Co-Ownership

Co-Ownership

Exists where two or more people own the same piece of land together.

Trust of Land

A trust separating legal ownership of land from equitable (beneficial) ownership.

Legal Title

Legal ownership of land held by trustees and shown on the Land Registry.

Equitable Title

Beneficial ownership of land held by beneficiaries and not shown on the register.

Trustees

Legal owners with powers and duties of management over the land.

Beneficiaries

Equitable owners entitled to the value or benefit of the land.

Dual Capacity

A person can be both a trustee (legal owner) and a beneficiary (equitable owner).

Express Trust of Land

A trust deliberately created and evidenced in writing and signed by the declarants.

TR1 Declaration

A standard Land Registry transfer form that can contain an express declaration of trust.

Implied Trust of Land

A trust arising by operation of law without formalities.

Implied Trust Example

A person contributes to the purchase price but is not a legal owner.

Legal Title Capacity

Legal title can be held by a maximum of four adults.

Minor Rule

A minor cannot hold legal title to land.

Legal Title Form

Legal title must always be held as a joint tenancy.

Equitable Title Capacity

Equitable title can be held by any number of people, including minors.

Equitable Title Forms

Beneficial ownership can be held as a joint tenancy or a tenancy in common.

Joint Tenancy

Co-owners together own the whole property as a single unit with no distinct shares.

Right of Survivorship

On death of a joint tenant, their interest passes automatically to surviving joint tenants.

Tenancy in Common

Co-owners hold distinct shares in property with no right of survivorship.

Death of Tenant in Common

The deceased’s share passes under their will or intestacy.

Unity of Possession

Each co-owner is entitled to possess the whole property.

Four Unities

Unity of possession, interest, time, and title required for a joint tenancy.

Unity of Interest

All co-owners hold the same type of interest in land.

Unity of Time

All co-owners’ interests must arise at the same time.

Unity of Title

All co-owners must derive title from the same document.

Express Declaration of Equitable Title

Parties may expressly declare how they hold the beneficial interest.

Presumption of Joint Tenancy

Applies where there is no express declaration, unless the land is acquired as a business asset.

Business Asset Presumption

Property acquired for business purposes is presumed to be held as tenants in common.

Severance

The process by which a joint tenancy in equity is converted into a tenancy in common.

Legal Title and Severance

Legal title cannot be severed and must remain a joint tenancy.

Effect of Severance

The right of survivorship ends for the severing party.

Severance (Two Joint Tenants)

Each becomes a tenant in common holding a 50% share.

Severance (More Than Two)

Remaining co-owners continue as joint tenants among themselves.

Four Joint Tenants Example

One severs and holds 25% as tenant in common, remaining three hold 75% jointly.

Severance by Written Notice

A joint tenant may sever by giving written notice to the others.

Notice Requirements

Must show an immediate and irrevocable intention to sever.

Form of Notice

Must be in writing but need not be signed.

Service of Notice

Valid if served by hand, first class post, or registered post.

Timing of Severance

Severance occurs when the notice is served, not when read.

Severance by Other Acts or Things

Severance may occur through unilateral acts, mutual agreement, or mutual conduct.

Unilateral Act

Severance caused by one joint tenant acting alone.

Total Alienation

Permanent disposal of the equitable interest, causing immediate severance.

Total Alienation Example

Selling one’s equitable interest.

Partial Alienation

Temporary disposal of the equitable interest that still severs.

Partial Alienation Example

Mortgaging or leasing the equitable interest.

Involuntary Alienation

Automatic severance on bankruptcy.

Bankruptcy Effect

The bankrupt’s equitable interest vests in the trustee in bankruptcy.

Mutual Agreement

Severance where all joint tenants agree to hold separate shares.

Form of Mutual Agreement

Need not be in writing or legally enforceable.

Effect of Mutual Agreement

Severance occurs even if parties later change their minds.

Mutual Conduct

Severance inferred from consistent behaviour showing separate ownership.

Mutual Conduct Example

Joint tenants make mirror wills treating shares as separate.

Wills Rule

Making a will alone is not an act of severance.

TOLATA 1996

The statute governing disputes relating to co-owned land.

Who Can Apply Under TOLATA

Trustees, beneficiaries, mortgage lenders, and trustees in bankruptcy.

Court Powers Under TOLATA

To order sale or make any order the court thinks fit.

Factor 1: Intentions

Court considers intentions of the person(s) who created the trust.

Intentions Example

A will stating the house is to be kept for children weighs against sale.

Factor 2: Purpose of Property

Court examines why the property was purchased.

Purpose Example (Family Home)

Ongoing use as a family home weighs against sale.

Purpose Example (Investment)

Investment purpose weighs in favour of sale.

Factor 3: Welfare of Minors

Court considers welfare of any minor occupying the property.

Minor Welfare Example

Risk of homelessness weighs heavily against sale.

Factor 4: Interests of Secured Creditors

Court gives strong weight to lenders seeking repayment.

Creditor Example

Mortgage default often leads to an order for sale.

Factor 5: Wishes of Adult Beneficiaries

Court considers wishes of majority by value of shares.

Majority Rule Example

Owners with majority share can influence outcome.

Court Order for Sale

An order requiring the property to be sold.

Effect of Sale Order

All equitable interests are overreached.

Overreaching on Sale

Beneficiaries’ interests transfer from the land to the sale proceeds.

Effect on Buyer

Buyer takes the property free of all beneficiary interests.