Professional Documents
Culture Documents
Co Ownership
Co Ownership
Co Ownership
Tenancy in Common
Those unities must be present with a joint tenancy. Tenancy in
common is a different kettle of fish. You only have to have:
a) Unity of possession
b) Distinct undivided shares in a tenancy in common.
Creation of Joint Tenancy/Tenancy in Common
That brings us then to the question of how do you know what youve
created. The simple answer is that you shouldnt even have to ask
that question if youre anywhere close to competent. Because if
youre trying to create one or the other you should be able to
articulate it in the document. Its only when people are careless that
you have to work it out. With registered land (which will represent all
of the land in the country eventually), as weve seen, the
Registration of Title Act 1964 saves you from that problem
because it creates a presumption that when two or more people are
registered together as co-owners, they are joint tenants. That is
helpful and removes some of the uncertainty, but what happens if
youre still operating in the unregistered system and the documents
that youre dealing with dont contain sufficient indication? Well you
then have tension that operates in the law of co-ownership, one of
these classic situations where equity and common law go their
separate ways. Equity favours tenancies in common because it likes
the fairness of people having distinct shares. It doesnt like the idea
that you may have chipped in but subsequently lose out. Because if
you die as a joint tenant theres nothing for your successors.
Survivorship operates and theres nothing for your estate. Equity
likes the idea that you have distinct shares because your estate
benefits. Even if you didnt mention it in your will, it will pass on
intestacy. Theres a hint already of the sort of litigation you get: one
person dies and one party asserts that they were a joint tenant and
that survivorship thus operates, and the other is asserting that he
was a tenant in common because they are the successors, the
beneficiaries under a will.
But the common law, which likes tidiness, favours joint tenancies. It
likes the idea of the pool of people narrowing down. Thats the
modern explanation as to why the common law favours joint
tenancies but theres in fact a feudal explanation: the common law
liked the idea that youd have a tapering number because it didnt
like the idea of having multiple tenants in respect of a given piece of
land multiple feudal tenants. Because it would mean that the lord
would have to keep chasing lots of people for feudal dues, instead of
one person. So the common law from the get-go favoured joint
tenancies. And in modern times its stance is justified in terms of the
tidiness or order it brings to the title.
But when youre talking about the common law and equity here, you
have to remember that these are preferences and not rules. So
therefore, when it says that the common law leans in favour of joint
tenancies or equity leans in favour of tenancies in common, all its
saying is, if there is doubt or ambiguity or if it could go either way,
each system will take its own approach. Equity wins out in these
kinds of rows because, take a co-ownership situation where you
have D and E, say the common law finds that theyre joint tenants,
well equity finds that they are tenants in common. So whats the
consequence? It could mean that, say E dies, at common law D
benefits from survivorship; hes left as sole owner. But in equity e
will inherit; so all thats happened in equity is that D and e are now
owners of whatever the shares in the tenancy in common. The
dividing line between common law and equity hasnt been abolished
as we know, and the union of judicature hasnt put common law and
equitable rights on the same footing.
The easiest way to go about creating a tenancy in common is to say
so. And even if you dont say so explicitly, you could use words of
severance, which even the common law would pick up on and say
no, those words mean we cant apply our preference towards the
joint tenancy because the are indicative of something operating as
a distinct share. These words of severance included in equal
share, equally (Surtees v Surtees [1871]), or you could say to A, B
and C as co-owners in the following shares 50/25/25. If you use
language like that you are clearly talking about distinct shares and
therefore the common law will have to give up on its presumption
and apply or recognise a tenancy in common.
Equity leans towards tenancies in common, and it will apply this bias
in a number of situations. Again, equity has no choice if the deed
says you are joint tenants; equity cant do anything about that. But
if the situation is ambiguous, and even if there arent words of
severance used, equity could look at the circumstances and say that
they are such that the shares must have been intended to be
distinct shares.
1. Purchase money provided in unequal shares
The first situation where this bias by equity towards tenancies in
common is applied is where people bought property together with
private purchase money in unequal shares (OConnell v Harrison
[1927]). Equity would fasten on that and say well, the person who
provided the bigger share presumably didnt intend to benefit the
person who provided the smaller share. So in a situation where
there are no words of severance but the purchase money went in
unequal shares, equity will presume a tenancy in common. Now of
course even if you put in money in unequal shares youre perfectly
entitled to provide that it should be a joint tenancy. But what equity
was doing was picking up on the uncertainty. If the purchase money
was in equal shares and there is no other indication, equity may feel
that it is bound to find a joint tenancy.
2. Mortgage Loans
This is an old phenomenon. This would have been where people
acted as lenders in the 19th century before the regulation of the
financial sector, before money lenders had to be licensed. Some
people used to just literally lend money as an investment. You might
have 3 people getting together to lend money to a third party and
they would take a mortgage over that third partys property. If they
took the mortgages jointly, the question arose as to what happened
if one of them died. And it would be absurd if their estate was still
owed money by the borrower but they had no security because the
mortgage was held under a joint tenancy. And so if its a mortgage,
equity has cognisance to the commercial rationale of the
arrangement. And commercial arrangements arent about making
presents to other people. So in this situation, equity says, because
its commercial, because you were in it to make money, well
presume that the mortgage was taken as a tenancy in common.
3. Partnership Property
So also with partnership property, which Ive used as an example
already.
4. Land held for individual purposes
If you have people buying land together, but for individual purposes.
Say a dentist, an engineer and a solicitor know each other and
decide to buy a three story property in which to practice their
respective businesses, the dentist taking the ground floor, the
solicitor having an office on the first floor and the engineer uses the
top floor for all his design drawings. Now, theyre not dividing the
building up in the sense that theyre not saying each floor is
exclusive. What theyre saying is well use it between ourselves,
but well be co-owners. But because they have their own
commercial interests at heart, equity takes that as a signal that they
couldnt have intended to be joint tenants: Malayan Credit Ltd v Jack
Chia-MPH Ltd [1986] AC 549.
5. Other evidence of intention
Finally, and unsurprisingly, equity will take into account any other
evidence of intention that it should not be a joint tenancy and
should be a tenancy in common. Equity is much more responsive to
indications of intent than the common law. So thats the sum total of
the disparate approaches of equity and the common law to coownership: Twigg v Twigg [1933] I.R. 65
Severance of a Joint Tenancy
The next thing on the handout is severance of a joint tenancy.
the ownership thats divided up. The common law said that there
are two mechanisms by which this can occur, and what the common
law fastened on was the destruction of certain unities. We saw how
the four unities were essential to the creation of a joint tenancy.
There are two unities that cant be destroyed: possession because
if youve destroyed the unity of possession effectively what youve
done is effected a partition; youve carved the land up, not just
ownership and therefore its not co-owned land anymore. So if you
destroy unity of possession, theres no question of it being a
severance of a joint tenancy, its far more dramatic. You also cant
destroy the unity of time because its simply a historic fact. So once
the unity of time is established, it is always present.
The two unities that could be destroyed leading to severance are:
1. Destruction of unity of interest - subsequent acquisition of an
interest by a joint tenant.
2. Destruction of unity of title - inter vivos alienation by a joint
tenant of his interest to a third party.
So all you were left with were the unities of interest and title. And,
as youll see from the handout, you could destroy unity of interest
by one of the joint tenants acquiring a further additional ownership
interest in the land. This could happen where the interest held in a
joint tenancy was less than a fee simple and the person goes off and
buys an extra interest. That would destroy unity of interest. Or unity
of title. If a joint tenant purported to convey their interest to a third
party. That was possible because, say youve got X and Y as joint
tenants and Y conveys to Z. That means that X is left to Z and they
cant be joint tenants because the unity of title is gone. Xs title is
derived from whatever disposition created that joint tenancy, but
Zs title is derived from the later conveyance and therefore the unity
of title is gone. And in fact, this mechanism whereby you convey to
a third party had to be used even if you wanted to effect a
severance in your own favour. Say Y wanted to obtain a distinct
share in the land, the law didnt allow you to convey to yourself so
you had engage in some kind of bizarre mechanism whereby you
conveyed to Z who then conveyed back to you. And again, that
destroyed the unity of title because Y now claims title by virtue of a
different deed to X. You chose to do these things.
Before the 2009 Act, a severance could also occur where you had
joint tenants and one or other of them had a judgment mortgage
registered against their interest in the land. Judgment mortgages, as
I said in the context of registered land, are quite commonplace and
are becoming more so due to the economic climate. A judgment
mortgage is an involuntary transaction. Despite the use of the word
mortgage, it doesnt involve any consent on the part of the person
who is classed as the judgment mortgagor (the landowner). Its a
non-consensual transaction by definition. Why should your co-
tenant thought you were always going to be joint tenants and may
have entered into an agreement only on that basis. You were able to
set that at nought under the old law.
Section 30(1), (2) of the LCLRA 2009 now provides:
(1) From the commencement of this Part, any
a) conveyance, or contract for a conveyance, of land held in
joint tenancy, or
b) acquisition of another interest in such land, by a joint
tenant without the consent referred to in subsection (2) is
void both at law and in equity unless such consent is
dispensed with under section 31(2)(e).
(1)In subsection (1) consent means the prior consent in
writing of the other joint tenant or, where there are more
than one other, all the other joint tenants.
So in other words, severance between joint tenants is now a
consensual matter, it has to be agreed upon, and if it isnt, theres
no severance. You cant employ these techniques to destroy the
unities of interest or title without the consent. Now, the the courts
do have the power to dispense with consent if its appropriate to do
so, and it can do so, as well see, in the context of section 31. But
the requirement of consent provides an important safeguard. It
means that the form of co-ownership selected for these co-owners is
preserved unless they agree or unless the court intervenes.
Severance in Equity
Equity was always a little bit more flexible in allowing for severance
of a joint tenancy because it didnt like joint tenancies. It regarded
them as slightly unjust. It preferred the idea of split shares and
regarded them as being more equitable. And so equity didnt insist
on you having a conveyance or an acquisition by way of legal
document or legal instrument. It didnt insist that title should have
passed to a third party or that title to a further interest should have
vested in a joint tenant. It didnt require the thing to be completed
by deed. It would give effect to less than that because, of course,
equity regards as done that which ought to be done, equity looks at
substance rather than form.
Section 30(4) of the LCLRA 2009 says:
Nothing in this section affects the jurisdiction of the court to
find that all the joint tenants by mutual agreement or by their
conduct have severed the joint tenancy in equity.
So the equitable jurisdiction isnt affected. But what section 30 is
acknowledging and is in fact correct in this the equitable
jurisdiction was always based on the idea of something being
worked out amongst the joint tenants. Now of course equity would
recognise a severance in the same situations that the common law
would acquisition of a further interest or disposal of your interest
but it also recognised two further situations as giving rise to
severance:
1) Agreement between the joint tenants to hold as tenants in
common. Just an agreement; no deed, no formal document was
needed to be entered into whereby you all became tenants in
common at law. In equity just an agreement would be effective.
2) Any course of dealing indicating that the joint tenants were
treating their interests as constituting interests under a tenancy in
common. Even less than an agreement.
And that remains the law; those headings are still good. And theres
no reason why they shouldnt be, because they are consistent with
the policy of the 2009 Act, the policy being, if a severance is going
to occur, it has to be by consent, unless the court intervenes. So
that is the situation in relation to severance. Severance is now
controlled and is about consensus for the most part, subject to the
courts intervention.
Determination of Joint Tenancy/Tenancy in Common
The last thing we have to talk about in the context of co-ownership
is how it comes to an end. Naturally it is always open to people to
agree in respect of these things, but what were really interested in
is where there has to be a degree of compulsion. But lets just work
through the various headings.
1. Union in a sole tenant
That can happen where survivorship keeps operating until theres
only one joint tenant remaining. When it hits the last one there is no
more joint tenancy, there is no more co-ownership, its a property
owned by one person, no different to any other piece of land. And so
in that situation, co-ownership ends. It could also happen that one
co-owner may have bought everybody else out; they may have
been tenants in common, and there would have been no
survivorship, but you buy them out. Theres nothing wrong with
that. But thats all on the basis of agreement.
2. Partition
Rather than one co-owner buying everybody else out, they may
agree to divide up the property. Again there nothing at all wrong
with that. Sometimes you find one person taking a piece thats
possibly more valuable than the other, and there is sometimes
brought into in whats called consideration for the quality of
exchange, as it were. One party gets a piece thats worth 60% of
the overall value, with the other party getting the piece worth 40%,
plus some money. And if thats worked out by agreement, again its
fine.
3. Court Order
Section 31 of the LCLRA 2009 is entitled Court Orders and
provides:
(1)Any person having an estate or interest in land which is coowned whether at law or in equity may apply to the court for
an order under this section.
(2)An order under this section includes
(a) an order for partition of the land amongst the co-owners,
(b)an order for the taking of an account of incumbrances
affecting the land, if any, and the making of inquiries as to
the respective priorities of any such incumbrances,
(c) an order for sale of the land and distribution of the proceeds
of sale as the court directs,
(d)an order directing that accounting adjustments be made as
between the co-owners,
(e) an order dispensing with consent to severance of a joint
tenancy as required by section 30 where such consent is
being unreasonably withheld,
(f) such other order relating to the land as appears to the court
to be just and equitable in the circumstances of the case.
(1)In dealing with an application for an order under subsection (1)
the court may
(a) make an order with or without conditions or other
requirements attached to it, or
(b)dismiss the application without making any order, or
(c) combine more than one order under this section.
(4) In this section
(a) person having an estate or interest in land includes a
mortgagee or other secured creditor, a judgment mortgagee
or a trustee,
(b)accounting adjustments include
(i) payment of an occupation rent by a co-owner who has
enjoyed, or is continuing to enjoy, occupation of the land
to the exclusion of any other co-owner,
(ii) compensation to be paid by a co-owner to any other coowner who has incurred disproportionate expenditure in
respect of the land (including its repair or improvement),
(iii)
contributions by a co-owner to disproportionate
payments made by any other co-owner in respect of the
land (including payments in respect of charges, rates,
rents, taxes and other outgoings payable in respect of it),
(iv)
redistribution of rents and profits received by a coowner disproportionate to his or her interest in the land,
(v) any other adjustment necessary to achieve fairness
between the co-owners.
(5) Nothing in this section affects the jurisdiction of the court under
the Act of 1976, the Act of 1995 and the Act of 1996.
(6) The equitable jurisdiction of the court to make an order for
partition of land which is co-owned whether at law or in equity is
abolished.
A court order is where you have problems. And this is inevitable in
relation to co-ownership. It was recognised by the legislature as far
back as the 16th century that co-ownership did not have a happy
course and that co-owners didnt get on. And so in a piece of
legislation in 1592 called An Act for Joint Tenants, it was recognised
that the courts would partition land divide it up. And although the
Act was called An Act for Joint Tenants, it applied to tenants in
common as well. In the 19th century you had the Partition Acts of
1868-1876, and significantly they created a jurisdiction to order a
sale in lieu of partition. Because it was recognised that a partition
was often not a happy way of dealing with it because partition
involved dividing the property up. And thats fine if youve got a
field with road frontage running along it so you can divide it up so
that youve got two fields. But if its a house you cant really
partition it. In the 19th century you had a big debate as to who got
the chimney, because if you couldnt light a fire you would freeze.
And so it wasnt a practical way of dealing with the issue, and the
courts were given the power to order the sale of the property and
the division of the proceeds in lieu of partition. And the important
thing about saying the court has the power is that the courts power
is there to be invoked by one of the co-owners one co-owner can
complain about another. You had this legislation for a long time, and
although you had the 19th century reform, the reform was very
limited because it was about something instead of partition, which
was sale. And sale could be a messy solution, particularly if the
market wasnt buoyant. And of course, needless to say, sale was
never a solution for a co-owner individually, because all they could
sell was their interest, and nobody would want to buy it. When was
the last time you saw even in the boom for sale. Half share of
house with slightly mad person already living there. You wont see it
because theres no market for individual co-owners interests. People
dont buy into these situations because you dont know what youre
buying into. So the only way the law could deal with it was to sell, at
the discretion of the court. This was rather unsophisticated and a
sale could be very hard on somebody who was treating this property
as their home. That person might not be the source of the unrest
prompting the sale, but they would be unable to acquire as nice a
property out in the world with their share of money from the sale,
which would amount to a fraction of the value of the original
property they were living in.
will say heres the way we are going to organise things if that
happens. It might provide that one party have an option to buy out
the other, for example. This is know as a put and call option. A put
and call option is where you have the option to put your interest to
somebody if such an option exists you can make someone to buy
you out by putting your interest to them and that is a contract, you
can get specific performance of that. Or the other type of option is a
call, where you can call on you to sell to me. So a well regulated coownership agreement can exist through such an agreement. But
these generally operate in a commercial field; you dont find them in
husband/wife scenarios.