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Published: Fri, 02 Feb 2018
Legalities of joint ownership
In co ownership for each section of land there is two estates, the legal estate and the equitable estate. Co ownership of the legal title to land happens when a legal estate is acquired by more than one person. The owners of the legal estate are recognized as the registered owners whom are able to transfer legal ownership of the land. The equitable estate owners are them whom are entitled to the equity in the property. Normally the legal and equitable owners are the same.
Considering the legal estate where two or more people are owners, automatically trust arises between them under (s36 (2) LPA 1925. This being implied trust. The legal title owners would be referred to as trustees whom are holding the land for the equitable owners based on trust. There are two methods in holding the equitable estate for joint owners. The two methods either being a joint tenancy or a tenancy in common. Under s36 (2) LPA 1925 any legal estate can only ever be apprehended as joint tenants.
Joint tenancy is regarded as all the co-owners are wholly entitled to the entire property that is owned. In other words each of the joint tenants is seen as owning the whole property as one. Even the factor of how much each joint tenant has contributed towards the property doesn’t matter. A joint tenant expressly takes on the land at the time and is much entitled to it than any of the other tenant. Joint tenancy was outlined in the case of Hammersmith LBC v Monk by Lord Browne-Wilkinson.
However conditions to the joint tenancy must be the four unites have to exist and are present. Unity of possession being that co-owners must possess the property as a whole, and it cannot be that one joint tenant can exclude the other from any part. For example A and B are joint tenants in a property, A cannot exclude B from the kitchen. Secondly there is unity of interest, both of the tenants must want the same interest i.e. A being the freehold owner and B being entitled to a life interest. Thirdly Unity of title being both joint tenants must acquire the property by the same identical way i.e. through the same act or document. Lastly there has to a unity of time, which is simply being both joint tenants acquired the property at the same time.
Within joint tenancy there is the principle of survivorship, this being the major difference between both joint tenancy and tenancy in common. It only ever operates in joint tenancy. It is the fact that when one joint tenant passes away, his interest on the land automatically is given to the remaining joint tenants. Even when one passes away the other joint tenants are entitled to no more than they were before his death, which is the whole of the property. For the deceased joint tenant’s means they cannot dispose of their interest to other by a will. If say both the joint tenants died at the same time and it cannot be said whom died first, it would be decided under the LPA section 184 that the younger joint tenant who had more chance of surviving, it would be pass under their will.
There is however the principle of severance under joint tenancy whereby the interest of entitled of the whole land can be converted into an estimated share. So if a joint tenants considered this, he or she gains say half the property while the other tenant gains the other half. This then becomes a tenancy in common between the two people. But when there are two or more joint tenants and one considers severance, the other two remaining in the joint tenancy each of them are still entitled to 75% property while the tenant who considered severance has his own share of 25%. Once the joint tenant who severed his interest into a share, he or she would not be a part of the principle of survivorship i.e. his share being automatically given to the ex-joint tenants or neither can he take part with the remaining joint tenants. For example A B C are joint tenants all entitled to owning 75% while D has his own separate share of 25%. A and B die in a car crash so C is automatically co owns the whole 75% under survivorship while D cannot be a part of it due to him severed his interest.
Joint tenancy is usually considered by marriage couples. Social factors such as more marriage couples helps arise joint tenancy more often as marriage is seen as compatibility, trust and being devoted to each other’s lives. Relationships such as marriages usually only work on trust and since trust is between them both, joint tenancy would seem best fit for them. A Joint tenancy agreement on a property being another way of saying what’s yours is mine and what’s mine is yours.
However when the relationship breaks down issues start to arise about the property. A straight forward scenario being a couple get married and take out a joint tenancy agreement on a property. The relationship breaks down and the gentlemen leaves. Couple years later the gentlemen finds out he is entitled to fifty percent of the property, even though he never contributed nothing towards the property. Problems such as this arise and cause disputes as one of the couple doesn’t think it’s fair, but in the laws eyes each person in joint tenancy must receive equal.
There is also the issue of children. Same scenario, couple buy a property together using joint tenancy but now have a family. Under the joint tenancy agreement, none of the couple can pass down their interest in the property to their kids or even so kids from their first marriage. Reverting to a tenancy in common is the only way their kids can benefit from their interest.
The major economic change that affected joint tenancies from not arising as much would be the credit crunch. Due to everything being priced up, newly marriage couples who have bought a property under the joint tenancy agreement are struggling to pay for their property.
Tenancy in Common is seen as the opposite to joint tenancy. There is no factor of each of tenants own property as a whole, but instead the property is divided into the estimated shares that each tenant is entitled to. Also there is no factor of each share being equal to make it fair. Since each of the tenants own their separate shares in the property, it cannot be that the property be physically divided up into their rightful share. For example A owns the kitchen and B owns the bedroom. The shares only exist in ownership of the property. Even so for B it would be trespassing going on if were to go in the kitchen. This brings up the condition of unity of possession; it applies in both forms joint tenancy and tenancy in common. A may have 25% of property but is still allowed possession of the whole property.
Within tenancy in common there is no survivorship; their rightful shares may be passed on by methods of wills or even so intestacy. Although the equitable estate is passesd downs through wills, the legal title cannot be passedpasses via a deceased tenant in common’s will, the legal estate does not, since as mentioned above the legal estate can only ever be held as joint tenants.
Tenancy in common is mainly used by business partners or people who have kids from previous marriages to consider. Social factors such failed marriages i.e. high divorce rates can help arise tenancy in common agreements more. Couples see it as being on the safe side and not considering trust as in enough. Even so it may be if couples are wishing to start a family, they may see it as having shares the best option for their kid’s future.
The economic factor of the credit crunch towards a tenancy agreement could help arise more tenancy in common as people would see it as the cheaper, fairer and best fit option. Consider A and B in joint tenancy agreement, A may have contributing ninety percent to the property and later find out that B still gets fifty percent after they broken up. In this day and age with the credit crunch A would be at a huge loss regretting his or her actions. Under the tenancy in common agreement, it would be certain that you get what is rightfully yours.
Where there only becomes one Legal Owner but there have been other people who have donated their share towards the payment of the property, a trust can still arise even so nothing was written down. This type of trust is known as implied trust. Implied trust within a joint tenancy being silence and the four unities and for a tenancy in common it may be business partners to non-owners contributing to the price. There is also express, resulting and constructive trust too.
Express Trusts being straight forward where in writing it is set out what shares would be yours in the payment and any intentions of yours towards the property. Also any other conditions are put down to such as when it comes to the sale of the property. For a tenancy in common it would be words of severance and in a joint tenancy it would be written down “as joint tenants” and the four unites.
Resulting Trusts is where a property is bought by one individual but a second individual who is not one of the co-owner has paid a big share towards the purchase of the property and on paper nothing is written down to state why the second individual has contributed so much. The law automatically sees it as the property being held by the legal owner the first individal and the second individual who has contributed to the property. In the equitable estate, the shares will be comparison to how much they have put forward to the purchase of the property. For instance the second individual contributing forty percent towards property, he or she is entitled to forty percent of the sale price when property would be sold. This principle was outlined in Bull v Bull .
Constructive Trusts would come when a non-owner has paid a share towards the property or mortgage and there is proof of an agreement that the non-owner should have an interest. For example in the case of Eves v Eves. The main difference in decisions against a resulting trust is that the under a resulting trust decisions are made on the matter of how much each has contributed whereas for a constructive trust the whole circumstances is considered to see what is fair. This was shown in Oxley v Hiscock [2004).
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