Co-ownership in land law - Joint tenants and tenants in common
Wherever land is owned by more than one person ownership must be through a trust of land. A trust of land separates the legal title of the land from the equitable ownership rights. Legal title is held by the trustees and these are the named paper owners of the land. The trustees hold the land on trust for the beneficiaries ie those entitled to equitable ownership rights. The trustees and beneficiaries are often the same people. Two forms of co-ownership are recognised these are joint tenancy and tenancy in common.
Joint tenancy
Where there is a joint tenancy, all the co-owners own the whole of the property collectively. It is not correct to mention shares when talking of a joint tenancy. In order to amount to a joint tenancy the four unities must be present:
1. Unity of possession - each party is entitled to occupy the whole of the land and none can exclude the others from any part of it.
2. Unity of interest - each party must hold the same interest in the property
3. Unity of title - each party must acquire their interest through the same transaction
4. Unity of time- interests must have been acquired at the same time
Where there is a joint tenancy, survivorship operates. This means that if one joint tenant dies, the remaining joint tenants benefit from his entitlement in that they still all remain entitled to the whole of the property. This means a joint tenant can not leave his interest in the property to another in their will. Neither will their interest in the land form part of their estate should they die intestate. It will simply pass to the other joint tenants. If there is only one other joint tenant, they become solely entitled to the land and can leave it in a will should they wish. Where both joint tenants die together in circumstances where it is impossible to determine which one died first, it is presumed the eldest died first and thus the property will form the estate of the youngest under s.184 Law of Property Act 1925. Where the co-ownership relates to equitable ownership, it is possible to for a joint tenant to separate their interest from the others through severance. This will allow them to leave their interest to another in their will, however, this will also mean that they can not benefit from survivorship should any of the other joint tenants die.
Tenancy in common
Where there is a tenancy in common, each co-owner will own a share of the property eg 50% or 80%. The share is undivided meaning that they are entitled to occupy the whole of the property even if their share is small. There is still unity of possession and no physical division of the land. The relevance of the shareholding is evident on sale, death or distribution of income from the property. Survivorship does not operate between tenants in common. Each tenant can nominate who to leave their share in their will or if they die intestate their share will form part of their estate.
Co-ownership of legal title
Where land is conveyed in to the names of more than one person, co-ownership of legal title will arise. Co-ownership of legal title can only be through a joint tenancy (s. 1(6) Law of Property Act 1925). This joint tenancy of a legal estate can not be severed (s.36(2) Law of Property Act 1925). The number of joint tenants that can hold legal title is limited to four. Where a conveyance seeks to give legal title to more than four persons, the first four named are taken to be the legal owners (S.34 Trustee Act 1925). The joint tenants of the legal title are the trustees and hold the property on trust for the beneficial owners. The beneficial owners are often the same people as the legal owners.
Co-ownership in equity
Co-ownership in equity can be as a joint tenancy or tenancy in common. It is important to determine how ownership is held and if it is a tenancy in common, the proportion of the shareholding held by each tenant. Where the trust is an express trust, the parties are free to determine the extent of their entitlement in the declaration of trust. This will override any implication that could be made from the facts such as the proportion of contributions. Difficulties arise where a trust is created informally.
Express trusts
An express trust can be created through a conveyance of land or through a declaration of trust. Where there is a declaration of trust, this must be evidenced in writing:
The extent of shareholding set out in the declaration of trust is conclusive:
Goodman v Gallant [1986] 1 All ER 311 Case summary
Pankhania v Chandegra [2012] EWCA Civ 1438 Case summary
If the declaration or conveyance states that the beneficiaries are to enjoy the land jointly, this will create a joint tenancy. If the declaration mentions shares, this will create a tenancy in common.
Where there is no express trust
Where there is no express trust, for example where the trust was created by a constructive or resulting trust or the parties simply failed to state the extent of their ownership on conveyance, the law will imply or presume beneficial entitlement from their conduct.
Where the land was conveyed into the names of more than one person and no express declaration as to how ownership is divided, the law raises a presumption of joint tenancy:
Stack v Dowden [2007] 2 AC 432 Case summary Youtube clip
Jones v Kernott [2011] UKSC 53
The presumption may be displaced where there is circumstances indicate that a tenancy in common would be more appropriate:
Where the parties intend to operate separate businesses from the premises:
Malayan Credit Ltd v Jack Chia -MPH Ltd [1986] AC 549
Where the parties are commercial partners:
Lake v Craddock (1732) 3 P.Wms 158
Where there are unequal contributions to the purchase price:
Walker v Hall [1984] 5 FLR 126 - However, this needs to e considered in the light of Stack v Dowden [2007] 2 AC 432 Case summary and
Jones v Kernott [2011] UKSC 53
Where the parties have agreed to occupy separate areas of the property:
Malayan Credit Ltd v Jack Chia -MPH Ltd [1986] AC 549
Co-ownership under informal trusts
Resulting trusts
Resulting trusts arises through a direct contribution to the purchase price and the beneficial interest which arises is in exact proportion to the amount contributed. Ie if a person contributes 10% of the purchase price they will hold 10% of the beneficial interest. As this is a 10% share of the beneficial interest this can only ever be held as a tenant in common.
Bull v Bull [1955] 1 QB 234
Constructive trusts
Constructive trusts are based on a common intention rather than a mathematical formular as to proportion of contribution. The courts role is to seek to give effect to the common intention when considering how beneficial ownership is held:
Midland Bank v Cooke [1995] 4 All ER 562 Case summary
Jones v Kernott [2011] UKSC 53
Stack v Dowden [2007] 2 AC 432 Case summary
Co-ownership - joint tenants and tenants in common