Co-Ownership
There are two ways in which land can be co-owned:
Under a joint tenancy, all co-owners are equally entitled to the full interest in the land. The legal title can only be held as a joint tenancy.
Under a tenancy in common, the co-owners own separate shares in the land. These might be in equal or unequal proportions.
Both of these forms of co-ownership are a type of trust. Owners of the legal title hold the land on trust for the owner(s) of the equitable title (the beneficiary). While they possess all the powers of a normal landowner, they are required to exercise them with regard to the rights of the beneficiaries: Trusts of Land and Appointment of Trustees Act 1996, s.6. They must also abide by the terms of any express trust. If they fail to do so, they might be sued by the beneficiary for breach of trust.
Co-Ownership of the Legal Title
Types of Co-Ownership in Law
The only way a title can be co-owned in law is under a joint tenancy: Law of Property Act 1925, 1(6). Unlike the equitable title, a joint tenancy in law can never be severed into a tenancy in common: s.36(2).
Any attempt to transfer a legal title as a tenancy in common is treated as a conveyance of a joint tenancy: s.34(2).
The following requirements are necessary for a joint tenancy in law:
The co-owners must possess the ‘four unities’. These are unity of: title (all derive their title from the same act), interest (all have equal interest), possession (all have the same right to possess) and time (all got their interest at the same time).
Only four people can be named as co-owners at law. If more are named, then only the first four listed become joint tenants: Trustee Act 1925, s.34(2).
Only an individual over the age of 18 can be a co-owner at law. Any attempt to make a minor a co-owner transfers the legal estate to the adult co-owners only, but on trust for the minor: Trusts of Land and Appointment of Trustees Act 1996, sched 1, para 1.
Survivorship
The rule of survivorship applies to a joint tenancy. If a joint tenant dies, their interest ‘falls away’ and ceases to exist. This means that it is not possible for a person to inherit a joint tenancy.
Once there is only one joint tenant remaining, the joint tenancy ends and the land becomes wholly owned by the survivor. At this point, the survivor can leave their legal interest to their heirs.
Where multiple joint tenants die at once and it is unclear who died first, the law presumes that they died in order of age, with the oldest dying first and so on: Law of Property 1925, s 184. Therefore, if all the joint tenants die at once, the land will be inherited by the youngest co-owner’s heir.
Co-Ownership of the Equitable Title
Types of Co-Ownership in Equity
An equitable title can be co-owned either under a joint tenancy or a tenancy in common.
If there is an express declaration of trust describing the arrangement as a joint tenancy or tenancy in common, this is determinative: Goodman v Gallant [1986] Fam 106; Pankhania v Chandegra [2012] EWCA Civ 1438. A bare declaration of trust is presumed to create a joint tenancy in equity unless it specified different shares: Cowcher v Cowcher [1972] 1 WLR 425.
If there is no statement of trust, then the presumption is that the equitable title follows the legal title – meaning that there is a joint tenancy in equity as well: Stack v Dowden [2007] UKHL 17. This can be rebutted by proof of a resulting or constructive trust. It can also be rebutted by evidence that the parties intended to divide the property (unequally or otherwise): Robertson v Fraser (1870-71) LR 6 Ch App 696. This might be the case, for example, if the four unities are not present.
Survivorship
The survivorship rule applies to a joint tenancy in equity, as well as a joint tenancy in law. It does not apply to shares in a tenancy in common, by contrast. This means that if a tenant in common dies, their heirs will inherit their share of the land.
Severance
Unlike at law, it is possible to sever an equitable joint tenancy into a tenancy in common. There are four ways this can be achieved:
A joint tenant’s interest can be severed if they serve written notice on all of the others stating their immediate intention to sever: Law of Property Act 1925, s.36(2). This includes demands for the immediate sale of the property and distribution of the proceeds: contrast Re Draper’s Conveyance [1969] 1 Ch 486 and Harris v Goddard [1983] 3 All ER 242. There is no need for the other owners to consent. A notice is served if it is delivered to the other co-owners’ last known address: s.196(3). The same is true if the letter is posted to the last known address by registered post: s.196(4). There is no need for the notice to actually be received or read: Kinch v Bullard [1999] 1 WLR 423.
Severance will also occur if one co-owner does a legally binding act on their share: Williams v Hensman (1861) J&H 546. This includes contracting to sell the land (Brown v Raindle (1796) 3 Ves 296) in compliance with formalities, gifting the share to another, mortgaging the share or using it as security (First National Security v Hegerty [1965] 1 QB 580). It even includes declaring bankruptcy, since this transfers the individual’s interests to their trustee in bankruptcy. A mere unilateral declaration to sever is not enough, since it is not binding: Nielson-Jones v Fedden [1975] Ch 222.
If all co-owners agree to sever the interest, then this converts that tenant’s share into a tenancy in common: Williams v Hensman (1861) J&H 546. There is no need for any binding act. However, their agreement must be unequivocal, final, and evidence an immediate intention to sever. A mutual agreement can be implied from the conduct of all the parties: Hunter v Babbage (1995) 69 P&CR 548.
Where one co-owner unlawfully kills another, the deceased’s interest is severed: Re K [1985] Ch 85. This rule operates by virtue of the Forfeiture Act 1982, and it is possible to get relief under that Act. If relief is granted by the court, then severance does not occur and the survivorship rule operates as normal: Re Ninian (Deceased) [2019] EWHC 297.
Sale & Partition of Co-Owned Land
Partition of Co-Owned Land
Where the equitable title is held as a tenancy in common, the trustees (owners of the legal title) can ‘partition’ the land: Trusts of Land and Appointment of Trustees Act 1996, s.7(2). This divides the land into separate plots and transfers legal title of those plots to each of the beneficiaries. Partition can only be enacted if all the beneficiaries consent: s.7(3).
Sale of Co-Owned Land
If all owners of the legal title agree, they can sell the land without permission of the court. If there is disagreement, or if a beneficiary wishes to force a sale, they must apply for a sale order under s.14 of the Trusts of Land and Appointment of Trustees Act 1996. Creditors may also make an application for a sale order under s.14 TOLATA.
The court has complete discretion as to whether to grant an order, taking into account: s.15
- The original intentions of the settlor (the person(s) who created the trust).
- The purpose of the trust (and whether it remains possible to achieve).
- The interests of any minor occupying (or who might reasonably be expected to occupy) the land as their home. This is relevant even if providing them a home is not the trust’s purpose: White v White [2003] EWCA Civ 924.
- The interests of any beneficiary’s secured creditors.
- The circumstances and wishes of any adult beneficiaries, provided they have an interest in possessing the land. If the beneficiaries disagree, the court will give account to the wishes of the majority (weighted according to their share in the land).
The court will also consider the terms of the trust. For example they may refuse a sale order if the trust terms explicitly require unanimity before any sale: contrast Finch v Hall [2013] EWHC 4360 and Gandesha v Gandesha [2020] EWHC 1743.
Sale of Co-Owned Land in Bankruptcy
Where the application for sale is made by trustee in bankruptcy, the rules for s.14 TOLATA are modified by the provisions of the Insolvency Act 1986 (s.335A).
Where an application is made under the provisions of the Insolvency Act 1986 (s.335A), many of the same factors are relevant. However, the purpose of the trust and the intentions of the person who created the trust cease to be relevant. The bankrupt’s needs are also irrelevant, though the needs of their spouse/civil partner and children become relevant even if they are not beneficiaries: s.335A(2), Everitt v Budram [2009] EWHC 1219.
If the application is brought after a year from the onset of bankruptcy, the creditor’s interests are normally paramount: s.335A(3). This is so unless there are ‘exceptional circumstances’. Circumstances are ‘exceptional’ if they are ‘out of the ordinary course, or unusual, or special, or uncommon’: Re Citro [1991] Ch 142. In exceptional circumstances, any sale order will normally be postponed. A sale can be postponed indefinitely, but this is very rare.
- ‘Exceptional circumstances’ excludes hardships such as the difficulty of finding a comparable home, or disruptions to a child’s schooling.
- It includes the chronic or terminal illness of the bankrupt’s spouse or child if the home is adapted for their needs: Claughton v Charalambous [1999] 1 FLR 740.
- It also includes the chronic or terminal illness of the bankrupt, but only if their spouse or child needs to care for them within the home: Re Bremmer [1999] 1 FLR 912.
- Illness may result in only a short postponement until suitable alternative accommodation is found if the ill person is likely to survive a long time, however: such as in Grant v Baker [2017] 2 FLR 646.
If no application is made within 3 years of the bankruptcy, and the trustee-in-bankruptcy does not otherwise sell or charge the land, the property reverts to the full ownership of the bankrupt: s.283A. After this point, the provisions of the Insolvency Act 1986 cease to be relevant.
Occupation Rights
There are two ways in which a person can gain a right to occupy a piece of land.
s.12 of TOLATA 1996 grants a right to occupy to any beneficiary of a trust provided that a) the trust grants them a right to possess the land, and b) the trust’s purpose is to make the land available for them to occupy or c) the trustees hold the land out as available for them to occupy. The trustees may exclude or restrict the occupation of some (but not all) beneficiaries. However, they may not do this unreasonably (s.13(2)). They may impose reasonable conditions on occupation (s.13(3)). If the beneficiary is already in occupation, they cannot be excluded without a court order (s.13(7)).
If a person does not have any property rights in the land, they can still have a right to occupy land intended as a matrimonial home if they are the spouse or civil partner of someone who does: Family Law Act 1969, s.30(1)-(2). If such a person is already in occupation, they cannot be excluded without a court order. If they are not already in occupation, they may seek the court’s permission to begin occupation. Any payments towards rent, mortgage or outgoings by such a person are treated as equivalent to those done by the interest-holder.
