Land Law Co-Ownership, Study notes of Land Law

Download Land Law Co-Ownership and more Study notes Land Law in PDF only on Docsity! C H A P T E R 5 Co-ownership Co-Ownership There are two types of co-ownership: 1. the joint tenancy 2. the tenancy in common S1(6) Law of Property Act 1926 provides that only the joint tenancy exists at law, but equity does recognise that co-owners may be either joint tenants or tenants in common. In any co-ownership situation, a trust will arise. The legal joint tenants will be trustees, holding the property on trust for beneficiaries who will be either joint tenants or tenants in common in equity. You need to consider the position in law and in equity separately. Joint Tenancy •! Joint tenants are not regarded as having shares in the land but as together owning the whole estate - i.e. they are not separate owners, but an inseparable group owner. None of them can identify an individual share as belonging to him/her. •! The right of survivorship applies to the joint tenancy - no one joint tenant owns an identifiable share in the property, so no one joint tenant can deal with the property by, for example, leaving it to another per- son by will. It is possible to sever a joint tenancy and convert it into a tenancy in common at equity. However, if the joint tenancy is still in existence at the death of a joint tenant, the surviving joint tenant will inherit the property irrespective of the terms of the will. •! A joint tenancy will not exist unless four requirements, known as the four unities, are satisfied: 1. time - the interests of all co-owners should be acquired at the same time. 2. title - all co-owners acquired their title by the same means, i.e. all from the same document 3. interest - the interest of all the co-owners must also be identical. Each interest must be of the same duration and the same nature and extent (e.g. if A had a life interest, and the other a fee simple - they cannot be joint tenants). 4. possession - the co-owners must be equally entitled to the possession of the whole land 18 If a unity ceases to exist, the tenancy will become a tenancy in common automatically, (e.g. A, B and C are joint tenants. A transfers his equitable interest to X, and unity of title is destroyed - X is a tenant in common with B and C, but B and C continue to be joint tenants as between themselves. If A transfers his equitable in- terest to B, B would become a tenant in common as to that 1/3rd share but would continue to be a joint ten- ant with C as to the remaining 2/3rd shares. The Tenancy in Common •! Each tenant in common owns a specific share in the property - it is undivided, meaning that it is tied up in the property until the property is disposed of. They may be equal or unequal shares, for example to re- flect unequal contributions to the purchase price. •! The right of survivorship does not apply. This means that each tenant in common is entitled to a notional share of the property (e.g. a half, quarter, etc) and can dispose of his own share which may be inherited by will or on intestacy. •! The only unity which is essential is the unity of possession: 1. possession - the co-owners must be equally entitled to the possession of the whole land If the unity of possession does not exist there is no co-ownership at all. Creation Registered Land •! Form TR1 contains a declaration of trust indicating whether the transferees are to hold the property on trust for themselves as joint tenants or as tenants in common in equal shares. •! If declaration of trust in Form TR1 is not completed, equity generally follows the law (i.e. if it is a joint tenancy in law, it will be in equity) - but in certain circumstances it will not, and will presume a tenancy in common where there are: 1. unequal contributions - each co-owner is presumed as having a share in the property proportional to his contribution (Lake v Gibson) - though this will not apply to "domestic property", such as a family home, which gives rise to the presumption of a joint tenancy (Stack v Dowden). 2. partnership property - where co-ownership is of a commercial character, it is presumed to be a tenancy in common - and the burden of proving a contrary intention to rebut the presumption will lie on the party who alleges a joint tenancy (Re Fuller's Contract). 3. Estate or interest granted to secure a loan - When two or more people lend money secured by a mortgage, equity presumes that they hold the estate they receive by way of security as ten- ants in common (Morley v Bird) 19