WS2 - Co-Ownership & Trusts

Question 1

(a) Introduction: What is Co-Ownership?

Answer 1

Co-Ownership (or concurrent) is where more than one person owns land at the same time.

Question 2

(a) Introduction: What does S1 TOLATA 1996 create?

Answer 2

This creates a trust of land.

Question 3

(a) Introduction: What situations may trust of land arise?

Answer 3

They will arise where:
(a) Land owner intentionally sets up trust by transferring title to trustees for benefit of others - Express Trust
(b) Person aquires interest of land onwed by other due to conduct - Implied Trust
(c) Land aquired by more than one owner jointly - Co-ownership.

Question 4

(a) Introduction: What is a trustee?

Answer 4

Legal owners with an admistrative function with no entitlement to benefit of property.

Question 5

(a) Introduction: What is a beneficiary?

Answer 5

Equitable owners which trustees hold on trust for and these entitled to occupy/receive income.

Question 6

(a) Introduction: What are trustees functions and beneficiaryies entitlement in a sale?

Answer 6

Trustees must execute to transfer legal title and beneficiaries entitled to proceeds from sale.

Question 7

(a) Introduction: What does S1(6) LPA 125 set out regarding legal estate?

Answer 7

Legal estate must be held as joint tenancy and it cannot be severed.

So, trustees will always hold legal estate as JT.

Question 8

(a) Introduction: Who can be a trustee and what if there is a minor?

Answer 8

• Must be over the age of 18
• If land conveyed to a minor, ity will operate as a declaration of trust of the land to benefit of minor.

Question 9

(a) Introduction: What is position if land conveyed to minor and adult?

Answer 9

Land will vest in adult on trust for minor.

Question 10

(a) Introduction: What are the maximum number of trustees (legal owners)

Answer 10

• Maximum number of four trustees (legal owners)
• If more, then first four named will be trustees.
• No mimimum number but usual for two to ensure overreaching can work.

Question 11

(a) Introduction: What are the powers of a trustee?

Answer 11

• Trustees have all power of absolute onwer such as sell or mortgage.
• Powers limited by duty to consult beneficiaries of full age and interest in possesion.
• Trustees must comply as far as consistent with general interest of trust, wishes of B’s but this is only as it is practicable.

Question 12

(a) Introduction: What are two forms of co-ownership which equitable interest may be held?

Answer 12

• Joint Tenancy
• Tenancy in Common

Question 13

(b) Joint Tenancy: What is the position for right of survivorship?

Answer 13

On death of Jt, their interest passes automatically and immediately to surviving JT(s) and not under their will or intestacy.

Question 14

(b) Joint Tenancy: What is the position for undifferntiated ownership?

Answer 14

Term shares are not used and they are joint entitled to whole of property.

Question 15

(c) Tenancy in Common: Is there a right of survivorship?

Answer 15

If TIC dies, sare will pass in their estate or will/intestancy.

Question 16

(c) Tenancy in Common: What is the position for shares in TIC?

Answer 16

Each owner has a distinct share and this can be equal or unequal.

Question 17

(d) Determining if TIC or JT: How is this determined?

Answer 17

There are four tests which must be considered.

Question 18

(d) Determining if TIC or JT - 1) Are all four unities present: What is unity of possession?

Answer 18

Each Co-owner must have right to posses all land, the key is the right not actual possesion.

This is required for both forms of ownership.

Question 19

(d) Determining if TIC or JT - 1) Are all four unities present: What is unity of interest?

Answer 19

Each must have identical rights over the land and this is hallmark for JT.

TIC would have unequal and therfore not unity of interest.

Question 20

(d) Determining if TIC or JT - 1) Are all four unities present: What is unity of title?

Answer 20

Each must have aquired their interest from same document.

Question 21

(d) Determining if TIC or JT - 1) Are all four unities present: What is unity of time?

Answer 21

Must have received interest at same time.

Question 22

(d) Determining if TIC or JT - 1) Are all four unities present: What may absence of any indicate?

Answer 22

It may indicate a TIC.

Question 23

(d) Determining if TIC or JT - 1) Are all four unities present: What if all four present?

Answer 23

If all four present, then it could be held as either, so consider second test.

Question 24

(d) Determining if TIC or JT - 2) Does deed transferring land contain express declaration? Is this conclusive and what will this look like?

Answer 24

Express declaration would be conclusive, as would set out how it is to be held.

E.G: Transferred into their joint names as express beneficial joint tenants.

Question 25

(d) Determining if TIC or JT - 3) Does deed transferring contain words of severance? What does this mean?

Answer 25

Any words which indicate co-owners are to have distinct shares such as Between A and B, Half to A and half to B, etc which would indicate TIC.

If no express or words of severance, apply last test.

Question 26

(d) Determining if TIC or JT - 4) Equitys Presumption What is the presumption in equity?

Answer 26

Presumption is that co-owners will be JT in that it follows the law in which the legal title is held as JT.

Question 27

(d) Determining if TIC or JT - 4) Equitys Presumption When will this presumption be rebut?

Answer 27

It can be rebut by:

• If aquired for business use, then usually would want to pass in estate instead of business partners.
• Unequal contributions to purchase price - Equity presumes TIC in non domestic property but for those of the home, JT presumption would still apply.
• Psot aquisition money management - For trust of home, strong presumption of JT in equity. This can be rebut in exception circs such as one providing far greater of share of finance for home.

In absence of these, it will be Jt as it follows the legal estate.

Question 28

(e) Severance of JT in equity: What must severance be?

Answer 28

Inter vivos which means during lifetime of the co-owner.

Question 29

(e) Severance of JT in equity: Can a will effect severance?

Answer 29

Will will not as it does not take effect until death.

Question 30

(e) Severance of JT in equity: What are the two types of severance?

Answer 30

• Formal Severance by written notice
• Informal severance

Question 31

(e) Severance of JT in equity - 1) Written Notice: How can Jt be severed through written notice?

Answer 31

• Written notice to other JT’s that they intend to sever either expressly or impliedly.
• There is no specific form and it des not need to be signed and does not require consent of others.

Question 32

(e) Severance of JT in equity - 1) Written Notice: What must notice do to be effective?

Answer 32

(a) Use appropiate wording - Expres desire to end immediately and therfore future intent is not sufficient.
(b) Be received by all other JT’s or deemed to have received and this can be handed or posted.

Question 33

(e) Severance of JT in equity - 1) Written Notice: What does S196 LPA set out in respect of service?

Answer 33

This sets out the methods for proving service.

Question 34

(e) Severance of JT in equity - 1) Written Notice: What is the position for registered post under S196?

Answer 34

Deemed sufficiently served if letter is not returned via post office undelivered which JT can rely on this presumption.

Case law sets out it is irrelevant if you have not seen the letter after signing for it, it is not returned undelivered then its deemed served.

Question 35

(e) Severance of JT in equity - 1) Written Notice: What is the position for unregistered post under S196?

Answer 35

Deemed served if left at last known place of abode or business in UK of person to be served.

Case law set out where wife sent notice by ordinary post and posted by postman, but subsequtnly destroyed by wife after changing mind and husband then dying, it was still deemed sufficently served and this would of severed immediately.

Question 36

(e) Severance of JT in equity - 2) Informal Notice: What are the methods of informal service/

Answer 36

• Acts operating on JT’s share
• Mutual Agreement
• Course of Dealing
• Bankruptcy
• Homicide
• Post aquisition money management

Question 37

(e) Severance of JT in equity - 2) Informal Notice: How do acts operating on JT’s share sever?

Answer 37

JT disposes of equitable interest by sale, gift lease or mortgage.

As equitable interest, must be in writing and signed.

This would mean four unities no longer present and this can be to stranger or fellow JT.

If they then paid off the mortgage or lease expires, they will hold in TIC.

Question 38

(e) Severance of JT in equity - 2) Informal Notice: How does severance by mutual agreement sever?

Answer 38

• JT’s must act together to sever and must be supported by valuable consideraiton.
• This can be oral and also does not need to be carried through as not the agreement which binds but that it expresses an interest to sever.
• So, it one JT offers to pay for the others share but then one changes mind and asks for more but fails to take further action, it was still severed.

Question 39

(e) Severance of JT in equity - 2) Informal Notice: How does severance by bankruptcy sever?

Answer 39

this is involuntary alienation in which any bankriptcy affect a JT will sever by causing involtary assignment of equitable interest.

Once bankruptcy discharged, the euqitable interest reverts to co-owner who will hold as TIC.

Question 40

(e) Severance of JT in equity - 2) Informal Notice: How does homicide sever?

Answer 40

If one JT kills the other then it would sever in order to see the wrong doer benefit from their crime.

Question 41

(e) Severance of JT in equity - 2) Informal Notice: What is the position for post aquisition money management?

Answer 41

This is relevant where family home boguth in joint names of unmarried couple who both responsible for motrage with no express declaration:

(a) Starting power is equity follows law and they are JT.
(b) Presumption can be rebut if can show they had different common intention at the time of purchase or later formed. Different contributions would not normally be sufficient.
(c) Common intention to be deduced objectively from conduct, but if not possible by direct evidence or ingerence then shares are to be what court considers fair when considering whole course of dealing.
(d) Eahc case on its own facts, and fincnaicl contributions relevant but many other factors.

Question 42

(f) Effect of Severance: What does this depedent on?

Answer 42

This will depend solely on the number joint tenants.

Question 43

(f) Effect of Severance: What if there are two JT’s in equity?

Answer 43

If there are two, they both become tenants in common in equal share.

Question 44

(f) Effect of Severance: What if three or more JT’s in equity?

Answer 44

Only person who severs becomes TIC, the other joint co-owners continue to held JT of remaining interest.

Their share is proporationate to umber of JT, so if there are three, the person who severs ones one third and the remaining JT have 2/3.

Question 45

(f) Effect of Severance: What is irrelevant?

Answer 45

Irrelevant on what contributions to the purchase price they made.

Question 46

(g) Implied Trusts of Land: When do these arise and what are the types?

Answer 46

No express declaration of trust, then it may be implied through conduct of the parties.

Resulting or Constructive.

Question 47

(g) Implied Trusts of Land - 1) Resulting Trust: What are the requirements for a resulting trust?

Answer 47

• Person who does not hold legal title, makes contribution to purchase price.
• No evidence it was gift or loan.
• Contribution must be all or part at the date of aquisition and not after.

Question 48

(g) Implied Trusts of Land - 1) Resulting Trust: How will the beneficial interest be held?

Answer 48

They then hold beneficial interst propotionate to contribution.

Question 49

(g) Implied Trusts of Land - 2) Constructive Trust: What is the two stage test from LLoyds bank v Rosset?

Answer 49

Can be created either by:

(a) an agreement + Deterimental reliance or
(b) Conduct and Direct fincancial contribution

Question 50

(g) Implied Trusts of Land - 2) Constructive Trust: For Part 1, what will be considered for agreement?

Answer 50

Any agreement between parties on how it is to be shared beneficially which is question fo fact and looks at express discussions between parties.

This can be at time of purchase or after.

Question 51

(g) Implied Trusts of Land - 2) Constructive Trust: For part 1, what is irrelevant?

Answer 51

Irrelevant if agreement is based on trick or deciet - Eves v Eves: Legal owner claimed house could not be purchaed jointly as partner less than 21.

Question 52

(g) Implied Trusts of Land - 2) Constructive Trust: For party 1, what must non-legal owner show?

Answer 52

Must show they relied on agreement to their detriment or significantly altered position and examples are:

• Pay for improvement
• Pay all bills to allow legal owner to pay mortgage
• Working unpaid in legal owner business.

and must be linked to agreement and not any other motive such as love.

Question 53

(g) Implied Trusts of Land - 2) Constructive Trust: What is the position if stage two conduct and direct financial contribution?

Answer 53

Here, there would be no agreemnt or arrangement to share beneficially.

Without, corut looks at the conduct to infer common intention to share and conduct relied on.

Question 54

(g) Implied Trusts of Land - 2) Constructive Trust: What is the required conduct in L v R?

Answer 54

Payment towards purchase price initially or payment of mortgage payments by non-owning party and this gives rise to comon intention to share and case stated anything other than direct finacnial contribution insufficient

Question 55

(g) Implied Trusts of Land - 2) Constructive Trust: What is the position in Jones v Kernott and how to apply?

Answer 55

Previous test received critism and further approach developed:

(a) Was intended for non-owning to have any beneficial interest?
(b) If so, parties common intention must be deduced objectively from conduct.
(c) There is no presumption of joint beneficial ownership.
(d) If no evidence as to whart shares intended, the court considers what is fair having regard to whole course of dealing.
(e) Each case on its own facts and manay other factors in additional to financial.
(f) Resulting trust not appropiate to asvertain beneficial interests in family jome and constructive trusts preferred.

Initially apply LLoyds bank v Rosset to determine if there is a constructive trust and then Stack v Dowden and Jones v Kernoitt to calculate interests.

Question 56

(h) Settling disputes: What is the difference bwrween married and unmarried disputes?

Answer 56

• Married couples resolved using divorce.
• No such legislation for non married and case law as discussed can be viewed as a feamework for them.

Question 57

(g) Implied Trusts of Land - 2) Constructive Trust: What is the position for co-owned land and disputes?

Answer 57

For co-owned lane to be sold, all trustees need to execute, so where there is dispute, one may want to retain and others may not, and this is resolved using TOLATA 1996.

Question 58

(g) Implied Trusts of Land - 2) Constructive Trust: What does S14 TOLATA allow for?

Answer 58

Trustee or anyone with interest may make application for order under S14.

Court has discretion to make order:

(a) relating to excercise by trustees of any of their functions or
(b) Declaring nature or extent of persons interest

Question 59

(g) Implied Trusts of Land - 2) Constructive Trust: What are the types of applicants under S14?

Answer 59

• Disputes regarding size of interests if no express decleration
• Disputes on occupation of trust land
• Authorising transaction without consent of all
• Disputes as to whether co-owned land should be sold.

Question 60

(g) Implied Trusts of Land - 2) Constructive Trust: What does S15 set out in respect of courts powers?

Answer 60

• Intention of person ro persons who created trust
• Purpose of which the trust is held
  Court considers current position and if home is family home, court likely to refuse and order sale but if no children and relationship broken down, court more likely.
• Welfare of any minor who occupies
  Courts have refused to order sale where mother taken over mortgage and had minor in occpation but said when child grows up, another application would be more likely.
• Interests of any secured creditor
  It is settled that interests of mortgagee take priorty to interests of others such as welfare of 17 year old given little weight against needs of secured creditor.