Joint Tenancies v Tenancies In Common

INTRODUCTION AND CO-OWNERSHIP

Co-ownership is where any two or more persons each simultaneously owns a given estate in land and are thus entitled to an interest, or interests, in that estate. Co-ownership is put into four types, two of which are discussed here: joint tenancies, and tenancies in common. Concurrent co-ownership of both legal and equitable interests requires a trust of land (Law of Property Act 1925, ss. 34, 36). Since the passing of the Trusts of Land and Appointment of Trustees Act (TOLATA) 1996, a trust of land is established where there are two or more legal owners of the land, and a trust of land is established where there is one legal owner but more than one equitable owner.

This chapter will first discuss joint tenancies, and touch upon the following areas: survivorship, how and why a joint tenancy might be changed, the four unities, and the issues surrounding family breakdowns and joint tenancies.

This chapter will then go on to discuss tenancies in common, and will discuss the following points: that there is no right of survivorship; that the only unity present in tenancies in common is that of possession; tenants in common have rights of occupation and enjoyment; no tenant in common will ordinarily be expected to pay rent for occupying the property; contributions towards the maintenance of the land will only be apportioned between tenants in common at the time of a sale and not immediately; and equity exhibits a preference for tenancies in common, such that equity will determine the existence of a tenancy in common even though the legal title is necessarily shared between joint tenants.

Severance is not discussed here, as that is addressed in full in the chapter on Severance. Finally, take note that the reference to tenants here has nothing to do with tenants and landlords. Tenant here simply means ‘owner.’

JOINT TENANCIES

These types of tenancies are a type of co-ownership of land, under which each tenant - or ‘joint tenant’ - is equally and ‘wholly entitled on the whole’ to the estate (Burton v Camden LBC [2000] 2 AC 399, HL per Lord Millett). A joint tenancy is able to exist as either a legal or equitable interest, or both. In joint tenancies, no joint tenant is said to hold a share in the land; instead, each is invested with the whole interest in the land (Wright v Gibbons(1949) 78 CLR 313 (HC of Australia) per Dixon J), regardless of whether their interest is in the freehold or the leasehold. Because each joint tenant is effectively a single composite person - given there are no shares - they are deemed in the eyes of ‘outside world [as] one single owner’ (Hammersmith and Fulham LBC v Monk [1992] 1 A.C. 478 per Lord Browne-Wilkinson). That said, a joint tenancy can later be severed into shares, thus rendering the interests as tenancies in common in equal shares.

Joint tenancies have two characteristics in particular that distinguish them from tenancies in common. First, joint tenancies provide a right of survivorship. Second, joint tenancies always require the presence of the so-called four unities.

Right of survivorship

This right, also known as ius accrescendi, provides that upon the death of any of the joint tenants, the entire co-owned estate is said to ‘survive to’ the living joint tenant(s). The rights of the joint tenant upon death are therefore entirely extinguished upon death. The deceased cannot have provided for their rights to be passed on to nominated beneficiaries in their will. This is because, by definition, they have no share in the estate to pass on, because shares do not exist in a joint tenancy.

The law is to a degree archaic in this area when it comes to multiple deaths of joint tenants: if several but not all of the joint tenants die at a similar time, and it is not certain in what order they died, the deaths are presumed as a matter of law to have occurred in order of seniority (the so-called “commorientes” rule), and the youngest said to have ‘survived’ longest (Law of Property Act 1925, s.184). On the other hand, one might argue that the right of survivorship continues to reflect social norms, because with the death of one joint tenant in a family, the other family members who are joint tenants automatically receive the rights of the deceased joint tenant. This is a very convenient means of transferring rights: the only evidence that is required for the transfer is the death of the joint tenant. No evidence is required to show the deceased joint tenant intended and acted to dispose of their title.

The surviving joint tenant(s) takes the entire co-owned estate irrespective of their (lack of contributions) towards the initial purchase of the property. Survivorship is therefore often a useful measure for ensuring that a family home stays within the family. Since 1925, co-ownership of any legal estate in land has necessarily been rendered as a joint tenancy. For the legal estate, it is not ‘permissible’ to sever a joint tenancy into a tenancy in common (Law of Property Act 1925, s.36(2)).

Legal title is generally unimportant: it is a paper title that is held on trust, meaning that the legal title denotes the party with administrative and fiduciary responsibilities over the land, whereas the equitable title denotes the person who may benefit from the land. It is therefore relatively straightforward to create new joint tenancies of a legal estate, both because the distribution of benefits flowing from the land does not need to change with an increasing number of those with legal title, as these can be trustees, and also it means that where a joint tenant (with only legal title) dies, the surviving joint tenants with legal title can resume the duties of the deceased joint tenant without interruption. Trustees - i.e. those joint tenants with merely the legal title - can therefore be relatively easily appointed (Trustee Act 1925, ss. 36, 40, 41(1); TOLATA 1996, s.19(2)).

Changes in legal joint tenancy

Joint tenants may opt to transfer the legal estate in land to themselves, or to transfer it to others, and hold the land as legal joint tenants (Law of Property Act 1925, s.72). This can be a useful mechanism where one of the joint tenants, acting in a capacity as trustee, intends to retire and/or if someone else wishes to become a trustee.

The Four Unities

A joint tenancy necessarily requires the presence of the so-called “four unities” in order to exist (AG Securities v Vaughan [1990]1 A.C. 417 per Fox LJ). Likewise, where all four unities are present, the type of co-ownership is necessarily a joint tenancy (Corin v Patton(1990) 169 CLR 540 (HC of Australia) per Deane J). The four unities are unities of possession, interest, title and time.

Possession

The unity of possession pertains to the right of each joint tenant to possession of the land; the right of each tenant to the land applies to each and every part of the land. Therefore, no joint tenant may take possession of any portion of the land, such as by sectioning off that portion of land, to the exclusion of the other joint tenants (Meyer v Riddick(1990) 60 P & CR 50, CA). There cannot therefore be a trespass by any joint tenant against another, except where one joint tenant has wrongfully ousted another. According to the common law, joint tenants have no remedy of possession against other joint tenants, no matter how irritating, intolerable, or unpleasant the other joint tenant is (Wiseman v Simpson [1988] 1 WLR 35, CA). For statute, there are exceptions where a joint tenant may legally oust another, such as where the other joint tenant has been the perpetrator of domestic violence against the joint tenant applying or some other occupant of the land (Davis v Johnson [1979] AC 264, HL).

Interest

This form of unity derives from the idea that each joint tenant is ‘wholly entitled to the whole.’ The interest of each and every joint tenant is exactly the same in terms of extent, nature, and duration. No joint tenancy therefore can exist between a freeholder and leaseholder, because the nature (and durations) of their interests differ. The same can be said for owners in possession and owners in remainder, and for owners of a fee simple interest and those who own merely a life interest.

Title

The unity of title holds that each of the joint tenants derives their title to the land from the same act or document, such as an act of adverse possession, or a document such as a grant. For a co-owned legal estate, this type of unity also means that when a purchaser is looking to purchase the title to a portion of co-owned land, the purchaser need only purchase one title. Coupled with the fact that the number of trustees of any given legal estate is capped at four (Trustee Act 1925, s.34(2)), the purchaser will have no difficulty in investigating the title rights of the trustees, because a) there are relatively few trustees needed to sign the relevant documentation, and b) their interest is equal.

Time

Put simply, this unity requires that the interests of all joint tenants must have been vested in them at the same time.

Case in focus: A.G. Securities v Vaughan

The case concerned four occupants who had each entered into separate agreements with their landlords. The occupants had agreed to submit a monthly payment in exchange for the exclusive right to use a four-bedroom flat in common with the other occupants. The agreements were for a six-month term. The landlord sought a declaration from the county court that the occupants were mere licensees rather than tenants. When the matter reached the Court of Appeal, the court held they were joint tenants of the flat. In order for the occupants to be declared joint tenants, they would have to satisfy the four unities, according to Fox LJ. His Lordship summarised (at 432) the four unities. His Lordship summarised the four unities with a sentence each: every co-owner will be as much entitled to any part of the land as every other co-owner (unity of possession); every joint tenant’s title to the land derives from the same act or document (unity of title); each tenant’s interest must be vested at the same time (unity of time); and every co-owner’s interest must be the same ‘in extent, interest and duration’, meaning no one tenant can act by himself to, for example, surrender a lease or give a notice (unity of interest).

Key Points:

  • The four unities are essential to establishing that co-owners have taken land as joint tenants.
  • Fox LJ was responsible for elucidating and summarising the four unities.
  • All four unities must be present at the same time to establish a joint tenancy.

Family breakdowns and joint tenancies

Joint tenancies have given rise to issues where the joint tenants are a marital couple, or are in a civil partnership, and their relationship irretrievably breaks down.

Ending of periodic lease

The first issue is that the legal joint tenancy over the periodic lease requires unanimous action by joint tenants, yet where there is a breakdown in the relationship that unanimous action may not be possible. As a result, the court has indicated that a single joint tenant may be entitled to bring the lease to an end by refusing to enter into a further term for the periodic tenancy (Hammersmith and Fulham v Monk [1992]).

The problem, as noted in Qazi v Barrow [2003] UKHL 43, is that the service of a notice to quit by one tenant of a periodic lease effectively brought the lease to an end without any consideration of the effect the loss of property had on the other joint tenant(s). The matter was considered in Manchester City Council v Pinnock [2010] UKSC 45. The Supreme Court, in this case, determined that if a public authority seeks possession of a person’s home, it is open to the person intending to continue to occupy the property to have the court consider if it is proportionate, due to the damage done to the European Convention on Human Rights Article 8 right to privacy and to a family home.

Social norms

The terms of the equitable joint tenancy upon breakdown may not necessarily reflect social norms of justice of who is entitled to what share, particularly where the breakdown is followed by the parties no longer cohabiting (Stack v Dowden [2007] UKHL 17; Jones v Kernott [2010] EWCA Civ 578). In both these cases, the court determined that a joint tenancy was not a viable means of determining the interests, and therefore determined the interests were held as tenancies in common, with the parties holding unequal shares. Ordinarily, the starting point would be that the parties would each hold the property entirely, as per the four unities. However, upon breakdown, the joint tenancy instrument was ill-equipped for distributing shares between the parties, and the joint tenancy by its nature assumed - incorrectly - that the property would be co-occupied and used by both parties. In neither case did the court concern itself with the date at which the joint tenancies had been severed into tenancies in common; instead, the court was investigating the common intentions of the parties.

In each case there were differing bases on which the court determined the joint tenancy was actually a tenancy in common. In Stack v Dowden, the court found the following factors to be relevant: a meticulous separation of the finances of each party, an unequal contribution between them towards the purchase price, and unequal financial contributions to the householdafter the purchase. In Jones v Kernott, the parties accepted that a joint tenancy had existed initially; they disagreed on whether it continued or whether it had been severed by conduct into a tenancy in common. Among the relevant factors were the following: a long period of separation during which Mr Jones made no contributions at all towards the maintenance or purchase of the house, and the parties’ joint decision to cash an insurance policy so that Mr Jones could purchase a house.

It is unclear in these cases at what point the joint tenancies were severed into tenancies in common. That said, there is precedent in statute for severing to occur in this manner for joint tenancies: when property is owned by one or both spouses, and one spouse makes, or contributes to making, a substantial improvement to the property, then the spouse responsible for the improvements will acquire a share, or a larger share (unequal to that of the other spouse) in the improved property (Matrimonial Proceedings and Property Act 1970, s.37). The problem is that this section seems to assume that the property was held under shares before the improvements were made, and the concept of shares is inimical to joint tenancies. Therefore, applying that statute in accordance with the case law, it appears that the statute will act to sever a joint tenancy where one of the spouses/civil partners makes a greater contribution to improving the land.

Examination Consideration: The joint tenancy can be summarised as a form of co-ownership, comprising several concepts. It provides for survivorship, and it is typified by the four unities. The idea of shares does not exist within joint tenancies; instead, shares are a concept which relate to tenancies in common. By way of revision, in what case did the court refer to the four unities, and what are the four unities?

TENANCIES IN COMMON

Unlike with joint tenancies, in tenancies in common the co-ownership arrangements are such that each of the co-owners holds a distinct share, or proportions of entitlement. Tenancies in common take effect only in equity. The Law of Property Act 1925 s.1(6) describes tenants in common as holding land in ‘undivided shares’; the word undivided is said to mean that the co-owned land has not been divided physically. There are two defining characteristics to tenancies in common, both of which set tenancies in common apart from joint tenancies:

  1. There is no right of survivorship between tenants in common, and
  2. The only unity which exists between the tenants in common is the unity of possession.

No right of survivorship

There is, unlike joint tenancies, no right of survivorship between tenants in common. The size of each tenant in common’s share is defined, finite and fixed; it is unaffected by the death of any tenant in common. Upon the death of any tenant in common, their share passes on to whomever is named in their will or intestacy as the person to receive the tenancy in common.

Only unity of possession is required

Again, unlike with joint tenancies, tenancies in common do not require that all of the four unities be fulfilled. Instead, there is only one requirement: that each of the tenants in common has a right to possession of the land. If there was no unity of possession, meaning an equal shared right to possess the land, there would not be co-ownership. Without co-ownership, the arrangement would amount to separate ownership of physically distinct areas of land with boundaries between them.

Occupation and enjoyment

As with joint tenancies, given the unified right of possession between tenancies in common, no tenant in common is permitted to physically demarcate or erect boundaries on any part of the co-owned land for their own use at the exclusion of all other co-owners. The tenants in common each have the right to exercise other acts attributable to owners of land, so long as he does not interfere with the equivalent rights of the other co-owners. This applies, regardless of the size of the share of each tenant in common, meaning that a tenant in common with a much greater share of the property cannot act in ways that exclude the right of possession of any other tenant in common with a smaller share.

These views have backing in the case law: each and every tenant in common has a right to the ‘use and enjoyment of it [the land] in a proper manner (Bull v Bull [1955] 1 QB 234, CA per Denning LJ). This right of possession also has statutory backing (TOLATA 1996, s.12(1)). Except where a tenant in common acts to physically oust another tenant in common, or acts to unlawfully interfere with mutual rights of enjoyment, the notion of trespass between tenants in common has no meaning at common law (Jacobs v Seward(1872) LR 5 HL 464, HL). That being said, courts have the means to regulate the occupation rights between the tenants in common (TOLATA 1996, s.14(2); Family Law Act 1996, ss. 33(3) and 36(5)).

What may also be noted is that there is no inherent right of trustees, i.e. those that hold the legal interest in the land, to compel one beneficiary (i.e. a tenant in common with an equitable interest) to sell their share to another beneficiary (Rahnema v Rahbari [2008] 2 P. & C.R. DG5; Bagum v Hafiz and another [2016] Ch. 421 per Lord Dyson MR). Ordinarily, what is required is the unanimous consent of all the beneficiaries for such an arrangement to be lawful and effective (Saunders v Vautier(1841) 4 Beav. 115). Otherwise, it falls to the court under sections 14-15 of TOLATA 1996 to deal with the dispute over shares in such manner that the dispute is resolved justly and effectively.

Liability of occupation rent

Between the tenants in common, it is usually the case that no one tenant in common can require the other tenant(s) in common to pay rent, even where one of the tenants in common effectively enjoys sole occupation of the land. In this case of sole occupancy, what occurs is not an abrogation of the right to possession on the part of the tenant in common who is not in occupation. Their non-occupation is a matter of voluntary choice, and does not give rise to a relationship of landlord and tenant (Henderson v Eason(1851) 17 QB 701). This is relevant to the notion of trustees of land having the power to exclude some (but not all) of the beneficial co-owners from occupation where the trust instrument grants the power (TOLATA 1996, s.13(1)). Where a tenant in common is so excluded, the trustee can require the payment of ‘compensation’ to any beneficiary whose enjoyment of the land has been precluded or restricted (TOLATA 1996, s.13(6)(a)).

Where rent is received from a letting of co-owned land, paid by a stranger occupying the land that has been let out, the paid rent is divisible between the tenants in common in exact proportion to the value of their respective share (Job v Potton (1875) LR 20 Eq 84).

Liability for repairs and improvements

When one tenant in common offers to pay for or make repairs or improvements to the co-owned land at their own expense, they generally have no right of immediate recovery of his costs from the tenant(s) in common. (This principle applies also for joint tenants.) That being said, the tenant in common can endeavour to impose a lien on the co-owned property, or its proceeds of sale, at such time when the land’s value is realised and distributed amongst the tenants in common (Leigh v Dickeson(1884) 15 QBD 60, CA). By imposing a lien, the cost of the improvements will be equally deducted from the share of each tenant in common at the time of sale (Re Pavlou (A Bankrupt) [1993] 1 WLR 1046, ChD per Millett J). Alternatively, where the trustees are acting for the beneficiary tenants in common, the trustee may impose ‘expenses in respect of the land’ (TOLATA 1996 s.13(5)) and such expenses may reasonably include maintenance and improvement works.

Equity’s Preference for Tenancy in Common

The common law has tended to favour joint tenancies for purposes of certainty and the value of the concept of survivorship, whereas equity has tended to favour tenancies in common. Equity views tenancies in common as providing fairness in the property relations of co-owners (Kinch v Bullard [1999] 1 WLR 423, ChD per Neuberger J). We have already seen this preference in the cases of Jones v Kernottand Stack v Dowden. Each tenant in common is said to hold a beneficial interest that is fixed and not vulnerable to ‘the gamble of the tontine’ (Corin v Patton(1990) per Deane J). In tenancies in common, every share is a separate portion of wealth, distinguishable from the other shares, and can be used by the tenant in common for commercial purposes or may be passed down in the family.

As mentioned the common law favours joint tenancies, and this has been given statutory backing: co-ownership must take the form of a joint tenancy where it pertains to a legal estate in the land (Law of Property Act 1925, ss. 1(6) and 36(2)). Yet equitable estates can take the form of either a joint tenancy or a tenancy in common. The question of whether the equitable estate is one or the other will depend on whether the tenants have retained the right of survivorship or have instead sought to delineate their interests as distinct and apportioned shares.

There is an advantage, regarding the equitable estate, for favouring tenancies in common. Survivorship means that in the event any tenant dies prematurely, their interest passes wholly to the other joint tenants, and thus the deceased tenant has no means of diverting the interest to the persons they would have designated in their will. Tenancies in common, whether created so at the outset or have come about following severance, the co-owner is thereby immune from the risks associated with survivorship, and the tenant in common is now able to exercise full control over their share of the property in terms of dispositions and wills.

What happens then where a tenant is simultaneously a joint tenant of the legal estate and a tenant in common of the equitable estate? This simply amounts to a full separation of those measures which attach to legal and equitable estates respectively. In other words, where a person is a joint tenant in the legal estate, they would pass on all of the administrative functions and liabilities (for example, a leaseholder of the legal estate being required to pay service charges to the freeholder) to the remaining joint tenants, and where they are a tenant in common, they would have the opportunity to pass on the rights of beneficial enjoyment of their share in the land to whomever they designate.

Generally, as equity will follow the law, equity’s prior assumption is that where a person is a joint tenant of the legal estate, they are also joint tenant of the equitable estate (Pettitt v Pettitt [1970] AC 777, HL per Lord Upjohn; Cowcher v Cowcher [1972] 1 WLR 425, Fam Div per Bagnall J). However, this is an assumption only, and can be displaced by indications from the words and conduct of the parties that they intend to take the equitable estate as tenants in common. There are a variety of circumstances which act to override the presumption of equity following the law and declaring a joint tenancy of the equitable estate. Thus, in the following cases, equity will declare a tenancy in common over the equitable estate rather than a joint tenancy, and the list is not exhaustive (Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549, PC per Lord Brightman):

  1. Express or implied words of severance - This instance will usually arise in a document or transfer or conveyance in which it is expressly or impliedly clear that the parties intend to take distinct and separate shares in the land;
  1. Absence of the “four unities” - As mentioned, the presence of all four unities is required for a joint tenancy, so an absence of any of the unities (save for the unity of possession) will necessarily mean the tenancy cannot be a joint tenancy;
  1. Contributions towards the purchase price in unequal proportions - Where the contributions are unequal, such circumstances give rise to the presumption that the parties had intended to take distinct shares in the property that were proportionate to their respective contributions, and given the contributions are unequal, the parties were necessarily recognising that one party would hold a greater share of the estate over the other tenant(s);
  1. Commercial partners - Given that joint tenancies have the right of survivorship as an essential characteristic, commercial parties would be presumed not to intend to divest the whole of their share in favour of the other commercial party, and instead would have opted to retain distinct shares (Lake v Craddock (1732) 3 P Wms 158);
  1. Business tenants - Where such tenants take a joint tenancy, they are also presumed to have taken a tenancy in common in equity given their ‘several individual business purposes’ (Malayan Credit Ltd v Jack Chia-MPH Ltd [1986]);
  1. Joint mortgagees - Mortgagees are of course the lenders in a mortgage relationship, and so where there is more than one mortgagee, it would be in their respective business interests to retain their own shares and contributions towards a property, meaning each mortgagee is taken to have intended to ‘lend his own and take back his own’ (Morley v Bird (1798) 3 Ves 628).

Case in focus: City of London Building Society v Flegg [1988] A.C. 54.

The case concerned four equitable tenants in common (of which, more below in the section ‘Tenants in Common’) and only two legal joint tenants. Mr and Mrs Flegg were the equitable tenants in common and the parents of the two joint tenants, Mr and Mrs Maxwell-Brown. Mr and Mrs Flegg had provided the bulk of the purchase monies for the property. Both the Fleggs and the Maxwell-Browns were in occupation at all relevant times. The joint tenants charged the property to the City of London Building Society without the knowledge, and therefore without the consent, of the tenants in common. The joint tenants defaulted on the payments for the charge. Given that the payments had been the responsibility of the joint tenants of the legal estate, the arrangement satisfied the requirements for the Building Society’s interest to overreach the interest of the tenants in common, following ss. 2 and 27 of the Law of Property Act 1925. The tenants in common, being the equitable owners of the estate, had a personal claim against the joint tenants because the interest of the Fleggs had been absorbed by the outstanding mortgage debt. Had the Fleggs been joint tenants, their interest would not have been overreached.

Key Points:

  • The joint tenants have the right to charge the property without the knowledge and consent of the equitable owners.
  • The interest of each tenant in common, being merely an equitable interest, could be overreached by a party entitled to the charge over the property.
  • The tenants in common had a personal claim against the joint tenants given the failure of the joint tenants to maintain the payments and for not obtaining the consent of the tenants in common.

Examination Consideration: Tenancies in common exhibit a range of features that distinguish them from joint tenancies. The fact that they do not have a right of survivorship is often put forward as their main advantage. Why is the lack of the right of survivorship potentially advantageous and preferable for tenants in common? Also, if a tenant in common expends resources to maintain or improve the trust property, and the property is later sold, what happens to the pay-out of each tenant in common given the maintenance and improvements carried out by the single tenant in common?


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