Co-ownership

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LLB Land (7. Co-Ownership) Note on Co-ownership, created by cadhla_corrigan on 20/05/2014.
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Note by cadhla_corrigan, updated more than 1 year ago
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Concurrent holding- The simultaneous enjoyment of land by two or more persons. ALL FORMS OF CONCURRENT HOLDING HAVE TO TAKE PLACE BEHIND A TRUSTThe trustees hold legal title and the beneficiaries only hold equitable title Joint Tenancy Each co-owner owns the “whole” of the land, each tenant owns total interest in the land i.e. there are no distinct shares in the land The joint tenants share one ownership. There is one formal title to which each tenant owns the whole as opposed to a share of the title Registered under Land Registry under one title number with each co-owner registered as proprietor A joint tenant's interest can be separated out by severance forming notional shares of a property (and a TENANT IN COMMON) S 34 (2) Trustee Act 1925: there can only be four joint tenancy legal owners.  Malayan Credit: survivorship does not exist in situations involving business partners, unequal contributions (i.e. co-mortgagees) or a resulting/ constructive trust as this amounts to a Tenancy in Common as opposed to a Joint Tenancy.  A person cannot pass an interest under a Joint Tenancy in their will as there is no share of interest to actually pass. A Joint Tenancy cannot exist without the Four Unities: The Unity of Possession- each joint tenant is entitled to physical possession of the whole land; there can be neither physical division of the land nor the prevention of use of land including rental income/profits. (S 12+13 TOLATA 1996 allow exclusion of one tenant from land) The Unity of Interest- each joint tenant’s interest must be of the same extent, nature and duration e.g. All freehold or all leasehold The Unity of Title- each joint tenant must derive their title from the same conveyancing documents. However, the nature of the agreement may suggest otherwiseAntoniades v Villers: unmarried couple took lease and signed two separate (but same) documents. HoL held that as a matter of law the couple had a joint tenancy as they did not have separate rights in the land due to the circumstances (situation) as opposed to the form/ documents. The Unity of Time- the interest of each joint tenant must arise at the same time thus making their ownership a single title. Survivorship:  if one joint tenant dies the existence of the joint tenancy automatically accrues to the remaining tenants (no formal/written document is required for this as the tenants merely continue to enjoy their rights over the whole land).This is rebutted where it would seem too harsh to apply or when there is a common intention between the co-owner and claimant. On the death of one tenant, the entire estate survives to the remaining tenants. s184  LPA 1925: If there are two or more joint tenants who die, the eldest is presumed to die first. Tenancy in Common A tenant in common can point to a precise share of ownership of the land even though the land is undivided and treated as a whole. Each owner has a distinct and quantifiable share in the land which can be realised if the property is to be sold although the land is actually undivided. There is a “unity of possession” but also shares within the land. Only the *Unity of Possession must be present for a Tenancy in Common to exist. There is no right of survivorship and so the share may be passed on in a will or in writing. A tenancy in Common may arise from the severance of a joint tenancy. LPA 1925 & Trusts of Land and Appointment of Trustees Act 1996 Before 1st Jan 1926 a joint tenancy + tenancy in common could exist as a legal and equitable estate, LPA 1925 limited the manner to which these co-ownerships could exist: There is no limit to the amount of equitable owners. Under S 34 and S 36 LPA the co-owners are trustees of the legal title in a joint tenancy. The co-owners have a duty to hold the land on trust for the beneficiaries (the equitable owners) and so are essentially holding the property on trust for themselves (and therefore they are the equitable owners). The equitable title may therefore be held under a joint tenancy or a tenancy in common S.13 TLATA provides that compensation should be paid by one co-owner occupying the land to the other . Chun v Ho: a co-owner was not required to pay rent to the non-occupying co-owner he had the benefit of the large amount of money which the occupying co-owner had contributed to the purchase price. Promote the free alienability of land (transferrable to the ownership of another) through the power to sell land under trust. By abolishing legal tenancies in common, the LPA 1925 ensured that there is only one legal joint title to be investigated thus saving time and money. The number of joint legal tenants is limited to four people so a purchaser will not be burdened will obtaining the consent of too many tenants. Land Law: Unseverable Legal Joint Tenancy in Land Trustees are under duty to hold land for persons interested (often themselves). TOLATA 1996 gives them full powers and can delegate functions to beneficiary of full age. S 36 (2) LPA 1925:  A joint tenancy is therefore UNSEVERABLE as it cannot be turned to a tenancy in common 14 TOLATA 1996 gives trustees the power to sell land under  (there is no duty to do so) A catalogue of the trustee’s functions and powers can be found in TOTOLA 1996. S 2 (1) (ii) and 27 LPA 1925: A sale by all the trustees will overreach the interests of the equitable owners. If there is only one trustee of the land the interests of the equitable owners cannot be overreached.  If the trust is created by a disposition (i.e. created expressly in writing) the trustee’s power of sale can be made subject to the beneficiary’s consent. Equity: Joint Tenancy and Severance to Tenancy in Common Express Trust: formalities are complied to, either tenancy can exist.  S1 (6) LPA 1925: a TENANCY IN COMMON LEGAL TITLE  CANNOT EXIST ∴ only joint tenancies at are possible, joint tenancies exist only at equity . Non-express Trust: common law generally prefers Joint Tenancies to be created, Equity prefers Tenancies in Common. NOW EQUITY FOLLOWS LAW- THERE IS A PRESUMPTION THAT A JOINT TENANCY IS CREATED. If there is no declaration of beneficial interest and no words of severance but the four unities are present, then there is a presumption that equity follows the law and a joint tenancy will be found (legal title can only be joint tenancy).Equity will not follow the law where a common intention can be proven by the legal co-owners as a constructive trust will then arise and the equitable shares will be redistributed according to that intention. This  is rebutted by words of Severance which suggest that there are shares in the land, then a tenancy of common will exist Further rebuttals are where there is a difference in the purchase price between tenants, this suggests a Tenancy in Common will exist. Stack  Dowden and Jones v Kernott: parties are bound only to an express written document. If there is no express declaration of beneficial interest, legal ownership will not represent equitable share. Malayan Credit: Tenancies in Common exist in situations involving business partners, unequal contributions to purchase price (i.e. co-mortgagees) or a resulting/ constructive trust.  A person cannot pass an interest under  Severance Occurs in Equity:S 36 (2) LPA: any EQUITABLE JOINT TENANT may give notice in writing to the other joint tenants of his intention to sever the joint tenancy. The tenant then becomes a tenant in common.S 196 LPA:  If the notice is left at the last place of work/residency then it is effective. Evidence that the written note was sent it does not have to be seen/ received by the other tenants to become valid. Shares under severance are proportional to the NUMBER OF JOINT TENANTS, PURCHASE PRICE ITSELF DOES NOT MATTER. Harris v Goddard:  A husband and wife were beneficial joint tenants of the matrimonial home from which the husband ran his retail business. After some time the wife left and served a divorce petition. Severance had not been effected. A notice of severance within s.36(2) had to show an intention to sever immediately not merely be a statement of future aspiration. The paragraph in the petition had merely expressed the wife’s desire to invite the court to exercise its jurisdiction to apportion property entitlements according to justice.Re Draper’s Conveyace: A summons by wife seeking an order for sale of the house and distribution of the proceeds of sale amounted to notice of an immediate intention to sever and not merely be a statement of future aspiration. It therefore amounted to a notice of the other spouse to sever the joint tenancy. Notice to sever does not need to be signed. The severance is unilateral and does not require the agreement or consent of the other joint tenants.Burgess v Rawnsley: H and Mrs R bought a property as beneficial joint tenants. R orally agreed to sell her interest in the house but then refused to proceed. Proceeding a course of conduct to sever may amount to notice (eg. Court Proceedings). A mutual agreement shows a common intention to sever at Common LawBerkley Road: Written notice to sever through registered post is effective even if it is not actually received.Williams v Hensman: Severance at common law may occur when: Tenant act operating upon his own share- tenant acts as if his interest in the land is a specific share eg. attempting to sell equitable interest in land (ALIENATION) or commencing litigation.  A mere declaration cannot amount to severence.  Mutual Agreement- mutual agreement shows an intention to sever at common law Mutual Conduct-  Long term assumptions over years or physical division of the land,  NOT inconclusive negotiations.  Note: Unlawful killing of a co-owner results in severance of equitable interest under forfeiture ; must be guilty of  intentional violence (Grey v Barr) Express and Implied Creation of Co-Ownership (Express, Resulting and Constructive Trusts)Express trust: the legal owner can generate interest in the land for another person in the form of an express trust through writing. In the absence to any contrary statement, the legal owners are considered to also be the equitable owners. In order for an express trusts of land to be valid it must satisfy S 53 (1) LPA- a purely oral declaration will usually not be effective, it must be in writing. If there is an express declaration, the parties cannot declare a constructive trust.Resulting trust: if one contributes to the purchase price of the property a person may claim an equitable interest through a resulting trust.Stack v Dowden: Unmarried couple who had lived together for many years had each contributed financially to the purchase of the property. The transfer of the property to the couple did not contain an express declaration of their respective beneficial interests in their home. HoL held that the parties were entitled to joint and equal shares in the property, unless a clear contrary intention could be shown.  Where the beneficial interests are not declared, the presumption is that equity follows the law and the beneficial interests reflect the legal interests in the property. Where there is sole legal ownership there is sole beneficial ownership. Where there is joint legal ownership there is joint beneficial ownership.        Jones v Kernott:  Ms Jones paid their property outgoings including the mortgage and the bills, whilst Mr Kernott paid for some improvements to the property. The couple split up in 1993. Mr Kernott moved out and made no further financial contributions to the property or to the family home. 13 years after they had separated, Mr Kernott decided to seek repayment from Ms Jones for his share of the contribution since moving out. The Supreme Court held the presumption that a family home is bought in joint names is that the parties own the property as joint tenants in law and equity is identified through common intention. Where they change their original intention the court is entitled to impute an intention that each is entitled to the share which the court considers fair having regard to the whole course of dealing between them in relation to the property. It was recognised that the couple owned the property equally at the point of their separation, but Mr Kernott's beneficial interest had reduced due to his lack of financial contributions, Mr Kernott was given only 10% of the property value.Although there is only one legal owner (A), the fact that another person (B) has established an equitable interest means that in equity the property is co-owned. According to Bull v Bull, this means that a trust of the land comes into existence whereby the original legal owner (A) holds the property on trust for himself and B in equity. A person who wishes to buy cannot rely on overreaching in this scenario. Thus, he may be bound by B’s equitable interest according to the rules of registered and unregistered land.Constructive trust: the legal owner and claimant must share a common intention that the claimant should have interest in the land which is relied upon by the claimant to their detriment. This does not need to be in writing if there is a detrimental reliance- S 53 (2) LPA Lloyds Bank v Rosset: Mr and Mrs Rosset decided to buy a property. Mrs Rosset knew the funds for the purchase were coming from family trust and the condition by the trustees was that it be registered in the sole name of Mr Rosset. The renovation was a joint venture. Mrs Rosset had supervised builders carrying out work on the property and done some decoration. Mr Rosset borrowed from Lloyds bank of which Mrs Rosset had no knowledge. The husband, Mr Rosset, defaulted on the loan payments and the bank sought possession. Under S 70 LRA 1925  Mrs Rosset had to be in occupation. However, Mrs Rosset was not entitled to claim an interest under constructive trust. There was no express agreement to share ownership and could only be inferred from direct contribution or mortgage instalments  therefore there was no beneficial interest and Rosset could establish no right in the home.Disadvantages of Trusts of Land: S.14 provides that any trustees of land, or any equitable owner may apply for an order concerning the property. When considering the application, the following are examples of factors considered by the court which fall within S.15 TLATA:Non – legal owners only had an interest in the proceeds of sale of the land, not the land itself. TLATA S.3 declares that the equitable owners shall be regarded as having rights in the land, as per it also provides in S.12 that an equitable owner has a right to occupy the land if this was the purpose for which the trust came into existence.1.  Disputes as to Sale:S.11 TLATA: equitable owner’s interests are relevant. There may be disputes between the trustees as to whether the property should be sold or retained for occupation. There is now no duty to sell, only a power.Re Buchanan-Wollaston’s Conveyance: Four land owners bought a neighbouring vacant plot to provide the home owners with sea views. One owner wanted to move away and sell the land. The court did not order sale as the purpose of the trust to provide for sea views was not exhausted under s. 14 TLATA 1996. The fact that the home owners had covenanted not to sell the land without unanimous or majority vote also led to the court to decline ordering a sale of the land.Goodman v Gallant: Goodman and Gallant were co-habitees. Their home had been conveyed into their joint names and the conveyance expressly provided that they were to hold as beneficial joint tenants. This express declaration was conclusive and that when a joint tenancy is severed the result is that the joint tenants hold as tenants in common in equal shares; the parties become entitled in equal shares and not in the proportions in which they contributed to the purchase priceWhite v White:  Mr. And Mrs. White were a farming partnership. Mr White's father made a contribution to the farm in addition to the couple’s efforts. During divorce settlement only one fifth of the total assets was given to the wife. The HoL held, in seeking to achieve a fair outcome in dividing the property of a divorced husband and wife, there was no place for discrimination between husband and wife and their respective roles, and (ii) that the courts could order an unequal division in big money cases, but should only do so if there were good reasons for doing so. 2.  Consent:A purchaser may be able to plea that the equitable owner has expressly or impliedly consented to the sale taking place,  the purchaser therefore gains priority over their interest.Skipton Building Society v Clayton: In order to give the purchaser this relief, the court must be satisfied that the expressed or implied consent is real: it does not exist simply through knowledge of the proposed sale or mortgage.S.10 TLATA:  If the disposition originally conveying the land to the co-owners makes the trustees’ powers dependent on obtaining the prior consent of the equitable owners there is a potential conflict with the ability of the trustees to sell the land and overreach the equitable interestsS.14 TLATA:  trustees can apply for removal of a consent requirement just as equitable owners can apply for one to be imposed.S.16 TLATA: applies only to unregistered land, if the purchaser did not actually know that the land was being conveyed in breach of consent requirement, then overreaching remains effective.Note: When consent is not required by the original disposition an equitable owner may not apply under S.14 for a court order that the trustees seek his consent before a sale OR if the land is registered, an equitable owner may place a caution against dealing on the . If dealing then occurs the equitable owner may then apply to the court under S.14.

3.  Bankruptcy:The list of factors in S.15 TLATA DO NOT APPLY when an application is made by the trustee in bankruptcy of a person interested in co-owned land.If one of the person interested in the co-owned land is made bankrupt whether they are legal or equitable owner, his assets vest in a ‘trustee in bankruptcy’ ie. the person who administers the bankrupt’s assets with a view to paying off the creditors. In a co-ownership a trustee in bankruptcy will step into the shoes of a legal or equitable owner and will want to sell the co-owned property to realise some of the bankrupt’s assets. If a sale is opposed, the trustee in bankruptcy will apply to the court for an order for sale under S.14.French v Barcham: Husband and wife were joint owners and occupiers of a bungalow. His trustee applied for, and obtained, an order for possession and sale. He asked the judge to offset from the wife's share an amount equivalent to an "occupation rent" from the date of the bankruptcy until the wife moved out. An offset against the wife's proceeds equivalent to 50% of the letting value since the date of bankruptcy.  If it would be unreasonable to expect a co-owner to take occupation of the property, it would normally be fair and equitable to charge an occupation rent. It was not reasonable to expect a trustee in bankruptcy to take occupation, therefore a trustee in bankruptcy would normally be entitled to charge a wife in this situation an occupation rent, and there was no reason not to do so in this case.4. Overreaching:If a purchaser buys co-owned land from two or more legal trustee owners, then the interest of the equitable owners are overreached.S.11 TLATA:  a duty to consult and pay attention to equitable owner’s, the duty does not affect the overreaching effect of conveyances.Boland: overreaching DOES NOT OCCUR WHERE THERE IS ONLY ONE LEGAL TRUSTEE. In the absence of overreaching, the normal rules of registered or unregistered land take over i.e. overriding, minor interest or notice doctrine.Equitable Co-ownership; Problems and ReformsLegal owners may decide to sell without telling the equitable owners.As a way of limiting the effect of overreaching on an ‘unwilling equitable owner’, the Law Commission suggested three alternative reforms: The overreaching should not be possible unless one of the trustees is a solicitor or licensed conveyancer.  Such a person might offer protection to an equitable owner. That overreaching should not be possible if the equitable owner had registered their equitable interest.  That overreaching should not be possible without the consent of all the equitable owners who are of full age and in possession of the property. If there is one trustee for sale, overreaching cannot occur so the purchaser will be bound by the equitable owner’s interest, save the relatively remote possibility of a sale against their wishes after a purchaser’s application under S.14. Even then, the equitable owner would be paid the full value of their share.If there are two trustees for sale, overreaching can occur, but in most cases, the two trustees will also be the only two equitable owners: e.g. husband and wife. It is only where there are two trustees for sale and different equitable owners that the problem will really occur. With the arrival of TLATA, equitable owners in the above scenario may apply, under S.14, for an order preventing sale, and the court will exercise its discretion to see which interest shall prevail.  

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