Express co-ownership arises where two or more people simultaneously hold the title to a freehold or leasehold estate in land. The co-owners think of themselves, and express themselves to be, legally and beneficially entitled to the land and its value.
Trusts of Land:
Where there are express co-owners, holding title to the land together, there exists a trust of land. [1] These express trusts of land must be in writing and signed. [2]
This trust can be subject to overreaching. A co-owner can decide how their right to the value of the land is to be treated when overreaching occurs.
Trustees and Beneficiaries:
Trustees (the persons holding legal title) are under a duty to hold the land for the beneficiary and their interests. It is often, but not always, the case that the trustees are also the beneficiaries under the trust.
EG: A and B holding land on trust for A and B.
Trustees must have regard to the wishes of the beneficiaries, but they have the absolute power of ownership also. [3] This can be limited by the instrument creating the trust. [4]
If the land is sold, the trustees hold the proceeds of the sale on trust for the equitable owners. Trustees have no duty to sell the land, but do have to power to do so.
Joint Tenancies and Tenancies in Common:
In law, express co-owners are always joint tenants.
In equity, express co-owners are either joint tenants or tenants in common.
Joint tenants: each party wholly entitled to the whole of the title.
Tenants in common: parties have undivided shares (like in a company).
Legal Rights of Co-owners:
Prior to 1926, an estate could have multiple tenants in common. This made it difficult for disponees to ensure that they were buying the legal estate from everyone who held it.
After the reformations, legal tenancies in common have been prohibited. [5] Disponees only have to investigate one legal title now since there can only be joint tenancies.
Cap:
Equitable Rights of Co-owners:
When land is sold, co-owners have an equitable right to the proceeds of the sale.
They can hold this in unity (as joint tenants) or as separate shares (as tenants in common). Therefore, co-owners cannot have distinct shares in their legal title, but can have distinct shares in the value of their title.
Survivorship:
By default, co-owners are joint tenants in both equity and law and have an undivided right to the proceeds of the sale. If one party dies, the joint tenant is automatically invested with the entire estate.
No formal conveyance / written document is required to reflect the new status of the remaining joint tenants.
Co-owners can also expressly displace this default survivorship rule by stating that they want to be treated as tenants in common under equity. A conveyancing form can be completed at the Land Registry to opt into being a tenant in common.
Severance:
Problems arise when the intentions of co-owners change over time, but the Land Registry form is not completed to rebut the default rule.
Severance happens when (one or both or all) legal and equitable joint tenants become equitable tenants in common (but they must remain legal joint tenants).
Express (Written) Severance:
Severance is normally accomplished by providing ‘notice in writing’ to the other co-owner(s) of their desire to sever. [8]
The notice must be sent but does not necessarily have to be received.
In Kinch v Bullard, during a divorce proceeding between A and B, B has a heart attack. A served a severance notice to B but realised that it would be better for her if she did not sever. A then went to B’s house to collect the severance notice.
The court rule that it is delivery of a written severance notice that is importance, not its receipt. Therefore, A had successfully severed.
The intention to sever must be clear: language of shares or division must be used.
In Harris v Goddard, MrH died before his divorce hearing. MrsH’s petition stated her wish for a ‘just’ settlement, believing this was a severance notice. If severance occurred, G would be entitled to MrH’s equitable share.
The court held that severance did not occur as the words used were insufficient to sever (no reference to shares). MrsH retained survivorship right.
In Gore & Snell v Carpenter, H and W owned 2 houses. After a divorce petition is made by H, W dies. The petition contained a suggestion that each should keep one of the houses.
The court held that there was no severance – a suggestion and an intent are not the same.
Severance cannot be affected by a will since the survivorship rules operate immediately upon death (the transfer of the full estate happens before the will is executed, so has precedence). Severance must, therefore, be in effect before death.
Implied Severance:
Severance need not be achieved by written notice. It may also be achieved by ‘such other acts or things as would … have been effectual to sever’. [9]
Acts or Things Sufficient for Implied Severance: [10]
‘Acting on your own share’: taking action to sell or give away your share in the co-owned property.
The transaction must be legally enforceable.
Mutual Agreement: all co-owners agree to sever the equitable joint interest, either agreeing on distinct shares between them or by agreeing that one co-owner will transfer their rights to a share of the sale to a third party.
By a ‘course of dealing’: entering into negotiations with the other co-owner over the value of ‘your share’.
Severance could still occur even though negotiations have broken down. [11]
This position is controversial since it is unclear how far ultimately failed negotiations have to advance before the equitable joint tenancy is severed.
By ‘murdering one of the other joint tenants’: [12] homicide automatically causes severance.
Disincentives the wrong of murder.
Only their entitlement is severed.
Equal Share Presumption:
If co-owners do not agree on their respective shares in the property, the default presumption is that they are all beneficially entitled to equal shares in the property’s value.
The initial contribution is irrelevant.
Rebutting the Presumption:
The burden is on the claimant to provide evidence of a common interest between the joint tenants that the beneficial shares would not be divided equally to displace the presumption.
In Stack v Dowden, it was ruled that the mere fact that one co-owner contributed more to the purchase price than the other might be relevant to determining this, but it is not conclusive. The approach is holistic.
Hale JSC: Evidence may be drawn from the parties’ indirect contributions (household expenses etc.), how finances are arranged, whether one party’s capacity to make equal contributions is hindered (childcare responsibilities etc.).
Note: the equal share presumption only holds for express co-ownership cases, not implied co-ownership.
Resources:
References:
[1] See Trusts of Lands and Appointment of Trustees Act 1996, part I [2] Law of Property Act 1925, s53(1) [3] Trusts of Lands and Appointment of Trustees Act 1996, s6 [4] Trusts of Lands and Appointment of Trustees Act 1996, s8 [5] Law of Property Act 1925, s1(6) and 36(1) [6] Law of Property Act 1925, s34(2) [7] Trustee Act 1925, s34(2) [8] Law of Property Act 1925, s36(2) [9] Law of Property Act 1925, s36(2) [10] Williams v Hensman (1861) 1 Johns. & Hem. 546 [11] EG: Gore & Snell v Carpenter (1990) 60 P&CR 456 [12] Forfeiture Act 1982, s2
Cases Mentioned:
Kinch v Bullard [1999] 1 WLR 423
Harris v Goddard [1983] 1 WLR 1203
Gore & Snell v Carpenter (1990) 60 P&CR 456
Stack v Dowden [2007] UKHL 17
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