to Nicola.
TRUE OR FALSE: Both Jessica’s and Lionel’s gifts will pass their beneficial shares in the property to Nicola.
FALSE - Beneficial interests held on a joint tenancy cannot pass by will. So, Jessica’s lifetime gift will be effective as an example of severance by alienation which complies with s53(1)(c) LPA 1925, but Lionel’s gift in his will does not pass his share to Nicola.
Jessica, Keith, Lionel and Margaret were friends. In 2015 they purchased the freehold property “Cliff Cottage” for occasional use as a holiday home. The conveyance to them contained an express declaration that they were beneficial joint tenants.
In 2019, Keith wrote letters to each of the others saying that he wanted the property sold so that his share could be paid to him out of the proceeds of sale. His letters were properly delivered. The property was not sold.
Keith died leaving all his property to Nicola.
Nicola becomes a beneficial tenant in common as to one-quarter and the remaining three-quarters are held by Jessica, Lionel and Margaret as joint tenants.
In 2021 Jessica, by a Deed of Gift, gave her beneficial interest to Nicola. In 2022 Lionel died leaving all his property to Nicola.
Which one of the following statements is CORRECT?
A) If a sale of the property takes place, Margaret will be entitled to a quarter of the proceeds of sale and Nicola will be entitled to the remaining three quarters.
B) If a sale of the property takes place, Margaret will be entitled to three quarters of the proceeds of sale and Nicola will be entitled to the remaining quarter.
C) If a sale of the property takes place, Margaret and Nicola will each be entitled to receive half of the proceeds of sale.
CORRECT ANSWER C - Nicola took Keith’s share after he severed his beneficial interest and she gets Jessica’s share under her life-time gift. Margaret already had her own interest in the property and she acquired Lionel’s when he died by right of survivorship
Jessica, Keith, Lionel and Margaret were friends. In 2015 they purchased the freehold property “Cliff Cottage” for occasional use as a holiday home. The conveyance to them contained an express declaration that they were beneficial joint tenants.
In 2019, Keith wrote letters to each of the others saying that he wanted the property sold so that his share could be paid to him out of the proceeds of sale. His letters were properly delivered. The property was not sold.
Keith died leaving all his property to Nicola.
Nicola becomes a beneficial tenant in common as to one-quarter and the remaining three-quarters are held by Jessica, Lionel and Margaret as joint tenants.
In 2021 Jessica, by a Deed of Gift, gave her beneficial interest to Nicola. In 2022 Lionel died leaving all his property to Nicola.
Jessica has now died. Nicola is in occupation of the property.
Assuming the title to the land is unregistered, which one of the following statements is CORRECT?
A) Nicola and Margaret hold the legal estate as joint tenants on trust for themselves as tenants in common in equity. If the land is sold by them the sale will overreach the equitable interests arising under the trust as the sale will be effected by all of the trustees being at least two in number.
B) Margaret holds the legal estate on trust for herself and Nicola as tenants in common. If Margaret sells the land a purchaser will take subject to Nicola’s equitable interest because Nicola has gone into occupation and so has an overriding interest under Schedule 3 paragraph 2 LRA 2002. It is not possible to overreach an overriding interest.
C) Margaret owns the legal estate for herself and Nicola as tenants in common in equity. If she sells the land, a purchaser risks buying subject to Nicola’s equitable interest (the purchaser may have constructive notice of Nicola’s equitable interest as she occupies the house). Margaret should first appoint a second trustee to overreach Nicola’s equitable interest.
CORRECT ANSWER C - the correct way for Margaret to sell is for her to appoint a second trustee. Statement A is false as Nicola is not on the legal title; she has an equitable interest only. Statement B is incorrect as the title is unregistered so the LRA 2002 will not apply (if this were registered title, note that it is possible to overreach an overriding interest under Schedule 3 para 2 LRA 2002 if it is protecting an interest under a trust).
Two brothers bought a property together and both their names were entered on the proprietorship register. The only entries on the proprietorship register are (1) their details and (2) the purchase price paid for the property. One of the brothers has died (‘the deceased’) and the other brother is selling the property to your client.
Which one of the following statements represents the best advice to give your client about what steps must be taken to enable your client to register his title at the Land Registry?
A) It will be necessary to overreach the deceased’s beneficial interest as the beneficial title was held by both brothers as tenants in common.
B) It will not be necessary to overreach the deceased’s beneficial interest as the beneficial title was held by both brothers as joint tenants.
C) It will not be necessary to overreach the deceased’s beneficial interest as the beneficial title was held by both brothers as tenants in common.
D) It will be necessary to overreach the deceased’s beneficial interest as the beneficial title was held by both brothers as tenants in common and it will be necessary to appoint a second trustee to enable a valid receipt to be given to your client.
E) It will not be necessary to overreach the deceased’s beneficial interest as the beneficial title was held by both brothers as joint tenants but evidence of the deceased death will be required when your client’s title is registered at the Land Registry.
CORRECT ANSWER E - In the absence of a restriction on the proprietorship register in a co-ownership situation the beneficial interest is held as joint tenants and the rule of survivorship applies. Options B and E are both correct but Option E is the best answer as evidence of death will be needed to prove who is the sole surviving legal and beneficial owner. Options A and D are therefore wrong.
Option C is also wrong as even if it were held as a tenant in common the deceased’s beneficial interest would need to be overreached.
A family bought a cottage together. The arrangement involved a mother, father, brother, and daughter, with the mother and father acting as trustees and all the family members holding their interests as “beneficial joint tenants”. The daughter has correctly served a notice in the valid form on her father and mother, making it clear that she wants to immediately sever her equitable interest.
Which of the following statements best describes the effect of the daughter’s actions?
A) All four family members are now tenants in common in equity as a result of the daughter’s severance by notice.
B) The daughter’s actions failed to sever the equitable joint tenancy, so all four family members remain joint tenants in equity.
C) As a result of the daughter’s severance by notice, the mother and father now hold as tenants in common at law but all four family members remain joint tenants in equity.
D) The daughter’s actions failed to sever the equitable joint tenancy so the daughter holds a one quarter equitable share in the property.
E) The equitable joint tenancy has been severed but as a result of a mutual course of dealing rather than by notice.
CORRECT ANSWER B - because the notice has been served on only two of the three other beneficial joint tenants. Service on all three of them would have been required for an effective severance under s36(2) Law of Property Act 1925.
Statement A is wrong because the equitable interest would remain as joint tenants as the severance is ineffective on our facts. As indicated above, the notice has not been served on all three of the other beneficial joint tenants.
Statement C is wrong because although the family continues to hold as joint tenants in equity as the severance has been ineffective, the joint tenancy of a legal estate cannot be severed.
Statement D is wrong because severance by notice has not occurred, so the daughter does not have an identifiable share in equity. The equitable interest in the cottage is still held as joint tenants, so all four family members hold the equitable interests as a whole.
Statement E is wrong because the daughter’s actions were unilateral and so this could not amount to a mutual course of dealing.
A solicitor acts for a man and his partner in the purchase of a freehold property (‘the Property’) for £350,000. The partner contributed £150,000 and the man contributed the remaining £200,000. The Property is transferred to them as express beneficial joint tenants in equity.
Which of the following best describes how the Property is held?
A) The Property is held legally and beneficially as joint tenants due to the express declaration of trust.
B) The Property is held as a tenancy in common due to the unequal contributions made to the purchase price.
C) The equitable interests are held as a joint tenancy as the express declaration of trust is conclusive.
D) The equitable interests are held in a tenancy in common as the presumption for a joint tenancy has been rebutted by unequal contributions.
E) The Property is held as a joint tenancy as the four unities are present.
CORRECT ANSWER A - The man and his partner hold the legal estate as trustees as joint tenants (s 1(6) LPA 1925). The four unities are present which would indicate a joint tenancy (or a tenancy in common).
Option E is correct but is not the best answer as it does not reflect the express declaration.
There is an express declaration that the man and his partner hold the equitable interests as joint tenants. Option C is, therefore, correct, but not the best answer as it does not take account of how the legal estate is held.
The express declaration is conclusive, notwithstanding the unequal contributions made to the purchase price. Options B and D are, therefore, wrong.
Three postgraduate students (a biologist, a chemist and an engineer) bought a house to live in together three years ago. They held the legal estate and the beneficial interests as joint tenants.
Six months ago the biologist decided that she wanted to move out and sold her interest to the chemist, complying with the relevant statutory formalities. Unfortunately the engineer was killed in a car crash last week. Her will left all of her estate to her sister.
Which of the following options best describes how the house is now held?
A) When the biologist sold her interest to the chemist, this severed the legal estate and the beneficial interests. The chemist is now the sole legal and beneficial owner.
B) When the biologist sold her interest to the chemist, this had no effect on the legal estate. The beneficial joint tenancy was severed leaving the chemist and the engineer as joint tenants (2/3) and the chemist as tenant in common (1/3). When the engineer died this left the biologist and the chemist as joint tenants of the legal estate and the chemist as the sole beneficial owner.
C) When the biologist sold her interest to the chemist, this had no effect on the legal estate. The beneficial joint tenancy was severed leaving the chemist and the engineer as joint tenants (2/3) and the chemist as tenant in common (1/3). When the engineer died, her legal interest passed by survivorship to her sister and her beneficial interest passed by will to her sister. The legal owners are the chemist and the sister as joint tenants and the beneficial interests are held by the chemist (2/3) and the sister (1/3) as tenants in common.
D) When the biologist sold her interest to the chemist, this had no effect on the legal estate. The beneficial joint tenancy was severed leaving the chemist and the engineer as joint tenants (2/3) and the chemist as tenant in common (1/3). When the engineer died, this left the biologist, the chemist and the sister as joint tenants of the legal estate and the chemist (2/3) and the sister (1/3) as tenants in common in equity.
E) When the biologist sold her interest to the chemist, this had no effect on the legal estate. The beneficial joint tenancy was severed leaving the chemist (2/3) and the engineer (1/3) as tenants in common. When the engineer died, this left the biologist and the chemist as joint tenants of the legal estate and the chemist (2/3) and the sister (1/3) as tenants in common in equity.
CORRECT ANSWER B - When the biologist sold her interest in the house to the chemist six months ago this had no effect on the legal estate, which cannot be severed (s1(6) LPA 1925). When the engineer died last week the legal estate passed by survivorship to the biologist and the chemist, who are now the trustees.
The beneficial joint tenancy was severed by alienation because the formalities for a disposition of an equitable interest in s.53(1)(c) LPA 1925 were satisfied when the biologist sold her share to the chemist six months ago. This left the chemist and the engineer as joint tenants of 2/3rds and the chemist as tenant in common of 1/3rd. When the engineer died last week her interest passed by survivorship to the chemist (her will was of no effect in relation to the house), leaving the chemist as the sole beneficial owner.
Two brothers and a friend bought a lease of a commercial property together four years ago. The lease stated that they held the property as joint tenants in law and equity. A month ago the brothers discovered that the friend had been having money troubles and that the friend went to a solicitor to discuss selling his beneficial interest in the property to his father. When the brothers found out about this, they argued with their friend and the friend left the property. A week later the brothers heard that the friend was killed in a cycling accident. In his will, the friend left all of his property to his sister.
How is the lease of the property now held?
A) The brothers and friend’s father are joint tenants in law and tenants in common in equity.
B) The brothers and friend’s sister are joint tenants in law and in equity.
C) The brothers are joint tenants in law and in equity.
D) The brothers are joint tenants in law and the brothers and friend’s sister are tenants in common in equity.
E) The brothers are joint tenants in law and the brothers and friend’s father are tenants in common in equity.
CORRECT ANSWER C - the friend only discussed selling his share to his father, so as the correct formalities for alienation (signed writing) were not followed, severance did not occur. As a result, the rule of survivorship applied when the friend died and his sister did not inherit his interest in the property under the will.
As a result, neither the father nor the sister have any interest (legal or beneficial) in the property and the other options are therefore wrong.
