Co-Ownership

Front 1

What is Co-Ownership?

Back 1

It arises when two or more people own the same piece of land at the same time

Post 1925 in instances of co-ownership there is an imposition of a statutory trust (s34(2) LPA 1925), known as a "trust for sale"

This was updated in 1996 with TLATA; which abolished the trust for sale and introduced the trust of land

Front 2

What is Joint Tenancy?

Back 2

Blackstone: 'A thorough and intimate union of interest and possession'. As a group you are one globule.

- Irrelevant how much you contribute to purchase price, you do not get a share.

- You get right of survivorship. Will becomes irrelevant.

Front 3

What is a Tenancy in Common?

Back 3

- Only unity of possession is essential for this.

- Each co-owner is regarded as having a distinct 'undivided' share.

- Share can and often will be proportionate to contribution.

- If 4 unities are present, tenancy in common can be created expressly by words of severance

- No right of survivorship; share passes under will or intestacy rules

- Method ideal for house with friends and business investments.

Front 4

What is Severance?

Back 4

- The act of converting a Joint Tenancy to a Tenancy in Common.
- If you sever your interest, the right of survivorship no longer applies and you will be entitled to an equal share.
- You can only do this in equity.

Front 5

AG Securities v Vaughan

Back 5

Held: Joint tenants are viewed as a single entity, a joint tenancy cannot exist unless 4 unities are present.

1. Possession.
2. Interest.
3. Title. (same document)
4. Time. (same time)

Front 6

s1 TLATA 1996

Back 6

Co-Ownership gives rise to a trust of land.

Front 7

s1(6) LPA 1925 + s36(2) LPA 1925

Back 7

- Legal title is always held as a joint tenancy. You cannot be legal tenants in common.

Front 8

s36(2) LPA 1925

Back 8

Severance.

- There can be no severance of a legal joint tenancy to create a tenancy in common.
- Must be done inter vivos - survivorship takes place immediately on death, will is operative after death (Re Caines Deceased).

2 Ways to sever interest;
1. Notice in Writing.
2. Acts or things which would amount to severance.
- Also homicide.

Front 9

Grindal v Hooper

Back 9

Held: You cannot contract out of severance.

Front 10

s34(2) TA 1925

Back 10

- Max number of trustees in legal title: 4

- if there are more than 4, the first 4 in the conveyance will be the ones counted

Front 11

s.2 + s.27 LPA 1925

Back 11

- Overreach a beneficial interest in land by paying purchase money to 2 or more trustees.

- You then take the land free of their interest. Beneficial interest goes from land to money you pay for the land. You will not be bound by any of the beneficial interests. Makes life simpler for buying co-owned land.

Front 12

Equitable Title

Back 12

- Held as JTs or TICs
- Unlimited number of co-owners.
- Must have 4 unities to be JTs. Need unity of possession.
- 4 unities, but then look at declaration or words of severance.
- If nothing, follow the law.

Front 13

Pink v Lawrence

Back 13

Held: Where there are express words in the grant as to how beneficial interest will be held, this declaration will prevail.

Front 14

Re Kilvert deceased

Back 14

Words of severance - 'equally'

Front 15

Jones v Kernott

Back 15

- Confirmed Stack v Dowden
- Where a 'home' is held in joint names, this creates the rebuttable presumption that equitable title would be presumed to be held as joint tenants.

Front 16

Goodman v Gallant

Back 16

Held: Joint tenancy results in equal contributions regardless of initial unequal contributions.

Right of survivorship no longer applies as between the severing party and the remaining JTs

Front 17

Harris v Goddard

Back 17

Held: Intention to sever must be immediate. (also some degree of permanence). She wasn't asking for immediate severance

"a notice in writing which expresses a desire to bring about the wanted result at some point in the future is not, in my judgement, a notice in writing within section 36(2)"

Front 18

s.196(4) LPA 1925

Back 18

Deals with registered post.
- Deemed delivered as soon as it is put in the post.

Case: Re 88 Berkeley Rd.

Front 19

Williams v Hensman

Back 19

- 'Other acts or things' to sever.
i. JT acting on his own share.
ii. Mutual agreement of JTs.
iii. Mutual conduct of JTs.

Front 20

Re Gorman

Back 20

Held: Involuntary Bankruptcy was act operating on own share.

Front 21

Gore & Snell v Carpenter

Back 21

- there was no severance. There were discussions, but the man actively refused to issue a notice of severance (as recommended by his solicitor) as he wanted to see how the divorce proceedings went

Front 22

Burgess v Rawnsley

Back 22

Facts: In love, they decide to buy a house and be JTs. She agrees to sell him her share and they agree a price.

Held: Their JT was severed at the moment they agreed.

Front 23

Davies v Smith

Back 23

Facts: Woman fell down stairs before she could sign document to confirm separate shares in property.

Held: Mutual Conduct can be sufficient - they had split their assets in such a way that indicated severance

Front 24

s6(1) TLATA 1996

Back 24

- Trustees have rights of the absolute owner.

Front 25

s11(1) TLATA 1996

Back 25

- Trustees have a duty to consult beneficiaries and give effect to the wishes of the majority in value, but only so far as consistent with the general interest of the trust (which is decided by the trustees)

Front 26

s.14 TLATA 1996

Back 26

- Right to apply to court for an order of sale.

Front 27

s.15 TLATA 1996

Back 27

Creditors first among equals.
Case: Bank of Ireland v Bell: ‘a powerful consideration is and ought to be whether the creditor is receiving
proper recompense for being kept out of his money, repayment of which is overdue.’

In relation to sale, will consider:

intentions of trustees;
purposes of trust;
children; creditors;
wishes of the beneficiaries

Front 28

s335A Insolvency Act 1986

s335A(3) - Exceptional Circumstances.

Back 28

Look at all circumstances and have a duty to get as much money as possible barring exceptional circumstances (Re Mott - severe illness).

Will look at the interests of the innocent co-owner, creditor, spouse, children

Creditors' interests paramount after 1 year, unless exceptional circumstances

Front 29

Wright v Gibbons

Back 29

Successor in will can hold share as a TIC and a JT.

Front 30

Re Ever's Trust

Back 30

Held: Sale under TLATA denied as the property was still serving its purpose as a family home.

"court must have regard to its underlying purpose"

Front 31

Kinch v Bullard

Back 31

- doesn't really matter how the written notice gets to the address, as long as it does

- once it's sent "the deed is done and cannot be undone"

- however, if the person who is to receive the letter is told before the letter arrives that the mind has changed the notice would have been successfully withdrawn

Front 32

Re Draper's Conveyance

Back 32

- no signature is necessary

- the summons and affidavit "clearly evinced" an intention on the part of the wife that she wished the property to be sold

One potential key point is that she applied for a court order that the house be sold - a sign of immediacy

Front 33

Hunter v Babbage

Back 33

- "the severance not only did not depend on the agreement being carried out, it actually operated independently to the extent of producing a result quite different from what the result would have been if the agreement had been carried out"

- in this instance, stated that severance had occurred but the agreement they were discussing in terms of split was immaterial - 50/50

Front 34

Nielson-Jones v Fedden

Back 34

- inconclusive discussions are not enough for severance by mutual agreement - "it is quite impossible to say they reached an agreement at all"

- although Denning thought this was wrongly decided in Burgess v Rawnsley

- Sir John Pennycuick: "the significance of an agreement is not that it binds the parties; but that it serves as an indication of common intention to sever"

Front 35

Jones v Challenger

Back 35

Purpose of the house was a matrimonial one; when the marriage broke down, "primary duty to sell was restored"

Applied the test from Re Buchanan

"the court must look into all the circumstances; if when the examination is complete, it finds there is no inequity in selling the property, then it must be sold"

NB: Pre TLATA

Front 36

Re Buchanan Wollaston's Conveyance

Back 36

Pre TLATA

the court must ask "whether or not the person applying for execution of the trust for sale is a person whose voice should be allowed to prevail"

Front 37

Mortgage Corporation v Shaire

Back 37

Post TLATA: acknowledged the changes it brought - Pre TLATA cases should be "treated with caution"

Front 38

Re Mott

Back 38

Bankruptcy: Exceptional Circumstances

an elderly lady who had lived in her house for over 40 years was allowed to remain, notwithstanding that her son’s trustee in bankruptcy had applied for a sale of the co-owned property. The court was advised that the proposed sale would be extremely detrimental to the mother’s health and agreed to postpone the sale until after her death.

Front 39

Re Citro

Back 39

Bankruptcy & matrimonial home: "the voice of the dreditors will usually prevail over the voice of the other spouse ... the coice of the other spouse will only prevail in exceptional circumstances"

NB: pre TLATA

Front 40

Bull v Bull

Back 40

Equitable presumption against joint tenancy: purchasers are presumed to take as tenants in common in equity in proportion to their respective contributions

Front 41

Re 88 Berkeley Rd

Back 41

- Letter of severance was delivered but never read, still counts

"the notice of severance, even though never received by the plaintiff, was in fact sufficiently served for the purposes of section 36 (2)"

Front 42

Severance: acting on own share

Back 42

Total alienation: sale or gift

Partial alienation: mortgage or lease

Involuntary alienation: bankruptcy
- re Gorman

Litigation
-re Draper’s Conveyance

n.b. Cannot sever by will!

Front 43

Selling property: dispute

Back 43

s15 TLATA lists considerations

Pre TLATA case law to be "treated with caution"

Front 44

The four unities

Back 44

Possession:
- each co-owner is as much entitled to possession of any part of land as the other; no owner can be excluded from any part of the land

Interest
- interest must be the same in nature and duration

title
- All joint tenants must acquire title under the same document or act; this is satisfied if they all take their rights by the same conveyance / transfer deed

time
- interest of each tenant must vest at the same time

Front 45

Words of severance

Back 45

- in equal shares (Payne v Webb)

- share and share alike (Heathe v Heathe)

- to be divided between (Fisher v Wigg)

- equally (Re Kilvert deceased)

Front 46

Severance: Act operating on own share

Back 46

Total alienation
- disposal of interest in favour of third party
- must comply with s53(1)(c) LPA 1925
- Ahmed v Kendrick; severance when husband sold house and forged his wife's signature
- Penn v Bristol and West Building Society; no severance where there was collusion in forgery

Partial alienation
- joint tenant charges or mortgages their equitable interest in the property

Involuntary alienation
- bankruptcy automatically has the effect of transferring the assets to the trustee in bankruptcy, thus severing any joint tenancy

Contract to alienate
- if a JT has entered into a specifically enforceable contract to dispose of his / her interests in a property, that will be alienation, as equity looks upon that as done which ought to be done (Brown v Raindle)

Commencement of litigation
- may be sufficiently unilateral and irrevocable

Front 47

Severance: mutual agreement

Back 47

Where there is no express agreement, it may be inferred from the parties’ conduct. For conduct to amount to effective severance, it must be supported by the requisite intention.

Front 48

Dispute: duty to consult

Back 48

Under s11(1) TLATA 1996, the trustees have a duty to consult (but only obey if consistent with the general interest of the land) the beneficiaries of full age and beneficially entitled to an interest in possession in the land. They must give effect to the wishes of those beneficiaries, or in the case of dispute, to the wishes of the majority by value, but only so far as consistent with the general interest of the trust.

Front 49

Right to occupy trust land

Back 49

ss12 and 13 TLATA 1996 concern the right of beneficiaries to live in the property subject to the trust.

A beneficiary/beneficiaries have the right to occupy the trust land if either:
1. the trust was set up to provide land for their occupation (solely or jointly);
or
2. subsequent to the creation of the trust, the trustees acquired land for their occupation (solely or jointly).

Front 50

Applying for sale of land

Back 50

s14 TLATA;

when not concerned with bankruptcy, s15 applies:
1. the intentions of the person(s) who created the trust;
2. the purposes for which the trust property is held;
3. the welfare of any minors who occupy the trust land as their home;
4. the interests of any secured creditor of any beneficiary. This will apply where a co-owner mortgages his/her share in the property;
5. the circumstances and wishes of the beneficiaries of full age and entitled to an interest in possession in the property subject to the trust or in the case of dispute, to the wishes of the majority by value.

When bankruptcy is an issue, s335 IA 1986 applies

Front 51

Postponement of sale

Back 51

Putnam v Taylor - five month postponement was allowed for the occupiers to sell the property themselves before a sale was automatically to be enforced

Front 52

Re Ravel

Back 52

Bankruptcy: Exceptional circumstances

A short postponement of an order for sale was allowed where there was a paranoid schizophrenic who could have been seriously affected by a move.

Front 53

Re Bremner

Back 53

Bankruptcy: exceptional circumstances

Where the bankrupt was suffering from terminal cancer and had six months to live, sale was postponed for three months after the bankrupt’s death to allow the elderly spouse to care for him in their own home during the latter stages of his life.

NB: because the court cannot consider the situation of the bankrupt, the focus was on his spouse's needs

Front 54

Nicholls v Lan

Back 54

Bankruptcy: exceptional circumstances

Where the spouse of a bankrupt had chronic long-term schizophrenia, an order for sale was postponed for 18 months.

Front 55

Re Haghighat

Back 55

Bankruptcy: exceptional circumstances

An order for possession of a bankrupt’s property in favour of the trustee in bankruptcy was postponed for three years. The eldest child of the bankrupt lived in the property and was seriously disabled with cerebral palsy and required continuous care

Front 56

Human rights

Back 56

Ford and another v Alexander
Peter Smith J: ss335A(2) and (3) ‘provide a necessary balance as between the rights of creditors and the respect for privacy and the home of the debtor’.

Barca v Mears: basically, don't adopt a universal approach