Co Ownership in land Revision Notes PDF

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Everything you need to know for Co Ownership in land, including different approaches to co ownership with the relevant colour coded cases and legislation., Everything you need to know for Co Ownership in land, including different approaches to co ownership with the relevant colour coded cases and le...

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Co-Ownership in Land s.34-36 LPA 1925 as amended TOLATA 1996 imposes a trust on all co-owned property. Where there is co-ownership, a trust is created. In a trust there must be trustees and beneficiaries. Ex: A + B buy a house together for themselves A + B = Trustees A + B = Beneficiaries As they bought the property for themselves they are the beneficiaries. Trustees and beneficiaries not always identical, depends on the situation Ex: C + D buy a house together and E + F live there C + D = Trustees and enjoy co-ownership and responsibilities E + F = Beneficiaries and enjoy rights in equity Co-Ownership creates two levels of ownership, in law (Trustees) and in equity (Beneficiaries) Who can be Trustees? s.34(2) LPA 1925 – There can only be 4 Trustee’s. Simplifies conveyancing. Trustees must sign the document of sale in the future if sold. Minors are prohibited from being Trustees. Ex: C + D (Minors) + E + F + G + H buy a house together for their own use E +F + G + H = Trustees C + D + F + G + H = Beneficiaries Types of Co-ownership There are two types of co-ownership: a) Joint Tenancy b) Tenancy in Common s.1(6) LPA 1925 makes the joint tenancy the only legal form of co-ownership. Equity recognises both forms however. In any co-ownership situation the legal joint tenants will hold the trust for the beneficiaries who enjoy equitable rights who will either be joint tenants or tenants in common. Joint Tenants - Together own the whole interest in the property - Right of survivorship applies, death means right is extinguished - 4 unities to have a Joint Tenancy a) Possession – Full, equal b) Interest - Identical c) Title – Same document d) Time – Received at same time

Tenancy in Common - Each own a specific, undivided share - Tenancy in Common decide the relative value of their shares - No right of survivorship. This means each tenant can dispose of his own share which may be inherited. - 1 unity a) Possession

Ex: A + B buy a house together as beneficial tenants in common A + B = Trustees (A) (B) = Beneficiaries When B dies and states C to gain the land in his will. C cannot become a Trustee due to lack of 4 unities. A = Trustee (A) (C) = Beneficiaries

Creation The basic principle is that a joint tenancy will be created provided that the four unities are present, unless words of severance are used in the deed creating the co-ownership e.g. ‘equally’, ‘in equal shares’. TR 1 Form has been introduced that deals with this problem. If the declaration indicates a tenancy in common, a restriction is entered in the Proprietorship Register to warn a purchaser that the purchase money must be paid to two trustees to ensure that overreaching takes place. Goodman v Gallant: The claimant, Mrs Goodman, had a 50% beneficial interest in the matrimonial home. Her husband held the legal title. He left the home and five years later Mrs Goodman developed a relationship with the defendant Mr Gallant who moved into the house. Two years later they entered negotiations to purchase Mr Goodman's half share in the house. No formal valuation was undertaken but it was estimated the house was worth £17-18,000. Mr Goodman agreed to convey the property to them for £6,700. The purchasers' declaration of trust stated that they held the property as joint tenants. Mrs Goodman later gave notice to sever the joint tenancy. She later sought to argue that she held 75% of the beneficial interest based on the fact that she already owned 50% of the beneficial interest and contributed to the purchase of the remainder. Held: Mrs Goodman was only entitled to 50% of the beneficial ownership. In the absence of fraud or mistake, the declaration of trust was conclusive as to the party’s respective ownership rights. The extent of the party’s relative contributions was irrelevant. Who can be a trustee? s.36(2) provides that a legal joint tenancy cannot be severed so as to create a tenancy in common. This simplifies conveyancing as a purchaser must now deal with a limited number of legal joint tenants. s.34(2) and s.36(1) LPA 1925 provide that the legal joint tenants will be the first four of full age named in the conveyance. Thus if land is conveyed to A, B C D E and F, and B is an infant, the legal fee simple is held by A, C, D and E as joint tenants on trust for all six as joint tenants or tenants in common in equity. Severance of Joint Tenancy A joint tenant can severe Joint Tenancy and transfer it to a tenancy in common in equity. s.184 LPA 1925 – If all Joint Tenants die at a time uncertain of whom survived the others. It will be presumed death occurred in the order of seniority, thus the youngest will be assumed to be the survivor. Can be done in statute and in common law. The legal estate cannot be severed s.36(2) LPA 1925 only legal estate is Joint Tenancy. S.1(6) LPA 1925 only the beneficial interest can be severed. After severance each party is entitled to an equal share – Goodman v Gallant If there are 3 or more co-owners and one severs, it only effects them. EX: (A B C D) – Legal (A B C D) – Equitable A SEVERS (A B C D) – Legal (A) (B C D) – Equitable

Statutory methods of severance Notice in writing under s.36(2) LPA 1925 - To be effective the notice must be served on ALL joint tenants in accordance with s.196(3) or s.196(4) LPA 1925 - Notice must be given to ALL joint tenants, it does not need any prior consent or notice - Must have 3 components to satisfy statue. 1) Its Form: Re: Drapers Conveyance – There is no particular form or format needed 2) Content: Harris v Goddard - There must be an immediate intention to severe and show said intention 3) Service: s.196(4) LPA 1925 – Notice can be sent by registered or recorded delivery to the last known place of abode or business of the person to be served. S.196(3) LPA 1925 – Notice can be left at, or affixed to, the last known place of abode or business of the person to be served. To all other Joint Tenants. Kinch v Bullard – Only needs proof that the notice was left at, or affixed to the correct address. Method of service does not matter. Letter delivered through letter box but destroyed before reading, still served. 88 Berkley Road Upon instruction by a wife, a letter was sent by a solicitor to the husband purporting to sever the joint tenancy of the home. The wife signed for the letter, intercepting it such that her husband (the other joint tenant) would never read it. Had the joint tenancy been severed? Yes! ‘Notice in writing’ in s.36 of the Law of Property Act 1925 is to be interpreted in accordance with s.196 of the same Act, such that it is effective whenever it would usually have been delivered, had the wife not intercepted it. “Any notice…shall also be sufficiently served, if it is sent by post in a registered letter addressed to the [other joint tenant(s)], at the aforesaid place of abode or business, office, or counting-house, and if that letter is not returned by the postal operator (within the meaning of the Postal Services Act 2000) concerned undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered.” The Williams v Hensman methods of severance (Common Law) s.36(2) LPA preserves the methods of severance pre 1926. An Act of operating on one’s own share - Sale of share, bankruptcy Mutual agreement - Burgess v Rawnsley Mutual course of dealing - Greenfield v Greenfield - Brothers purchased a house as beneficial joint tenants; they were JT in law and equity. When both brothers got married they physically split the house into two flats. One brother died and the other brother evicted his sister in law from the property. It was held that she did not have the right to occupy as the right of survivorship applied as when they purchased the house they decided to be JT. His share could not be passed on as he had no individual share. Physical separation did not show the intention to sever, because it seemed that he parties were happy for the doctrine of survivorship to continue to operate.

How to work out if co-owners are beneficial joint tenants, or tenants in common The basic principle is that a joint tenancy will be created where the 4 unities are satisfied, unless words of severance are used in the deed creating the co-ownership. Equitable presumptions – Consist of presumptions of the intentions of the parties when the property was bought, where there is no express evidence of actual intention. There is no closed list to situations as to when this can happen. This arises particularly where co-owners make unequal contributions towards the purchase price – Stack v Dowden Sale of Co-owned property s.14 TOLATA, replacing, s.30 LPA 1925 lists the ‘s.15’ factors of if a court will grant a sale of the property: i) intention of the persons creating the trust ii) Purpose for which land is held iii) The welfare of any infant who occupies, or might reasonably be expected to occupy rhe land iv) Interests of any mortgage of the beneficiaries v) The wishes and circumstances of all beneficiaries vi) The wishes of the majority TSB Bank plc v Marshall Mortgage Corp. LTD v Shaire Bankruptcy serves as automatic severance of the joint tenancy in equity.

Past Questions 1. In 2012 two sisters, Dot and Emily, and their mother, Frieda, bought a large house called ‘Stenhome’, as a home for themselves and Emily’s 5 year-old daughter. Dot and Frieda each contributed 40% of the purchase price and Emily contributed the remaining 20%. The deed transferring the house is shown at the end of this question. The women got on very well, but after the purchase, it was agreed that Frieda should convert the top floor of the house into a self-contained unit, just to give her a little more privacy. In 2014 Dot’s employer re-located to London and Dot moved too, as she did not want to lose her job. Last month Dot sent a letter by recorded delivery to Stenhome which read: “Dear Mum and Emily, I desperately want to buy a flat I’ve seen here in London. I know you don’t have enough savings to buy me out of Stenhome, so we are just going to have to put the house up for sale. I’ll use my share of the sale proceeds to buy the flat, and you can always use yours to buy another small place.” Emily signed for the letter when it was delivered by the postman and, having read it, she destroyed it as she knew how much its contents would upset Frieda.

Last week Dot was killed in a road accident. In her will, she left all her property to her boyfriend, Gary. Gary is now seeking its sale.

Advise Frieda and Emily:

(a) Who owns the house and in what proportions? (You should explain the position both at law and in equity.) [75 marks]

(b) Explain whether Gary can force a sale of the property and consider what matters the court will take into account in reaching a decision. (You can assume for the purposes of this question (b) that Gary has an interest in the property’) [25 marks]

If you need more room than is provided for in a panel, and your software allows, you can expand any panel in the form. Alternatively use continuation sheet CS and attach it to this form. Leave blank if not yet registered.

1

Title number(s) of the property: NE43576

Insert address including postcode (if any) or other description of the property, for example ‘land adjoining 2 Acacia Avenue’.

2

Property: 10 Willifield Way, Newcastle upon Tyne NE2 5NA

3

Date: 1 September 2012

4

Transferor:Greg Mews

Give full name(s).

For UK incorporated companies/LLPs Registered number of company or limited liability partnership including any prefix:

Complete as appropriate where the transferor is a company.

For overseas companies (a) Territory of incorporation: (b) Registered number in the United Kingdom including any prefix: Give full name(s).

5

Complete as appropriate where the transferee is a company. Also, for an overseas company, unless an arrangement with Land Registry exists, lodge either a certificate in Form 7 in Schedule 3 to the Land Registration Rules 2003 or a certified copy of the constitution in English or Welsh, or other evidence permitted by rule 183 of the Land Registration Rules 2003.

Transferee for entry in the register: Dot Levy , Emily Levy and Frieda Levy

For UK incorporated companies/LLPs Registered number of company or limited liability partnership including any prefix: For overseas companies (a) Territory of incorporation: (b) Registered number in the United Kingdom including any prefix:

Each transferee may give up to three addresses for service, one of which must be a postal address whether or not in the UK (including the postcode, if any). The others can be any combination of a postal address, a UK DX box number or an electronic address.

6

Transferee’s intended address(es) for service for entry in the register: ‘Stenhome’, 10 Willifield Way, Newcastle upon Tyne NE2 5NA

7

The transferor transfers the property to the transferee

Place 'X' in the appropriate box. State the currency unit if other than sterling. If none of the boxes apply, insert an appropriate memorandum in panel 11.

8

Consideration The transferor has received from the transferee for the property the following sum (in words and figures):

X

Five Hundred and Fifty Thousand Pounds (£400,000.00) The transfer is not for money or anything that has a monetary value

Insert other receipt as appropriate:

Place 'X' in any box that applies.

9

The transferor transfers with

Add any modifications.

X

full title guarantee limited title guarantee

Where the transferee is more than one person, place 'X' in the appropriate box.

10

Declaration of trust. The transferee is more than one person and X

they are to hold the property on trust for themselves as joint tenants

they are to hold the property on trust for themselves as tenants in common in equal shares

Complete as necessary

they are to hold the property on trust:

11 Insert here any required or permitted statement, certificate or application and any agreed covenants, declarations and so on.

Additional provisions

The transferor must execute this transfer as a deed using the space opposite. If there is more than one transferor, all must execute. Forms of execution are given in Schedule 9 to the Land Registration Rules 2003. If the transfer contains transferee’s covenants or declarations or contains an application by the transferee (such as for a restriction), it must also be executed by the transferee.

12

Execution Signed as a deed by GREG MEWS

Greg Mews

in the presence of: Jay Stone JAY STONE

21 Westway Manchester MT3 4SB

Dot Levy

Signed as a deed by: DOT LEVY in the presence of

Philip Roberts PHILIP ROBERTS 11 Temple Grove Newcastle upon Tyne NE4 8PP

Signed as a deed by: EMILY LEVY in the presence of:

Emily Levy

Philip Roberts

Signed as a deed by: FRIEDA LEVY Frieda Levy in the presence of :

Philip Roberts

WARNING If you dishonestly enter information or make a statement that you know is, or might be, untrue or misleading, and intend by doing so to make a gain for yourself or another person, or to cause loss or the risk of loss to another person, you may commit the offence of fraud under section 1 of the Fraud Act 2006, the maximum penalty for which is 10 years’ imprisonment or an unlimited fine, or both. Failure to complete this form with proper care may result in a loss of protection under the Land Registration Act 2002 if, as a result, a mistake is made in the register. Under section 66 of the Land Registration Act 2002 most documents (including this form) kept by the registrar relating to an application to the registrar or referred to in the register are open to public inspection and copying. If you believe a document contains prejudicial information, you may apply for that part of the document to be made exempt using Form EX1, under rule 136 of the Land Registration Rules 2003.

2. Ella and her partner Fred bought a house in York in 2009. Ella contributed 60% of the purchase price while Fred contributed 40%. The transfer deed to them stated that Ella and Fred were joint tenants in equity. One reason they had bought the house was because it suited their living and working styles. Ella was an architect. She used a room on the ground floor as her drawing office and meetings with clients often took place there. Fred did gardening work in the neighbourhood. In 2014 Ella gave birth to their son Oliver. In 2015 Fred decided that, having been supportive of Ella’s career over the years, he now wanted a career of his own. Fred was offered a place at an American university to study politics in January 2016 and was keen to take up this opportunity. Fred asked Ella if she would purchase his financial interest in the house. Ella wanted to help Fred but, before discussing a price with him, she approached her bank to see if she could raise a loan. Her bank declined to help her and, since she had no other means of raising any cash, she was unable to go ahead. Fred left for America, and in July 2016 he wrote Ella a letter and said in it: “Dear Ella, I am really enjoying my studies but living in America is very expensive. I need access to capital to be able to continue my studies. I would have been happy to sell my share in the house to you but, since you can’t raise the money, I must ask you to try and sell the house before my new academic term starts in October 2016. You will be able to buy a smaller place with your share of the proceeds.” A mutual friend of Fred and Ella who lived in York and had been visiting Fred, delivered the letter to Ella at her house the following week. Last week Ella was told that Fred had died in a car crash in America. In Fred’s will he left everything to his brother, George.

Advise Ella on the following:

(a) Who owns the property and in what proportions? You should discuss the position both in law and equity. [75 marks] (b) For this question (b) assume that George does have an interest in the property. George would like the house sold, but Ella wishes to continue living there. Discuss whether George can seek to force a sale of the property and what matters a court would take into account in reaching its decision. [25 marks]

3.

In 2012 Roy and his partner Sara, together with Roy’s father Tom, had purchased a large detached house with stables, ‘Surrey House’. It was to be their home. The purchase price was £400,000.00 and Roy and Sara had each contributed £100,000.00, and Tom had paid the remaining £200,000.00. The transfer deed stated the property was transferred to the three of them as beneficial joint tenants. Roy turned the stables into a workshop and used it for his antiques business. In 2013 Sara gave birth to their twin daughters. Tom was a doctor who worked at the local hospice. Having learned the hospice was very short of money and in danger of closing, he decided he would like to use his own money to help save it. He therefore discussed with Roy and Sara whether they would buy out his interest in Surrey House. Roy and Sara said they would consider the proposal, but in the end decided they did not want to do so. Shortly after that Tom left a typed note on the breakfast table which Roy found. It said: “Dear Roy and Sara, my conscience requires me to ask you to sell Surrey House so that with my share I can provide the hospice with the money it desperately needs. Otherwise it may close very soon”. Roy did not act on the letter or show it to Sara. The following month Tom died. In his will he left everything he owned to the hospice. The hospice has now written to Roy and Sarah requesting Surrey House be sold imme...