Property Law Lecture 6: Co-ownership and Trusts of Land

Property Law Lecture 6: Co-ownership and Trusts of Land

Page 1: Introduction

• Title: Co-ownership and Trusts of Land

• Institution: Institute of Law Jersey

Page 2: Learning Outcomes

By the end of this lecture and the associated readings, students will be able to:

• Explain the distinction between a joint tenancy and a tenancy in common.

• Describe the various modes of severance.

• Recognize situations in which a resulting trust or constructive trust may arise.

• Explain the significance of the Law of Property Act 1925 (LPA 1925) and the Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996) reforms regarding co-ownership and trusts of land.

• Apply the above rules and principles to hypothetical scenarios.

Page 3: Co-ownership Defined

• Co-ownership occurs when two or more individuals possess an interest in the same land, which can be either:

  • Freehold: Perpetual ownership.

  • Leasehold: Ownership for a specific duration.

Page 4: Trusts Arising from Co-ownership

• Requirement: Co-ownership of land necessitates that the land be held on trust.

• When land is conveyed into multiple names, a statutory trust arises as per LPA 1925, ss 34-36.

  • Example: If Arwen conveys land to Boromir and Celeborn, a trust of land is automatically established.

  • Both will act as trustees and beneficiaries, holding the land in trust for themselves, thus being co-owners legally and equitably.

• Governance: Trusts of land are governed by the Trusts of Land and Appointment of Trustees Act 1996 (ToLATA).

Page 5: Forms of Co-ownership

• Joint Tenancy:

  • Co-owners collectively own the entire property without distinct shares.

  • Features the right of survivorship; when a joint tenant dies, their interest transfers to the surviving tenant(s).

  • Joint tenants are treated as if one person owns the land, making it impossible to bequeath their share in a will.

• Tenancy in Common:

  • Co-owners have distinct and defined shares in the property but the property remains undivided.

  • Allows separate ownerships, enabling co-owners to sell or bequeath their specific shares.

• Commonality: Both forms share unity of possession, allowing each co-owner the right to possess the entire land.

Page 6: Co-ownership Characteristics

Joint Tenants

• Each tenant owns the whole property.

• Deceased joint tenant's interest passes automatically to the surviving tenant(s).

Tenants in Common

• Each tenant holds a defined share in the property.

• Upon death, the interest of the deceased tenant is passed according to their will or through intestate succession.

Page 7: Key Legislation

• Law of Property Act 1925: Establishes legal frameworks for property ownership.

• Trusts of Land and Appointment of Trustees Act 1996: Modernizes the law around trusts and co-ownership in land.

Page 8: Legal vs Equitable Co-ownership

• Legal co-ownership is restricted to joint tenancy under LPA 1925.

• Equitable interests can arise from both joint tenancy and tenancy in common:

  • Legal estates cannot exist in undivided land shares (tenancy in common).

  • Equitable interests allow greater flexibility, as multiple parties can have interests that reflect their physical shares in the property.

Page 9: Trusts in Co-ownership

• Trusts of Land:

  • Joint tenants are always trustees, usually for their own benefit.

  • Tenants in common also act as trustees and beneficiaries, regardless of the number of trustees amongst them.

  • Relevant sections: LPA 1925, ss. 34 and 36; ToLATA, ss. 4 and 5.

Page 10: Express Trusts

• An express trust is recommended:

  • Should be formalized through an agreement outlining the rights and obligations related to the property.

  • Must include a clear declaration of trust, per s. 53(1)(b) LPA 1925, necessitating written evidence.

Page 11: Resulting Trusts

• Occur when a person contributes to purchasing a property but does not appear on the legal title.

• There is a presumption of a beneficial interest in the property, following the principle of 'purchase in the name of another' leading to a resulting trust.

Page 12: Constructive Trusts

• Common Intention Constructive Trusts:

  • Arise when a party has contributed to the purchase or establishment of a home without being on the legal title, based on a shared intent recognized by the court.

• There must be a common intention and detrimental reliance by the claimant for this trust to be established.

Page 13: Establishing Common Intention

• A common intention constructive trust needs:

  • A demonstrable common intention between parties.

  • Detrimental reliance by the party claiming a share, establishing a two-stage judicial review:

    • Threshold/acquisition issue: Assess if the threshold condition for a trust exists.

    • Quantification issue: Determine specific shares in the property.

Page 14: Case Study: Lloyds Bank v Rossett (1991)

• Two methods to establish common intention:

  1. Express agreement or understanding combined with detrimental reliance.

  2. Direct or indirect contribution to the purchase price, though this narrow definition is no longer applicable.

Page 15: Case Study: Stack v Dowden (2007)

• The court broadened its understanding of factors influencing common intention beyond mere financial contributions:

  • Considerations include intentions at the time of purchase, reasons for joint title, nature of relationships, financial arrangements, and dependent children's welfare.

Page 16: Case Study: Jones v Kernott

1. If a property is solely registered in one name, there’s a presumption that this person is the sole equitable owner.

2. If registered jointly, the presumption is of shared equitable ownership, which can be rebutted by demonstrating a different intention.

3. If no common intention is established, the court will aim to decide what is "fair" based on circumstances.

Page 17: Understanding Inferred vs. Imputed Intentions

• Inferred Intentions: Derived from the conduct and communication between parties, leading to an interpretation of their dealings.

• Imputed Intentions: When interactions don’t expose any intention, the court may conclude what they would have likely intended.

Page 18: Quantification of Shares

• In quantification questions, courts attempt to ascertain:

1. The intention about the share distribution.

2. If this cannot be inferred, then an imputed intention may guide the decision on what is fair, aligning with the principles established in Jones v Kernott.

Page 19: Exercise Scenario

• Scenario: Sam and Dean co-purchase a house with Dean contributing a £50,000 deposit and securing a mortgage for the remainder.

  • Co-ownership Type: Likely a joint tenancy.

  • Rights Upon Dean's Move: Assess if he retains rights in the house.

  • Effects of Sam's Death: Examine implications for Dean upon Sam's demise.

  • Dean's Future Actions: Determine legal issues regarding the value of the shared house if he intends to finance a new purchase with Lisa.

  • Criteria for Court Decisions: Identify the legal determinations available for resolving these issues.

Page 20: Conclusion

• Contact Information:Institute of Law JerseyWebsite: lawinstitute.ac.je