#17746 - Co Ownership Acquistion Notes - Land Law

Co-ownership Acquisition Notes

What are the basic aspects of co-ownership of land?

Whenever land is co-owned, whether co-ownership arises in relation to the legal title, the beneficial interests, or both, the land is held on trust. All co-ownership trusts are considered to be ‘trusts of land’ and are governed by the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996).

What are the different types of co-ownership?

English law distinguishes between two types of co-ownership:

1. Joint tenancy – each tenant is wholly entitled to the land when acting collectively.

   1. No single joint tenant has any “share” in the land with which they can deal individually – each owns the whole

      1. Thus when a joint tenant dies, the title “survives” in the remaining joint tenants – this is the concept of survivorship

         1. Where the co-owners all die simultaneously such that it is not clear who dies first, it is presumed that the younger survived the elder (s184 LPA 1925)

      2. BUT: this concept of each owning the whole should not be taken too far:

         1. The courts have recognised that each is entitled to a share of any income deriving from the co-ownership (for instance, from rent)

         2. Statute has provided for exception with regards to the financial provision for dependents of a deceased joint tenant, liability for inheritance tax, and liability to creditors

   2. Co-ownership of a legal estate can only be created and exist as a joint tenancy per s1(6) of the LPA 1925

2. Tenancy in common – the tenants hold “undivided shares” in the land

   1. Lawson and Rudden capture the essence of this in saying that:

      1. [In a company] the shareholders each have a separate thing with which they can alienate or leave to pass on their death, but none of them can go into the HQ office, point at a room and say “I claim my share”. So if there are two owners in common of a house, each has a separate, though intangible, asset: it is the house which is not divided into distinct “shares”.

   2. Tenants in common are able to deal with their shares individually (through selling them and assigning them in their will)

   3. The only unity required for a tenancy in common is unity of possession (see below)

   4. A joint tenancy can be converted in to a tenancy in common by the process fo severance

Why does English law distinguish between these two different types of relationship?

The two sorts of co-ownership reflect the fact that different relationships require different sorts of arrangement

• Survivorship will not necessarily suit all types of owners, such as between business partners

• A tenancy in common is a more flexible form of co-ownership which is not subject to the strict requirements of joint tenancy

How do you identify whether are particular instance of co-ownership is a joint tenancy or a tenancy in common?

In order for a joint tenancy to be present, the four unities must be present:

1. Unity of possession –

   1. Each owner must be entitled to possession of the whole, distinguishing co-ownership from separate ownership of various parts of the land

      1. For instance, A and B must be entitled to possession of the whole of Stamford Bridge, they cannot be entitled to possession of one half of the pitch each.

   2. It is not necessary for each co-owner to occupy the whole

2. Unity of interest –

   1. Joint tenants must have interests of the same type and quantum

      1. For instance, a gift ‘to A and B for life concurrently and to C in fee simple’ creates an interest of a different quantum and therefore will create a tenancy in common

         1. However a ‘gift to A and B for life, remainder to B’ creates a joint tenancy, as this is just another way of stating the concept of survivorship.

   2. If the joint tenancy is subjected to severance, then, the shares will automatically be the same size

3. Unity of title -

   1. The interests must derive immediately from the same title (ie from the same deed or will)

      1. This will be significant where one joint tenant transfers his interest – the purchaser’s title will derive from conveyance of the share, whilst the original co-owner’s title will derive from the document creating the joint tenancy

         1. Therefore one co-owner transferring their interest will reuslt in severance

4. Unity of time –

   1. Each of the joint interests must vest at the same time

      1. Problems will therefore arise where a gift of land is made to ‘the children of D at 21’ where D’s children will all reach 21 and attain their interests at different times

   2. This unity is weak because it does not apply to gifts by will or conveyances to uses (in modern terms, trusts)

      1. Today, concurrent interests always take place under a trust, and so it is questionable whether or not unity of time has a significant role any more

How does severance of a joint tenancy take place?

Severance is the process by which a beneficial joint tenant becomes a tenant in common. There are four methods by which severance can take place.

The first three are set out in Williams v Hensman by Page-Wood VC:

1. Acts operating on the tenant’s share –

   1. If any of the four unities cease to exist, then the joint tenancy must terminate

   2. This must be an act operating on the share, unilateral declaration of intent to sever by one joint tenant will not be effective (unless it comes under statutory severance).

   3. The act can be unilateral so long as it obstructs one of the four unities

      1. The act does not need to involve actual disposition, merely entering in to a contract for sale will be sufficient (Page-Wood VC in Williams v Hensman)

   4. The act can be voluntary or involuntary

   5. It seems illogical to talk of a tenant’s share being acted upon, given that there are no shares in a joint tenancy

      1. BUT: the act of severance effectively frees up a tenant’s share.

   6. Where A B and C are all joint tenants and C transfers her interest to D, this severs C’s share by shattering the unity of title, However A and B will continue as joint tenants of their combined two thirds share. Survivorship will continue to operate.

2. Mutual agreement –

   1. There must be mutuality in the agreement between all members to the tenancy

   2. Agreements to sever do not require writing (Burgess v Rawnsley)

3. Course of dealing –

   1. A common intention, rather than a binding agreement, is required for this sort of severance (Greenfield v Greenfield)

   2. Any course of dealing sufficient to display that the relevant interests are mutually treated as constituting a tenancy in common will sever the joint tenancy

      1. In Davis v Smith, it was said that evidence about what the parties wished to do, intended to do, and what they were advised by solicitors to do is irrelevant

         1. The court concentrates on conduct: the words and actions of the tenants

         2. This seems to conflict with Greenfield v Greenfield where it was said that the courts look for a common intention

            1. BUT: the court is looking for a common intention, but one displayed by an actual course of action.

The fourth method by which severance can take place is to be found in statute:

4. Section 36(2) of the LPA 1925 –

   1. It requires a notice in writing provided to other joint tenants expressing a desire to sever the tenancy in equity

      1. The written notice must:

         1. Express immediate severance

            1. In Harris v Goddard Lawton LJ said that notice in writing of a desire to sever must show an intention to sever immediately, it would not be enough that it invited the court in the future to determine property allocation

         2. Relate to the ownership of the land or proceeds of sale in a manner inconsistent with joint tenancy

            1. A desire to sever should be read in to documents that, on their face, are not directed towards severance

               1. In Re Draper’s Conveyance, the court helped that a court summons requesting sale and the division of proceeds would be sufficient (this was affirmed in Harris v Goddard)

               2. NOTE: subsequent case law on this issue has been inconsistent, and so will likely depend upon the particular wording used by lawyers in the relevant document

   2. Severance will be effective upon the time that a letter is delivered such that the other party can rely upon it (Kinch v Bullard)

   3. This section of the statute provides an easy way for severance of a joint tenancy without having to go through the charade of conveyance to trustees

Further rules exist in relation to periodic tenancies:

Any joint tenant of a periodic tenancy can give valid notice to terminate the periodic tenancy even if against the will of the other joint tenant pursuant to Hammersmith and Fulham LBC v Monk

• The effect of this is to allow one party to destroy property rights of another (co-ownership can only exist in legal estate as a joint tenancy).

  • It would be wrong to insist that one party to a contract should be held to it, potentially for rest of their life, against their will.

Are the rules on severance satisfactory?

The Law Commission has suggested the abolition of the Williams v Hensman means of severance, preferring them to be replaced with severance by will, alongside the s36(2) mode of severance

• A theoretical problem arises with severance by will – a will is effective from the moment after the death of the testator, but survivorship operates at the moment of death.

  • Provision would need to be made stating that the will takes effect prior to the principles of survivorship

    • This seems to be quite a fundamental concession.

• A practical problem also arises with severance by will:

  • “Rogue” beneficial joint tenant could secretly sever joint tenancy by will and enjoy possibility of right of survivorship without risk to estate.

    • Rogue’s co-tenant dies first: Rogue takes all.

    • Rogue dies first:...