The Joint Tenancy Has Long Been ‘Looked Upon As Odious in Equity’

Info: 1495 words (6 pages) Essay
Published: 18th Jul 2019

Jurisdiction / Tag(s): UK Law

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The joint tenancy has long been ‘looked upon as odious in equity’ (R v Williams (1975) Bund.342 at 343). i)

i) Explain why the joint tenancy is disliked by equity, but not by the common law; and ii) assess whether there are any circumstances under which beneficiaries under a trust would prefer a beneficial joint tenancy.

i)
Land may be held by multiple persons, each person having an interest, which can be joint or several, in the land. The structure for this co-ownership can either be as a joint tenancy or as a tenancy in common. The following essay it going to explore the reasons behind why equity dislikes a joint tenancy and when a joint tenancy may be preferred by a beneficiary. Firstly, a short explanation of each type of co-ownership will be presented to set the foundations for understanding the reasons equity prefers a tenancy in common.

A joint tenancy is characterised in particular ways and has certain qualifications to it which grant rights and interests to those who are holding as joint tenants. A joint tenancy is held by all the joint tenants on trust for the others holding interest in land, their beneficial equity stake being held as though they were tenants in common (see an explanation of tenants in common below) yet their legal stake being held as joint tenants . In order to create a joint tenancy, each party to the land must have the same interest, therefore must have an interest which is of the same extent, duration and nature and which had arisen under the same act. The land must be able to be seen as a whole and not as separate parts belonging to each tenant. Further, in order to create such a situation, the act which created the joint tenancy must expressly have no wording to the effect that the grantees to the land are taking separate interests . This is also termed words of severance and any indication of such wording will automatically create a tenancy in common in the eyes of the court .

A joint tenancy is also limited to vesting in four trustees , therefore the first four members to a joint tenancy hold the land on trust for all other beneficial interest holders, which have no maximum number limitation. These four trustees hold the legal title as well as having a beneficial interest. This, in practical terms means the trustees have the power to act on the land yet the beneficial interest of the other joint tenants cannot be dismissed as they are also subject to all duties imposed on trustees to act in the best interests of their beneficiary. The only qualifications to hold on trust is that the person be over the age of 18 .

The key quality to a joint tenancy is the right to survivorship, also known as the jus accrescendi . When one tenant dies, his interest vests equally in the remaining tenants. For example, where A, B and C hold an estate as joint tenants and C dies, his interest vests in A and B equally so that if A were to die, B would be sole remaining joint tenant and would have the entire estate in his name. This occurs regardless of what instructions A or C would leave in a will as no new joint tenant can join the property as they would be obtaining their interest in land by a different act and would be holding for a different duration than the current tenant.
This right of survivorship is the key missing to the structure of a tenancy in common.

Under a tenancy in common, the land in question is held in divisible shares and does not require unity in time, duration or title but does require unity of possession . It is crucial that words of severance are used in the tenancy agreement, whether this merely be by titling the document a tenancy in common, it must be clear that the intention of the parties is to create a tenancy in common . Under this structure it is possible to take one party’s interest in the land and pass this on to another external party. For example, A, B, C and D hold land in four equal parts are tenants in common. D passes away and leave her land to her children E and F. E and F then hold one fourth of the land together , in effect holding one eight each. A, B and C retain their quarters as before.

The joint tenancy, versus the tenancy in common, is disliked in equity. Equity prefers a tenancy in common mainly due to the equitable maxim of equality is equity . Where parties make individual contributions to a property, they are deemed by equity as tenants in common, where the property is beneficially held on trust for each party. Especially if the property is purchased in unequal shares and no express instruction is given on the contrary as to the distribution of property, equity treats the property as falling under a tenancy in common . When a party to the property were to die, then the remaining survivors would hold on trust for the deceased’s representatives thereby even if a joint tenancy was existing where the purchase occurred in unequal shares, the estate falls under a tenancy in common . This is often the case with a marriage where the courts will deem a husband and wife having purchased, even if they did contribute in unequal shares, as a joint tenancy. This is also a matter of public policy as for a husband or a wife to have to share their home with another party after the death of their spouse could lead to homelessness especially in the event of a bad relation with a child or in-law.

Equity sees the tenancy in common as a more equal solution as when a group of people put differing amounts of money into properties either for the purpose of investment or to find their own home, it is not fair that upon death, these monies vest in the remaining property holders and are in effect lost to the deceased party, especially where the deceased party created a will outlining an inheritance to a third party. Further with respect to business transactions, equity always favours the tenancy in common even when no express statement to the contrary was made.

Regardless of whether purchase monies are provided equally or unequally, equity treats a relationship of contract as one of a tenancy in common .Even where persons advance money jointly on a loan either equally or unequally, they are treated as tenants in common in equity with respect to the rights they accrue under the transaction regardless even as to how the monies are secured .

ii)

There are various instances where beneficiaries would prefer a joint tenancy due to the right of survivorship features of a joint tenancy. This may be applicable, desirable and useful when the parties to the property do not desire to obtain any new input or rights to third parties as the intention was not to do so when the agreement or transaction commenced. Further, it may reduce the rights of those parties already tenants to the property. It can often be the case that the intention of the initial purchase will be destroyed with new parties coming into the property. For example, a collection of four University students buy a property with the intention of keeping this property for the duration of their University studies and for the purpose of living in. One dies during the third year and leaves his share to his parents. In his memory they do not want to sell and this would be against the original intention of the other three students. Naturally, vesting his invested share on them would be unfair if the full sum was paid up front, but if his interest is in the form of a mortgage, the remaining students could take his share and keep the property between them. Under law, a court can force a sale of a tenancy in common if that was the intention behind the initial purchase, but this is an example to merely illustrate that each case is individual and different motivations may result in a joint tenancy being preferred due to the right of survivorship.

The classic situation in which equity prefers a joint tenancy is in the marriage relationship, as touched upon above. This is not a relationship which should be subject to third party invention upon death of one spouse and therefore should be handled with the right of survivorship. A court will generally favour such a structure in a marriage and for this reason, a beneficial relationship of that found in a joint tenancy will be favoured.