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Co-ownership

Co-ownership:


When one person owns a property, that person owns the legal title to the property. The only other people that are relevant to that property are ones that may have easements or covenants. In co-ownership, when land is owned by more than one person, thre is a trust of land that is created. This is most common when people purchase property together within a relationship such as spouses, partners or civil partners but it can also be through a business relationship in a commercial sense. Two forms of co-ownership that exist in land law are joint tenancy and tenancy in common.


Joint Tenancy:


Where there is a joint tenancy, all of the co-owners are said to own the entire property as one with no distinct shares. Joint tenancy is recognised as a legal title to property through section 1 (6) of the Law of Property Act of 1925. It is also possible to hold an equitable interest under a joint tenancy. In order for there to be a joint tenancy, four unities must be present as laid down in the case of AG Securities v Vaughan [1990]. The effect of these four unities being present creates a presumption of a joint tenancy:

1. Possession:


• Co-owners are entitled to possess the entire property.

• If there are any such restrictions, there is no joint tenancy in operation—i.e. no one can be excluded


2. Interest:


• Co-owners must have the same interest in the land


3. Time:


• The interests of the co-owners must have been acquired at the same time which is generally at the time of the transfer of property


4. Title:


• The co-owners’ title must be derived from the same conveyance or transfer of land


The Right of Survivorship of a Joint Tenancy:


This only applies in a joint tenancy—when a joint tenant dies, the equitable interest that belonged to the deceased simply passes on to the remaining joint tenants. The remaining tenants benefit from the entitlement of the deceased as they remain entitled to the whole of the property in question. This process ultimately continues until there is one survivor who then would hold the land as a sole property owner. In circumstances where both joint tenants die at the same time, under section 184 of the Law of Property Act of 1925, the “Commorientes Rule” states that if there is no order to who died first that can be ascertained, the general rule is that the property automatically forms the estate of the youngest of the joint tenants. The only time survivorship would not apply is if a joint tenant chooses to separate their interest through severance.


Tenancy in Common:


Where there is a tenancy in common, each co-owner holds a share of the property. This share is undivided because they are entitled to occupy the whole of the property no matter how big or small their share is. Tenancy in common is only recognised through equity and it is seen to be fairer than joint tenancy. Tenancy in common differs from joint tenancy in a few ways:


1. A tenant in common holds distinct shares


• The contribution is based on the size of how much a tenant in common contributed to the purchase price


2. There is no right of survivorship


• On death, shares will pass according to a person’s will or through the rules of intestacy


3. On the purchase, a deed uses clear express words of severance


• It is up to the parties to determine and express what they intend


4. Only the unity of possession is required


Severance:


This is a process that only exists in equity that allows a joint tenant to server a joint tenancy in an equitable interest. Further, when a joint tenant servers the equitable interest, it becomes a tenancy in common interest. The remaining joint tenants maintain their joint tenancy status even if one chooses to sever their equitable interest. It is important to note that the legal co-ownership status can never be severed.


Methods of Severance:


Common Law Methods:


As laid down in the case of Williams v Hensman [1861], there are four ways to identify severance:


1. An act of any person interested in operating upon his own share:


• This means that one of the joint tenants alienates or transfers his share to another—it could be another joint tenant or someone outside of the original co-ownership agreement


2. Mutual agreement:


• This requires all of the joint tenants to agree to sever the entire joint tenancy which will turn it into a tenancy in common


3. Mutual Conduct:


• This involves a course of dealings in which there is an agreement or an intention to sever the co-ownership


4. Murder


• If one of the joint tenants murders the other then this does not amount of an act of severance and the rules of survivorship do not apply


Statutory Method:


The statutory method is more straightforward and more common than the common law methods when a joint tenant wants to sever the co-ownership. As stated under section 36(2) of the Law of Property Act of 1925, a joint tenant can fill out a form known as “Form SEV” or a letter at the Land Registry which will then be served on all remaining joint tenants in which severance will occur. Therefore, the notice must be in writing, must be a unilateral act and must serve on all remaining joint tenants. Importantly, it must be an immediate intention to sever, not a future desire. In this respect, wills therefore, are excluded from the operation of severance through section 36(2).

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