Co-ownership

Whilst some ideas of Property Law may seem distant and unreal, co-ownership of land is something that will touch many of us. All property can be owned by more than one person. In that situation, the property is held as either a tenant in common or joint tenant (more details below). However in land (remember Property is a generic term for all property, of which land is one form) there are more complex rules on co-ownership. It also shows the close connections between Land Law and Equity & Trusts. A trust is also a form of property.

One part of the Chapter deals with how the beneficial interest can be acquired by implied trust but a key part of the chapter deals with what happens when parties are joint legal owners and the presumptions made as to beneficial ownership.

In Land Law when two or more people legally own the land there is an automatic trust created (Trust of Land and Appointment of Trustees Act (TLATA)). This means that there is a conceptual difference in ownership, often depicted like this:

Remember that the English Legal System has two concurrent systems of rules, the Common Law and Equity. They have different rules and developed in different courts (see CLRI). It is the distinction between the two types of ownership that can be examined.

At law (the trustees in our diagram) there can only be a joint tenancy (s1(6) Law of Property Act 1925 (LPA)). This means that all the legal owners are seen as one unit in the eyes of the law. The law does not see the separate persons as having an individual share, they all own 100%.

Additionally there can only be four legal owners of land (s34 Trustee Act 1925). This aids transactions in land ownership.

However in equity there is no such restriction, there can be more than four owners and they can hold as either joint tenants or tenants in common. As a tenant in common, this means that all owners have their own individual share. The size of the share can be based on their initial contribution to the purchase price, under a resulting trust (Bull v Bull). We know that equity follows the law (Stack v Dowden) but such things as unequal contributions, or purchase for business purposes can lead to a presumption that the property is owned as tenants in common. However, these presumptions are rebutted by an express statement by the owners (Goodman v Gallant).

In answering a question in this area you need to be able to set out how the property is owned, at purchase and then also at the various stages of ownership. Many students fail to do this, missing a fundamental gap in explanation. For example:

A, B, C, D and E buy land; they contribute unequal amounts and intend to use it for a business. It is registered to A, B, and C, as legal owners and conveyed to all as beneficial joint tenants.

Some students will explain that there can only be four owners at law (which is correct) so they conclude (incorrectly) that the first four (A, B, C and D) are legal owners. The express facts say that the legal owners are A, B and C. This is poor application to the facts.

Then the students will see unequal contributions and a business venture so say A, B, C, D & E are beneficial tenants in common. Failing to see the express statement as to beneficial ownership as joint tenants. This means, as the main issues being examined in this type of question are the methods of severance, the rest of their answer is illogical. This is because if the beneficial ownership begins as a tenancy in common there is nothing to sever, as legal ownership cannot be severed (s36 LPA).

Good students will point out the starting position is:

Then the important point in any answer is to explain if, and how, the beneficial joint owners have severed their joint tenancy. In our situation above, even though there were unequal contributions to the purchase, on severance they would sever in equal amounts. So, for example, A had contributed 40% to the initial purchase, if he severed he could get 20% (100% divided by 5).

Changes to the beneficial ownership will not alter the legal ownership. You cannot sever a joint tenancy at law (s36 LPA), the only way this will change is if a legal joint tenant dies, and they disappear from the legal ownership. So for example in our example above, if C died. Then the picture would be:

The important point in this area is to understand the process of ownership and severance. This requires a clear grasp of the wealth of cases in this area which illustrate the requirements to effectively sever a joint tenancy. I hope that this has helped you prepare for your revision. Good luck!