#17301 - Co Ownership - GDL Land Law

Whenever land is co-owned a trust of land is imposed by statute (s.34(2) LPA 1925 and s.1(1)(a) TOLATA)

Forms of Co-Ownership

• Successive Co-ownership: Two or more people are entitled to the enjoyment of land in succession to each other.

• Concurrent Co-ownership: two or more people are entitled to the simultaneous enjoyment of land.

  • LPA 1925 s.30-36 and Trusts of Land and Appointment of Trustees Act (TOLATA) 1996 (s.12, 13, 14, and 15)

  • Drafted after WW!, significant land depression (90% land owned by 10% of the people). The driving force behind the legislation, same as today, is to make co-owned land freely alienable (alienable = transferrable).

Two Types of Concurrent Co-Ownership

• Joint Tenancy (‘JT’)

  • A single title owned by 2-4 named parties (never use the word ‘share’)

  • Everything must be done unanimously, there is no majority voting.

  • Right of survivorship (Gould v Kemp): if anyone dies, then they simply drop out of the picture. They don’t own anything to leave it by will, therefore no costs or transfer.

  • When a JT is severed, it is turned into a TiC. They are severed equally.

    • It is possible for one person to sever (take their 25% share), while the remaining 75% block is kept in joint tenancy.

  • The Four Unities are Required to have JT

    • Unity of Possession: All of the joint tenants are entitled to possess all of the land at the same time. No one can be excluded from any one portion of the land.

    • Unity of Interest: each tenant has the same estate.

    • Unity of Time: All of the participants must acquire their interests at the same time

    • Unity of Title: all tenants acquire the title under the same document.

• Tenancy in Common (‘TiC’)

  • Aka an undivided share in land. No survivorship rights as that share is yours.

  • Unity of possession is still required: cannot be excluded from any part.

    • Other unities may be present, simply not required.

Legislative Structure:

• A legal title can only be held by way of JT (S.1(6) LPA 1925). It cannot be severed. T

  • here are a maximum of four legal owners, if more than four are named then it is the first four who hold the legal title (s.32(4) LPA 1925).

  • The existence of just one title makes investigation, conveyancing much simpler and easier.

  • Legal owners hold the land on trust for equitable owners (even if the two are the same group).

  • All the power to deal with the land resides with the legal owners.

• A trust of land is an overreaching trust (S.2 and S.27 LPA 1925)

  • Legal owners (trustees) can transfer land to a purchaser and the equitable owners are ‘overreached’.

    • This means their interest in converted into a packet of money, so the equitable interests have no affect on the purchaser.

    • The equitable owners have no power to prevent this (City of London BS v Flegg [1987])

  • Overreaching is a process by which equitable rights in land which might otherwise have enjoyed protection on the occasion of a disposition are detached from the land and are transferred instead to monies paid in exchange for the sale/mortgage.

  • Three conditions for overreaching (s.2 LPA; Mortgage Express v Lambert [2016])

    • 1) This only occurs when there is a conveyance of a legal estate (selling, leasing or mortgaging the land).

    • 2) Only over-reachable rights can be overreached.

      • i.e. shares in co-ownership, and possibly equitable claims like estoppel.

    • 3) You can only over-reach when you have at least two trustees. (s.2(2) LPA)

      • All of the trustees must unanimously agree.

      • This is statutory.

      • If you only have one legal owner, the purchaser cannot rely on overreaching.

      • City of London BS v. Flegg -two trustees therefore overreaching

      • William & Glynn’s Bank v Boland – one owner, no overreaching.

1) The Four Unities

• For a JT the four unities must be present (AG Securities v Vaughan)

• For a TiC only unity of possession is necessary, but the others may be present.

2) There may be an express written declaration.

• These are not compulsory (in Stack v Dowden Lady Hale said it would be a good idea if it was compulsory).

• Exception:

  • Clarke v. Meadus [2010] – Declaration was sidestepped because of proprietary estoppel; There was an explicit promise that they would not rely on the writing. Therefore unconscionable to go back and rely on that written document

• An express declaration as to whether a property is held as JT or TiCs will prevail over any other presumptions:

  • Pankhania v Chandegra (2012) – Jointly bought house on behalf of a third party (C’s uncle, D’s Sister). There was an express declaration of trust to the effect that the claimant and defendant held the beneficial interest in equal shares as tenants in common. The intentions of parties were that the uncle would eventually live in the property and they would sell their shares to him. D changed her mind and changed locks.

    • Held, in the absence of fraud or mistake, the express trust prevails.

  • Goodman v Gallant (1986) – Goodman had 50% interest in matrimonial home. Gallant moved in. Together they purchased first husband’s share, declared they held it as JTs. Later split. Tried to argue that she had 75% interest as she already had 50% when they added.

    • Held Goodman was only entitled to 50

• The problem is that if people are unmarried (married people have a different law) then this is permanent and even if one A leaves B, and stops child maintenance, mortgages etc. then this declaration is still conclusive and cannot be escaped.

  • The solution would be to make a jurisdiction for unmarried couples.

3) Failing an express declaration look for words of severance

• These are words which show an intention not to be JTs.

• E.g. ‘in equal shares’ (Payne v Webb) or ‘to be divided between’ (Fisher v Wigg)

4) Occasionally courts may imply a TiC due to the background context

• Equity presumes a tenancy in common, this is especially true where:

  • (1) unequal purchase contributions (Bull v Bull)

  • (2) unequal loans or mortgages,

  • (3) business partnerships, and any other circumstances in which equity may infer unequal beneficial interests (Lake v Craddock).

• In the context of ‘domestic’ properties (i.e. family homes), the presumption of tenancy in common arising from unequal purchase contributions will not apply unless one of the parties can provide evidence to the contrary.

  • Generally domestic situations are presumed to be TC unless evidence to the contrary (Stack v Dowden; Jones v Kernott)

5) When the first four of these have failed, you apply the rule that equity follows the law.

• The legal title is held as a joint tenancy therefore the equitable title is a joint tenancy

6) If you have reached the point that equity follows the law, the parties can then use resulting or constructive trusts to vary the interests.

• Cannot do this if any of 1)-4) applies.

• This was a development of Stack v. Dowden (2007) in HoL

  • Followed Jones v Kernott (2011) in Supreme Court – House bough jointly in both names. Mr K moved out. Ms K took on mortgage payments and looked after children. Constructive trust imposed. Held that equitable split was 90-10 in favour of Ms K.

    • Lady Hale: each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property.

  • Followed again in Marr v Collie (2017) in the Privy Council – couple acquired a range of properties as investments. All in joint names without specifying the parties’ respective beneficial interests.

    • Held that rule above equally applied in a commercial setting. What matters is still the party’s intentions.

• We have to establish an intention – we no longer presume that if you paid more you own more.

Express co-ownership

• i) Where two or more people buy land and the land is conveyed to the two of you (should expressly convey the equitable interests as well, but you may not).

• ii) A sole owner who declares in writing that they now hold the land on trust for someone else (s.53(1)(a) or (b) LPA).

  • Resulting and constructive trusts are however exceptions to this formality rule.

• iii) Re-conveyance

  • If A and B own the land and C moves in, instead of expressly declaring that A holds it on trust for both, then you can formally convey it to both A & B.

  • This is expensive (conveyancing fees, land duty, stamp tax).

Implied co-ownership. LPA 1925, s.53(2): “This section does not affect the creation or operation of resulting, implied or constructive trusts”

• If you want a share of land, but don’t have a written instrument, then s.52(3) explains that you can rely on resulting or constructive trusts or estoppel

  • Resulting Trust – this is statutory.

    • Share of your interest is directly proportional to the amount you paid.

    • The problem with the resulting trust is that it only takes into account initial contributions towards the purchase price. It does not reflect any other contributions towards household expenses or even mortgage payments

  • Constructive Trusts – this is statutory

    • Share reflects the agreement that you made, irrespective of how much you paid.

      • Midland Bank v Cooke [1995] – paid 6% purchase price, receives 50% of the equity.

  • Proprietary Estoppel – this is a creation of equity.

• Outcome of a successful resulting or constructive trust is a proprietary share. However, with estoppel you will get a remedy, the nature of which lies at the discretion of the court. This remedy may be a proprietary share, but it might not be.

• Two types of claim that leads to these arising:

  • An acquisition claim is made by B against the landowner...