Co-ownership

of Land

Richard Bowyer
Co-ownership

• Whenever land (freehold or leasehold) is owned by more than one person, there
is necessarily a trust of land.
• Trusts separate out legal ownership from beneficial ownership.
• In relation to registered land, legal ownership is determined by looking at the
proprietorship register of the registered title.
• Beneficial ownership may mirror legal ownership, but does not have to.
Forms of co-ownership

• Joint tenancy: the co-owners are seen as the same legal entity – they own the
undivided whole, without a ‘share’ to speak of.
• The four unities must be present (e.g. Antoniades v Villiers; AG Securities v
Vaughan): unity of possession, interest, title, and time.
• Tenancy in common: each co-owner enjoys a share in the property: their share
can be sold, mortgaged, gifted, or inherited.
• In both cases, there must be unity of possession, as without possession there is
no ownership.
Survivorship

• Under a joint tenancy, the death of one co-owner means the remaining joint
tenants continue their ownership of the property jointly (or if only one joint
tenant remains, absolutely). This is called survivorship.
• Tenants in common do not enjoy survivorship, so the death of one co-owner
leads to their share in the property being left in accordance with their Will, or
under the rules of intestacy (where there is no Will).
• It is possible to ‘sever’ a joint tenancy to make it a tenancy in common, in
order to oust the prospect of survivorship (e.g. upon relationship breakdown).
Co-ownership at law

• Only a joint tenancy can exist at law (s.1(6) LPA 1925): co-owners are seen as
a single entity enjoying ownership over the undivided whole.
• There can be no more than four co-owners at law (s.34(2) LPA 1925). Where
there are more than four on the conveyancing documentation, the first four
people of full age are the legal co-owners (s.34(2) LPA 1925), holding the
property on trust for the beneficial interest of all owners.
Co-ownership in equity

• Equity can follow the law, and produce a joint tenancy.

• Or equity can see the co-owners as tenants in common, with distinct shares.
• Whether it is one or the other depends on:
1. Whether there was an express declaration of trust indicating the intentions;
2. Whether the four unities are present to support a joint tenancy;
3. And if it is still unclear, under a range of rules, norms, presumption generated
through the case law, on equitable principles.
Express trust

• Fortunately, today, most property purchases include an express trust, because

the Land Registry forms used in conveyancing include an option to indicate
beneficial ownership as a joint tenancy or tenancy in common (and if the latter,
what the shares would be).
• In terms of formalities, s.53 LPA 1925 requires that the declaration of trusts
must be manifested in some writing and signed by the person(s) granting the
beneficial interest.
• The Land Registry form readily meets this requirement.
Land Registry
Form TR1
Goodman v Gallant [1986] 2
WLR 236
• The family home was held in the name of Mr Goodman only, but for the
beneficial ownership of both himself and his wife, Mrs Goodman, in equal
shares.
• The marriage failed and the house was eventually transferred to Mrs Goodman
and her new partner, Mr Gallant, as ‘beneficial joint tenants.’
• Later, Mrs Goodman severed the joint tenancy in order to access her individual
share.
• Did she have a 50% share, or a 75% share?
Mrs Goodman’s argument:
-She already had a 50% share in the property;
-What Mr Gallant acquired was an equal share
in what they jointly acquired (i.e. Mr
Goodman’s 50% which he sold to the couple).
Mrs Goodman 75% (50% + 25%)
Mr Gallant 25%
Mr Gallant’s argument
-There was an express trust in the conveyance
from Mr Goodman to Mrs Goodman & Mr
Gallant, that there would be a beneficial joint
tenancy.
Mrs Goodman 50%
Mr Gallant 50%
The Court of Appeal agreed with Mr Gallant.
Only in cases of fraud or undue influence will an
express trust be disregarded.
Equitable presumptions (which
can be rebutted)
1. Equity follows the law – a general presumption, therefore, of an equitable
joint tenancy – especially in domestic settings.
2. A presumption of tenancy in common for non-domestic situations (business or
investment).
3. Two or more mortgagees (lenders) hold an interest in the property as tenants
in common.
Severance

• The beneficial (equitable) joint tenancy can be severed in one of the following
ways:
1. By written notice to all co-owners (statutory severance).
2. Joint tenant operating on their own share.
3. Mutual agreement.
4. Mutual course of dealing.
5. Forfeiture Act 1982.
Severance only severs that party – other co-owners remain joint tenants.
Statutory severance by written
notice
• There must be a clear, unequivocal and immediate intention to sever.
• Two cases on almost identical facts (but different outcomes) help us draw out what is
required.
• In both cases, we are looking at a divorce, but where one party dies shortly before the
divorce is finalised.
• In Re Draper’s Conveyance [1969] 1 Ch 486, a court summons coupled with the wife’s
affidavit manifested a clear and immediate intention to sever the joint tenancy.
• In Harris v Goddard [1983] 3 All ER 242, the wife had commenced court proceedings, but
severance was just one of several outcomes that was possible = no clear and immediate
intention.
Serving notice of severance

• S.196 LPA 1925 says that notice is served where it is delivered to the last known
address(es) of the joint tenant(s).
• In Kinch v Bullard [1999] 1 WLR 423, a marriage had failed and the wife served
written notice to sever the joint tenancy by sending a letter by normal first class post.
• On the day the post arrived, the husband had a heart attack and was admitted to
hospital, without having opened the letter.
• The wife, thinking her husband would die shortly, intercepted the letter and destroyed it
(so she we would benefit from survivorship).
• The court held that the joint tenancy had been severed because the letter had been
delivered. She was entitled only to her 50% share.
Joint tenant operating on their
own share
• First National Security v Hegerty [1985] QB 850:
• A couple held property as equitable joint tenants.
• The husband forged his wife’s signature on a mortgage deed.
• Under s.63(1) LPA 1925, any conveyance of land only takes effect to the extent
that the grantor can convey.
• The court held that the husband could only have acted in respect of his ‘share’
and my mortgaging his ‘share’ he acted on his share and effectively severed the
joint tenancy.
Severance by forfeiture

• The unlawful killing of a joint tenant will not lead to the killer acquiring any
benefit from the act: s.1 Forfeiture Act 1982.
• The court has discretion to modify the effect of s.1, under s.2 FA 1982.
• In Re K [1985] Ch 180, the court disapplied the rule under s.1 in a case where the
killer had been the victim of a long pattern of domestic abuse, and had only intended
to threaten the husband with the gun (rather than act in a premeditated way).
Overreaching

• Beneficial interests under a trust come to an end where purchase money is paid
to two or more trustees (ss.2 & 27 LPA 1925).
• The trust of land is converted to a trust of the purchase money.

Where overreaching does not take place, remember that a beneficial interest under
trust can take priority over a s.29 disposition if there is actual and discoverable
occupation on the date of the disposition (Sch 3 para 2).
TOLATA 1996

• Before the 1996 Act, trusts involving land were ‘trusts for sale’, in the sense
that they only operated with a sale in mind, ensuring the purchase money
would be correctly distributed.
• S.1 TOLATA 1996 holds that all trusts involving land are now ‘trusts of land’ –
meaning they can operate as trusts without envisaging an ultimate sale.
• Consider, for example, a trust of land with the explicit purpose that it is to
provide a home for named children – shouldn’t the law protect this trust, rather
than racing to what happens when the land is sold?
TOLATA 1996 – the powers and
duties of trustees
• Legal owners (trustees) have, under s.6, the power to manage the land as
‘absolute owner’ – however, they must do so for the purpose ‘of exercising
their functions as trustees.’
• That means it is a great responsibility, as trustees must deliver on the purposes
of the trust, acting in the interests of beneficiaries.
TOLATA 1996 – the rights of the
beneficiaries
• S.11 – the right to be consulted.
• S.12 – the right to occupy the land.
• S.13(6) – the right to be compensated if a right to occupy has been restricted by
a trustee.
Purchasers of registered land
under trust: s.26 LRA 2002
• Purchasers of land subject to trust are protected against any claim made by
beneficiaries that the land shouldn’t have been sold.
• Section 26 clarifies that trustee obligations such as a duty to gain beneficiary
consent before a sale have no impact on a purchaser, unless they are
specifically registered as a restriction against the title.
• Trustees may remain liable personally, however, for any breach of trust.
Resolving disputes under s.14
TOLATA 1996
• The court has jurisdiction to resolve disputes between trustees and
beneficiaries, or any other person with an interest in the co-owned land (e.g. a
lender).
• The court must act by taking into account factors laid down by s.15 TOLATA:
• Intentions of the person creating the trust;
• The purpose for which the land is being held;
• The welfare of any minor occupying;
• The interests of any secure creditor.
Mortgage Corporation v Shaire
[2001] 4 All ER 364
• Mr Fox and Mrs Shaire bought a house in joint names, where they would live
with Mrs Shaire’s son from a previous relationship.
• Mr Fox mortgaged the property by forging Mrs Shaire’s signature; thus he had
mortgaged his beneficial share.
• Mr Fox fell into arrears and later died.
• A lender used s.14 TOLATA to ask the court for an order for possession and
sale of the home.
Mortgage Corporation v Shaire

• The court looked at each of the relevant considerations under s.15.

• The trust of land was principally to provide the family with a home; it would also be
an asset.
• The son was no longer a minor.
• The lender had a 25% interest in the property, and wanted to sell because the loan
was unpaid.

A pragmatic solution was drafted by the court: if Mrs Shaire would agree to a loan
at 3% above the base rate, in respect of the outstanding debt, then the court
would not order sale.
Bank of Ireland v Bell [2001] 2
FLR 809
• Similar facts to Shaire, but this time the court ordered a sale. The couple
divorced and the mortgage was in arrears:
• Because the relationship had been dissolved, the original purpose for the property as
a matrimonial home had dissolved with the marriage.
• The creditor was owed £300,000, and had not received a single payment for 8 years.
Bankruptcy

• Only relevant where one has been declared bankrupt by a court.

• S.306 Insolvency Act 1986: the estate interests of the bankrupt are vested in the
trustee in bankruptcy.
• That trustee may need to use the s.14 discretion where they are looking to sell
the property against the wishes of other co-owners (not the bankrupt).
• Otherwise, the trustee in bankruptcy can ask the court for sale under s.335(a)
IA 1986.
S.335A Insolvency Act 1986

• Within 12 months of bankruptcy, the court must take into account the interests
of any spouse (current or former), the needs of any children, and any other
circumstances.
• After 12 months, there is an assumption that the rights of the creditors outweigh
other considerations, save in exceptional circumstances.
• Exceptional circumstances normally mean things like terminal or severe illness
of the bankrupt or their partner.
• Barca v Mears queried (obiter) whether such a high threshold was ECHR-compliant.
Methods of acquiring a
beneficial interest
• This will be the focus of the next two lectures. In brief:
• By express trust, e.g. in the Land Registry or other conveyancing
documentation;
• By a resulting trust: where purchase money is advanced, one automatically
obtains a beneficial interest;
• By common intention constructive trust: looking to give effect to the intention
of the parties that one should have a share in the property (especially, but not
exclusively, for domestic property).
Quantification of the share

• In cases of common intention constructive trusts, which is based on the original

and evolving intention of the parties, it may be possible to argue that one’s
share (once severed, if originally a joint tenancy), should be varied from the
presumption of equal shares.
• E.g. when one party contributed significantly more to the property and
household costs and it was the intention of the parties that the share should be
quantified asymmetrically.
PQ

Kerry, Lisa, Marty, Nigel and Oscar are joint tenants, at law and in equity, of land
known as No.10 Exe Street. In January 2022, Kerry mortgages her ‘share’ in the
property to Prudential Bank. In February 2022, Lisa writes a letter to Marty, Nigel
and Oscar saying she is ‘hereby and immediately severing her share’ – the letters
are delivered to the correct addresses, but they are mistaken for junk mail and put
straight into the recycling box without being opened. In March 2022, Marty sells
his share to Nigel. And in April 2022, Nigel dies. How would you describe the
beneficial interests in the property?
10 Exe Street

• The first four names will be legal joint tenants holding for the benefit of five names as follows:
• K acted on her share, which severs her from the joint tenancy. She holds 20%, and LMNO are joint
tenants for the remaining 80%.
• L expressly severs herself from the joint tenancy. She takes her share (20%), leaving MNO as joint
tenants (60%).
• M acts on their share (20%), which is sold to N as a tenant in common, leaving N and O as joint
tenants (40%) – note how N is both a beneficial tenant in common for the purchased share, and
beneficial joint tenant for the remainder.
• N dies, and so O benefits from survivorship (+20%) as last remaining joint tenant.
• K has 20% (which is mortgaged); L has 20% (unmortgaged); O has 40% (unmortgaged), and
20% should go to N’s estate under Will (if it exists) or under the rules of intestacy (if it does
not).