LAWS UK Regional Revision 2019 Transcript: Co-ownership Lucinda Pattison, Property law This next session is to do with co-ownership. What I'm going to be looking at with you here is, ‘express co-ownership, co-ownership in law and in equity. We're going to be looking at thetwo different titles. As part of that, 'm going to be talking to you about joint tenants, tenants in common, and severance, Severance is severance of ajoint tenancy into a tenancy in common within equity only. We're going to go through all those different rules. Then finally, we're going to have a little chat about the Trusts of Land and Appointment of Trustees Act 1996. TLATA as we call it. From here on I'll call it TLATA. In terms of the first thing, really, to think about then is, what is co-ownership? Because you've got to think about what co- ownership is before you can get to grips with how it’s actually structured. Co-ownership is simply where two or more people have rights of ownership over the same piece of land. So two or more. In terms of co-ownership, it can be in freehold, it can be in leasehold. There's no restrictions as such as to who can be co-owners, in the sense that it can be family, friends, partners, relatives, spouses, business partners, whatever youwant tobe, those kind of things. Now, the key thing about co-ownership is where you have co-ownership, there's automatically a trust in place. What ‘we have s like a twotitle, two-tier system, if youllike, That you've got legal owners on the one hand, and then you've got beneficial ownersas well. So we have a legal title, and we have a beneficial title or equitable title. Going forward, we'll call it equitable title, but some people refer to it as beneficial. We're going to be looking at each of those and how they come about. Now, just one thing, it seems like stating the obvious, but if only one person actually owns the property, there is no co-ownership. In that sense, they have absolute title, Legal title, beneficial interest, is just an absolute title on their own. First off then, we're going to look at legal coownership. Legal owners are also known as trustees. You'll hear them, they're interchangeable terms. They are trustees, and they manage the property. That is partly their responsibility. Nowy, in terms of managing it, what | mean by that is it's the legal owners, it's the trustees that sign all the paperwork to do with the property. Ifa mortgage is entered into, they are the ones that execute the mortgage deed. If the property is sold, they execute the transfer deed, That is the legal owners and the trustees, one and the same people. Now, in terms of legal ownership, it's fairly straightforward in the sense that its always a joint tenancy. t cannot be anything else. Itis always a joint tenancy and it doesn't change. What a joint tenancy is, 'm going to come on to this more in a second buta joint tenancy is where the owners collectively hold that title together; there are no shares. In respectof the legal ownership, its joint tenancy, they own it collectively. That is backed up in the statute, under section 1, subsection 6, and section 36, subsection 2 of the Law of Property Act 1925. itis those sections that tell us the legal ownership, thelegal ttle, is always a joint tenancy. Now, in termsof this legal ownership, there's some caveats on it, if you like. To be a legal owner, ity. In other words, you have to be over 18. You've got to be an adult. The is we have a maximum number of legal owners of four. UK Regional Revision 2019 Page of 11This is under Section 34(2) of the Law of Property Act 1925. I'm going to come on toitin a second, also section 34(2) of the Trustee Act 1925. Same section, two different Acts, but same idea. That section 1(6) of the Law of Property Act that | mentioneda second ago, that also says that a legal estate cannot be held by a minor. You've got to be an adult, and a maximum of four. The idea being, if you have these legal owners on the ttle, if one of them dies, their name is simply removed from the title, and they are no longer there as a legal owner. Next question thoughiis, well, how do you decide- Student: Which four. Which four, yes, absolutely, because you may have more than four people that go to buya property, but you can only have four named on thetitle for legal owners. How do you decide if more than four? Well, unless stated otherwise, the land registry have a fairly simple rule that they take the first four named. That's it. Whichever order you put them on the deed, the first four get named as the legal owners. You obviously can state differently if you wish to. If the people decide amongst themselves who wants to be, then that's okay. Again, this is stated under Section 34(2) Trustee Act, and also Law of Property Act. Student: Which section? Section 34, subsection 2 of the Trustee Act and the Law of Property Act. Legal ownership in that sense is, actually, like | say, it’s fairly straightforward. It's just a joint tenancy. It can't be anything else. You have to be over 18, and a maximum of 4 people. There's a little bit more in terms of equitable co-ownershi Equitable co-ownership, we're talking here about the people with a beneficial interest in the property. The people who are entitled to benefit actually from that property, from that land. The likely thing is that at some point they've put money into the property. In other words, they purchased it. They bought the property themselves. They can put money in at the time of the purchase, or maybe later. You can come in later on and if you contribute, and that's the idea of ‘rusts, getting implied trust. if you contribute towards a property, you may get beneficial interest. Alternatively, ifyou're very lucky the property might have been gifted to you. You haven't actually boughtit, but it has been gifted to you and you therefore have a beneficial interest init. We call these people beneficiaries. I's the beneficiaries that have the equitable title. You've got the legal owners or the trustees, and then you've got the beneficiaries. Legal owners, trustees, have legal title. Beneficiaries, beneficial owners, equitable title. Now, they also, it's worth mentioning, that they can be one and the same people. You don't have to have different identities for the legal owners and the beneficial owners. Theycan be the same person. They area legal owner and a beneficial owner, or they may be one or the other. Okay, so you can have a different combination. It's also worth mentioning that there's no maximum number of equitable owners on a title. Legal ownership, we have that restriction of four. Equitable owners, there is no restriction on that. You can have as many as you want. The other thing about equitable ownership is there's different ways that the beneficiaries can actually hold the property. It can be held as a joint tenancy, or as a tenancy in common. There is a choice there. Even more than that, it can actually be a combination of the two, UK Regional Revision 2019 Page2 of 11If you've got three or more beneficiaries there, then they may be a combination. Two of them might be joint tenants, one might be a tenant in common. Obviously, the definition of joi tenants, you can't bea sole joint tenant, it doesn't work that way. After that in terms of combination, if you've got four people, you might have two joint tenants, two people who are tenants in common. Student: What happens after severance? Ifyou start off with a joint tenancy, and you sever it, yes, you g Absolutely. (0 a tenancy in common, What does joint tenants mean? | mentioned the idea a second ago that it's this idea of collectively, and that's exactly what itis. f you are a joint tenant of a property, you don't own a share. People sometimes talk about, "I'm a joint tenant, my share.” You don't have a share if you are a joint tenant. What you do is you collectively ownit with the other joint tenants 100%. Between whoever it is, you collectively own that property. What happens is when a joint tenant dies, all that simply happens is they are removed from the equitable title. People talk about that idea of, "| passed my share." No, you don't because you don't have one. it sounds awful to say but you're literally just removed from the title and whoever is left as joint tenants, they now own the property collectively, in that share. This is called the principle of survivorship. It's the survivorship being that when you survive somebody as a joint tenant, you get the property. It keeps coming to you. We call it, ast person standing gets the lot, basically. It sounds a bit awful, but if you stay as joint tenants and people are dying off, you are collectively owning more and more. Then if you're the sole one left, you've got the lot. It’s not a question of shares passing to you. There are no shares. It's just that whoever collectively, it's diminishing over time, and they take absolute ownership. The alternative to joint tenancy is tenancy in common. Now, in the tenancy in common, each tenant in common has a distinct share in the property. What that share is does not matter. if you've got two people, it can be 50/50, 60/40, 70/30. can be in point decimal denominations. Itreally doesn't matter. The only thing you have to make sure is that the shares add up to 100% because, obviously, it doesn't quite work if you've got some missing. Apart from that it's absolutely fine. You should always record that. People record what share they have in a document. Because somebody has a distinct share as.a tenant in common, they can deal with it in their lifetime, It's up to them what they do with their share, You can sell. You can transfert. You can gift itto somebody. You can mortgage it. Then when you die, you leave your share in the property to somebody, hopefully in a will because everybody should have a will. Failing that, we have the intestacy rules that say who gets it, but you have a share that needs to be dealtwith, That's the difference between joint tenants and tenants in common, Student: About it being recorded. It can’t be recorded as a notice, so it will be recorded as a restriction [crosstalk]. Yes. Basically, if you're tenants in common, we put a restriction on the ttle at the land registry. That restriction alerts the world that there's beneficiaries. Yes, the way that it actually works is the idea of the restriction, it might sound a bitbizarre, thisis a step ahead but it helps explain it. The restriction js actually protecting a future beneficiary because the idea is that when, as a tenant in common when you die, your share will go to somebody out there. That somebody at the moment UK Regional Revision 2019 Page3 of 11needs protecting, The rest really actually to protect them, for the property not to be dealt with without their consent, or as we know it can be overreached. In terms of the recording of the actual share itself; we draw up what's called a declaration of trust ora deed of trust.In the declaration of trust as tenants in common, we know how much money people have put in, what shares they have. You can go into quite a lot of detail about who pays the utility bills, what will happen if the relationship breaks down, that kind of thing. Student:| have a question. With the joint tenancy after the other individual who'd have died off and the sole person, it would have come to an end and the person own the fee simple absolute. Lecturer: Yes, you're then an absolute owner. Yes, because there's no co-ownership anymore so you're just an absolute owner. Yes, absolutely. You've got these options then. When it comes to the equitable title, we can decide how we choose to own property, whether it's joint tenancy or tenancy in common. You'd liketo think that people would expressly state, “I want to be a joint tenant. want to be atenant in common.’ That doesn't always happen. If somebody buys or people purchase a property and the co-owners don't, expressly state their cocownership, or ifit's been implied, then we need to decide whether they're joint tenants or tenantsin common because that obviously affects the property and how it's dealt with. We've got some tests to decide whether it’s a joint tenancy or tenancy in common. The first thing todo is to look for words of severance. What you do is you look at the agreement that the co- owners-like the transfer that they've used to purchase the property. You look for what we call words of severance. If there's something in there that says, "The property is to be held in unequal shares,” that would indicate a tenancy in common. Okay, ifi’s to be held “collectively’, “jointly”, “one ownership’. That's more hinting at a jointtenancy. You'relooking for--we call it words of severance. Things like “unequal shares’, “undivided property’. After that, we have a little test that we call the ITT test. The PITT test is also known as the four Unities. All four of these unities need to be there, need to be present, in order for a joint tenancy to exist. Now, you may remember this comes from the case of AG Securities v Vaughan that says that you need the four fora joint tenancy to exist. I'l just run through what they are. The first one is possession. Each owner has to be entitled to physical possession ofthe whole land. In other words, they can go everywhere. They are entitled to possess everything. That's possession. Then you've got interests. The interests of all the co-owners, of the co-owners themselves, they have to be identical. Identical in extent, in nature and duration. The easiest way to explain thatis, in terms of being identical, for example, they all own the freehold or they all own the leasehold. You've got a mixture going on then they don't own the same idea in terms of nature, extent, and duration. It's different. You've then got title. The title means that each owner must have received their title to the land from the same document. In other words, they've got it through a transfer deed, a lease, that document whatever it is that's given them the land, it has to have been from the same one,all of them. Now, this is a side point but | know you've all done leases, leaseholds. You've got some case ‘examples where people have been asked to sign separate agreements as a sham, which is the idea of a sham clause. That's the one exception. Ifit's a sham, if they've signed different ones, but it was ‘a sham, then we can overlook that bit because, effectively, they've got them. They are the same. UK Regional Revision 2019 Page4 of 11The last one is time, Time means that their interest in the property must have arisen at the same time. In other words, they purchased the property at the same time. They were gifted it at the same time. Everything's happening together really, and it's identical. That's the point of this. That's your PITT test As I say you need all four in order to have a joint tenancy. Then the last thing you've got to ask yourself, does equity assume a joint tenancy or a tenancy in common? If you've got no words of severance, and if you satisfy the PITT test, then the presumption really is that equity follows the law. The law in this instance says that the legal title isa joint tenancy. Therefore, if equity follows the law, the equitable title is also a joint tenancy. There are exceptions to that rule, though, when equity will assume a tenancy in common. To give you an example, if people buy property as business partners, for example, equity might assume in that situation you dont want to ownit collectively. You don't want the principle of survivorship. Therefore, you have distinct, shares, The other time equity might assume something different is if you've provided the purchase money in different amounts. fone person has put 80% of the money inand then the other person 20. Equity would look at that and go, in this instance we think this might be a bit unbalanced so it will be a tenancy in common. Really in those instances where you're looking for no evidence that they wanta joint tenancy. ‘Those are your three tests. Look for your words of severance. Go through the PITT test. Then look at what equity would assume in that scenario. That way, you decide if it’s joint tenancy or tenancy in common. Now in terms ofa joint tenancy. We have this concept called severance. Severance is where you take a joint tenancy, you sever it and it becomes a tenancy in common. It’s perfectly possible to start co-ownership as joint tenants and then change it to a tenancy in common later on. We do that through this process of severance. Now, one thing to understand about severance is only those people that are involved in severance sever their joint tenancy into a tenancy in common. For example, if you've got two joint tenants, anda severance happens, they both end up as tenants in common because you can't have a sole joint tenant. t doesn'twork that way. Say you've got three joint tenants and one of them does something to sever the joint tenancy, it’s only them that's severed, so they become tenant in common. The other two, they can remain as joint tenants. Itcan change, the situation can change depending on various acts and things that go on. In terms of this severance, it's in equity only, okay, and you must remember that. You cannot sever that joint tenancy in law. We know this from section one subsection 6 and section 36(2). Severance of a joint tenancy is only ever possible in the equitable title, never the legal title, The legal title must always remain as a joint tenancy. The reason being to make the conveyancing process easier. That's the reason behind it. You might think, "Why cant you?” If we started severing joint tenancies inlaw we'd end up dealing with multiple documents for the legal title. Thatiis not something we want to be dealing with. That's why we have it always asa joint tenancy. The only way your legal title wll ever change is by something like death, where somebody just gets removed, or where their name is specifically removed from the legal title because maybe they transfer the property, they sell the property, they walk away from it. It changes at that point. You canalso add people in as well. If you've only got two legal owners and somebody else comes in and buys into the property, you could add them to the legal title. It doesn't happen automatically. You actually have to transfer the legal ttle from two people to three people and do it that way. It doesn't change very easily in that UK Regional Revision 2019 Page of 11sense. Always remember, no matter what you're looking at, with severance, if you're ever looking at severance, it's not the legal title you're looking at, its the equitable title only, to sever it into a tenancy in common. Then we have to think about- Yes, of course. Student: When the equitable title is severed, how do you look at that? Do you issue them new documents? No, there's no new documents. if you did an express act of severance, if you like, and you acknowledged and you knew you were doing it, the sensible thing to do would be to put that restriction on the property's title. But, acts of severance, sometimes people do them and they don't, necessarily realise that’s what's happened. in that sense, there is no new documentation. Its just that you are now holding the property in a different way. Student: They do the declaration of trust? Ideally, you should do one. Again, if you actively go to sever, and you know you're doing it. There are all certain decisions, and then things happen, but i's a real conscious thing of, "I want to become a tenant in common.” The best thing to do then would be to get a declaration of trust drawn up and put the restriction on. {'m going to talk to you about the acts of severance. You will see in a minute that people don't necessarily follow it through in that way. They've severed and that's it. They are tenants in common but they haven't protected themselves, and there's no document. What we would do, though, in that instance, is we look at the share that they have at that time, if you like, and that's what they get. Student: What if someone say put in say a thousandpound more than the otherjoint tenant? At the point your joint tenancy iscollective. If there's two of you and you sever, 50-50. Yes, if there's three of you, then it would be a third each, that kind of thing. Student: The average non-lawyer, presumably, understands none of this. We barely understand it now. Yes, it’s tricky. People don't I's one of those things that when you are buying properties on behalf of people, you obviously have to explain this. You have to explain joint tenancy, tenancy in common. The easiest way we do it is if you want your- we don't talk about it as collectively, but we just say, on your death if you want the property to automatically pass, joint tenants. Ifyou want to leave it in your will, tenancy in common. That's the easiest way to do it. As a lawyer, i's our job to then do the declaration of rust, deal with the land registry. That's what we do. In terms of the severance, the methods of severance that we have. There are several different ways you can do this. They're mainly under case law but we also have statute as well. Some of them are more conscious than others in terms of how you do it. The case that you have is Williams v Hensman. Williams v Hensman is your key case, really, for talking about methods of severance. Williams v Hensman tells us that there are three, effectively, three methods of severance under this particular way. The first one that you've got is called acting on your own share. The first method under Williams v Hensman, acting on your own share. This might sound a bit daft because the very title says you're acting on your own share, but I've just told you, you don't have a share, which is correct. You don't have a share, so how can you act onit? It’sa bit backward in the sense of the way that it works. The idea being, you have no share to begin with as a joint tenant but by acting in a certain way, like you have a share, like you have a distinct share, you actually acquire one. By acting like you have a UK Regional Revision 2019 Page6 of 11distinct share, it then actually gives you that distinct share, rather than the fact that you have it in the first place. The thing with acting on your own share is it has to be an enforceable act: We're talking about something like an enforceable contract to sell your share. Transferring the share to somebody else. Obviously if you've actually transferred it, you've treated yourself like you've got a distinct share. Or mortgaging your share. If you do any of those things, you're acting like you had your own distinct share in the first place. Therefore, you get your distinct share, As | say, these are very deliberate acts. Ithas to be an enforceable thing for this to work. However, acting on your own share can actually also be involuntary. The involuntary way of acting on your own share is bankruptcy. f you are a joint tenant and you are declared bankrupt, that, automatically severs your joint tenancy, so hence it's involuntary. It's an automatic thing. Case ‘examples of that, Re Dennis, Re Paviou, we know that from those cases. As | say, it can be a deliberate thing, it can be involuntary. Do remember, if anybody is ever declared bankrupt, it's an automatic thing, and that's one where somebody probably wouldn't even realise it. They don't know that that's had that effect, but it has. Student: The reason for that is, obviously for the moneylender Yes, basically, the trustee inbankruptcy comes in and it's their duty to deal with that person's assets, to pay their creditors and so they need the share. They need a distinct share to be able to do that. Student: This also protects the other person, does it? Yes in terms of the otherjoint tenants, if there are other ones, they're left well alone, but that's it, they're severed. That's acting on your own share. You've also got mutual agreement. You'll note on this,|'ve put it on the slide, between all joint tenants. So whoever a joint tenant's there, the mutual agreement has to happen between all of them, not some of them. It’s all the joint tenants doing something to imply that they have mutually agreed to sever. There's some kind of mutual agreement going on between all of them. Interestingly, they don't actually have to act on that agreement but there has to be a mutual agreement there. For example, the case of Hunter v Babbage. That was a couple getting divorced They mutually agreed how the property was going to be divided. One died, the other one said, Hang on a minute, I'd rather be a joint tenant now. survivorship, and they were like, Noyoudidn't actually go through with the agreement yet but you did mutually agree. You've got examples like that. The other big case for mutual agreement is Burgess v Rawnsley. Burgessv Rawnsleyis a big case. There, there was an oral agreement. It was enough to sever. It wasn't enforceable in terms of what they had agreed at that point. At that point, in terms of, they'd agreed a price for one party to buy out the other, and then the one who was receiving money changed their mind and said, want more money so we were back to square one, if you lke. It never actually happened. The fact that they had agreed that and they had come to that agreement of, thisis the price. 'm buying you out. That was enough. I's a mutual agreement to see they've got those distinct shares. You have got other cases though, Gore and Snell v Carpenter. This says negotiations are not enough. If you're just negotiating and thinking about it it's not necessarily actually going to sever. The pointis, it's an agreement. You've got to have some kind of agreement there. That's mutual agreement. UK Regional Revision 2019 Page7 of 11The last one we have under Williams v Hensmanis mutual conduct. Again, this is between all joint tenants. Mutual conduct is an act between all of them. We also call this course of dealings. Ifyou see course of dealings, mutual conduct, course of dealings, one and the same thing. Again, it has to be between all of the joint tenants, not some of them. It means that there isa course of dealings between them enough to imply that they are a tenancy in common, that they have severed. There's no actual agreement to sever. Not actually sitting down and saying, "Let's sever,” but they're doing something, an act. For example, if you have a couple who are joint tenants and they sit down together and they execute mutual wills leaving their shares to other people, if they do that at the same time, they haven't agreed, They haven't sat there and said, "Let's sever, let's do this." By their actions, they're implying that the both of them at the same time are dealing with it. Under Burgess v Rawnsley, Lord Denning thought that that could also be mutual conduct. The rest of the court of appeal didn't quite agree. Again, you can bring inGore and Snell on this one to say that negotiations, again, are not enough. What | would say to you is the general consensus is that you can actually have quite a lot of overlap between mutual agreement and course of dealings/ mutual conduct. The two, when you look at them, it's like, "Which one is it?” Sometimes it can fall under both. Student: What was the other case you cited? Hunter and? Hunter v Babbage. Those are your three under Williams v Hensman. We then haveunlawful killing, homicide. Now, this is a fairly, | think, common sense rule, that no joint tenant should be allowed to benefit from the unlawful killing of another. You can't kill somebody and then obviously get the property. That doesn't seem to be fair somehow. In unlawful killing, the joint tenancy is automatically severed if that happens. The victim's share, the deceased, their share is dealt with instead under their will or under the intestacy rules. By the way, if the killer happened to be under the will as the beneficiary, they don't get it then either. It’s not a question of, "Oh, | know the joint tenancy will go, but hey I'l get it anyway.” No, you don't. ‘You don't get to benefit. There have been examples, though, where this rule has not been strictly enforced. There was a case called Re K. It's literally the letter K, Re K. The court made an exception to the rule due to the circumstances in that instance. However, it was manslaughter, so that's why it's slightly different. The rule stands for murder and there are no exceptions. It does stand for manslaughter but as | say, Re, they did reverse the rule in that instance. It was a question of fact on that. Unlawful killing, not one we come across very often. Notice to sever. This | would say is probably one of the maybe more common ones. Certainly in, | would say, situations of things like divorce because if people are getting divorced, one of the first things the family lawyer might say is,let’s sever the joint tenancy, and they would do it this way by notice. Notice to sever, it's a method of severance under statute. it comes from Section 36, subsection 2 of the Law of Property Act. A few key things for this to work. The notice must be in writing, It has to be in writing. You can't do this orally by saying it to somebody, and really crucially, thas to be addressed toall the other joint tenants, not some, all, for you to be able to do this. f you don't it ‘won't be valid. In writing addressed to the other joint tenants. The other thing you must state is your immediate intention to sever. It has to be clear that you're intending you want this to happen now. It’s an express immediate intention. Then, the final thing is ithas to be delivered correctly. Now, this is the bit where some people would say it's slightly obscure thing about what constitutes delivery in terms of doing this. UK Regional Revision 2019 Page8 of 11The notice needs to be sufficiently delivered. Now, you can see on there you've got statute Section 196, subsection 3, and also subsection 4, Section 3,0 section 196(3), says that it’s valid delivery if its left at the last known place of abode. In other words, if you share the house with the person, you can leave it, the note, the letter, in the house, preferably somewhere where they can see it. You can do that, leaveit atthe last known place of abode. Subsection 4 says it's valid delivery ifit's sent by registered post and not returned. That’s your other alternative is you send it recorded delivery. Then, obviously, you've got evidence of it having been sent. Now, you can see you've got a couple of cases on there, Kinch v Bullard, Re88 Berkeley Road. They were the ones that | directed you just to have a look at for today's session. The thing about Kinch and Bullard was that the notice was never actually seen by the other joint tenant. Itwas delivered to the property but the other joint tenant died before they actually saw it. Because of their death, the joint tenant that wrote it destroyed it, obviously now again wanting to have the principle of survivorship. The court deemed there was severance. It didn't matter that the joint tenant had never actually seen it, it had been delivered as required. That's why I say to you in terms of some people look and go, “odd in terms of delivery," that you don't actually have to see it. Re88 Berkeley Road, idea, if you like, in terms of they never saw it. In this instance, it was sent by recorded delivery, but the joint tenant who wrote the notice of severance actually signed for it when it arrived at the property. Again, it was never seen, but there was severance. What you can see from this is, no consent is needed bythe other joint tenants to sufficiently sever. In fact, they don't even need to have the knowledge, the actual knowledge that its happened. All that needs to happen is the notice needs to be written and it needs to be sufficiently delivered. At that point, you've got enough. It’s a unilateral act, if you like. One last thing on this just to make-- This is really crucial. You cannot sever in death. In other words, you cannot do a severance by your will. Your severance can only ever take place in a joint tenant's lifetime, not on their death. Your case for that is Gould v Kemp, G-O-UL-D, Gould. Gould v Kemp. says that survivorship takes precedence over testamentary dispositions. n other words, the survivorship takes over the fact that you've tried to sever through your will If you are a joint tenant, there's no point in you trying to“leave a share’, (in inverted commas), ina will. It won't work. You have to sever in your lifetime first, then you leave the share in your will. That's all about severance. | said to you that | just wanted to talk to you about the Trusts of Land and Appointment of Trustees Act 1996, very briefly. There's quite a lot under TLATA in terms of trustees and beneficiaries. There's various things like rights of occupation. In terms ofbeneficiaries have a right to occupy, that’s under Section 12. That is also, by the way, subject to exclusions and restrictions under Section 13. Beneficiaries also have a right to be consulted under Section 11. There's quite a lot of protection, if you ike, in TLATA. I'm ot going to go into masses of details on those now, but just be aware of them. ‘The one thing | do want to talk to you about just for a couple of minutes, though, is dispute resolution because that fits in, if you like, with the co-ownership and the severance side of things. We're going to look at how we deal, how the court would deal with dispute resolution under TLATA. Your starting point is Section 14. Here, if any of the trustees, any of the legal owners or any of the beneficiaries, want to have an order for sale by the court, or maybe they want to preventaa sale, UK Regional Revision 2019 Page9 of 11some of them want to sell and some of them don't, or if there's a dispute between the co-owners about the nature and extent of their ownership. In other words, what share they've got, how much they've got, then any of the trustees or beneficiaries can apply to the court under Section 14 of TLATA. The court actually has really wide powers in terms of orders that it can make under Section 14. It can deal with any of those things. How does the court go about deciding what to do, particularly, if you like, obviously, if it's the nature and extent of a share, they have to look at everything, But ifit’s ‘a question of whether there's going to be a sale or not, then the court has to look at, what we call the Section 15 factors. Now, you can see I've said there, as long as there's no bankruptcy. If any of the co-owners are bankrupt, we don't use section 15 of TLATA. The court won't look at that, they'll look at something differentand Ill come on to that in a second, When none of the co-owners are bankrupt and the court is deciding what order to make, perhaps to make an order for sale, then they will look at the Section 15 factors. Now, there's four of them. The factors are, the intentions of the persons who created the trust, the purpose for which that land is held, so the reasoning why, then the welfare of any minors, so any children that may occupy that property as their home or maybe expect to occupy it in the future and then fourthly, the interests of any secured creditor of any beneficiary. For example, a mortgage lender. Look at the intention, the purpose, welfare of minors, and then the interests of secured creditors. Now, if the purpose of the trust is at an end, say for example, property was bought by a couple, they're in a relationship, it's their home. The relationship has broken down, it is no more, and there's no children, the court may well order a sale and say, there's no purpose to this anymore. ‘The purpose has come to anend. If there's young children, they may postpone it until a later date. You've got case examples like the Mortgage Corporation Shaire for that one. Do bear in mind, creditors, they might be number four, kind of, on that list, but they are important because what a creditor could do is if somebody's defaulted is they could make them bankrupt. At that point, they would get an order for sale anyway. That's why the creditors, they're number four, but they are important. That is why they do get a say, if you ike, not as in they stand there and get a say, but the court takes them into account. In terms of the Section 15, these factors will come more into play if somebody wants an order for sale or you're trying to prevent it because that's when you're looking at the intention and the Purpose. When it's quantification, they're looking at the base of the common law, the common law rules of quantification. Section 15 works if there's no bankruptcy. If, however, one of the co-owners have been made bankrupt, the court does not look at Section 15. You can disregard that completely. Section 14 is still used for a person to apply to the courts. The trustee in bankruptcy applies under Section 14, but the court does not look at the Section 15 factors. Instead, what they look at is Section 335A ofthe Insolvency Act 1986. ‘These factors are quite different because number one is interests of the bankrupt’s creditors. Under Section 15, it's last on the list. Under Section 335A, it's top of the list. That's the difference between being made bankrupt. You've got the interests of the bankrupt creditors first. Then you've got the conduct and needs of any spouse. Their conduct is in towards the bankruptcy, gets taken into account. Needs of any children that may be there. Then afterthat, the court looks at all the circumstances other than the needs of the bankrupt. The bankrupt person UK Regional Revision 2019 Page 10 of 11themselves doesn't really come into it. What | would say here is that in this situation, an order for sale is likely. | said to you before, if there's young children and there's no problems with creditors, the court may leave it alone and not order it Now, if there's a bankruptcy, it's very likely they will order a sale even if there's children there. The court takes the view that a sale of a bankrupt property is an ordinary consequence of bankruptcy. There's nothing unusual about i, i's what's going to happen. Cases like Re Citro, for example. The only time they may make an exception is if there are exceptional circumstances to stop it or Postpone it for a bit. If an application is made to the court one year after bankruptcy, so more than a year after bankruptcy, unless there really are exceptional circumstances, creditors’ interests outweigh all others. A sale, | would say, is inevitable at that point. Just be aware that, as | say, because dispute resolution follows on nicely with severance because severance quite often happens and then there's a dispute, and so you end up dealing with this as well. UK Regional Revision 2019 Page 11 of 11