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6.3.2 Co-Ownership Disputes Lecture

RIGHT OF SURVIVORSHIP

Advantages of survivorship

There can be an imbalance because the person(s) with the right of survivorship will take the entire estate, whether co-owned or now solely owned, regardless of how much they contributed towards the purchase price of the property. They may have contributed no funds whatsoever to the purchase or maintenance of the property, and yet be still regarded as owning the property – most likely their most valuable asset – entirely.

The main question is whether a given person is a beneficial survivor of the deceased joint tenant. The question is unlikely to be whether a given person is the survivor of the legal estate, because that carries duties and responsibilities rather than benefits. The legal owner has responsibilities relating to the management of the land, whereas the beneficial joint tenant would be entitled to the use and enjoyment of the land as well as the ultimate value of the land. So if the land is sold, the proceeds be received by them as a beneficial joint tenant. A legal owner may be the first to receive those proceeds, but they would only be holding the proceeds on trust for the beneficial (co-)owner.

The process is also straightforward: there is a presumption that a surviving joint tenant will automatically receive the whole of the deceased joint tenant’s interest and thus take the property wholly. Indeed, the only evidence required to prove that the surviving partner is entitled to the interest is evidence of the death of the other joint tenant, usually provided simply by a death certificate.

The dispute: joint tenant survivor v. beneficiary of the will

It is an inherent and inescapable quality of joint tenancies that the right of survivorship overrides the wishes of any joint tenant expressed in a will where the two conflict.

What this means is that if a person named as a beneficiary in a will wants to ensure that they actually get their share, they have to show the following:

  1. The testator (the person who wrote the will) is entitled as a joint tenant to the property,
  2. The testator named the hopeful beneficiary as the beneficiary to the land in the will,
  3. The testator has successfully severed their share in the property before their death, or
  4. The alleged joint tenancy was actually a tenancy in common at the relevant time.

Intention to be a legal owner

A joint tenancy of the legal estate cannot be severed; only a joint tenancy of the beneficial estate may be severed into tenancies in common (Law of Property Act 1925, s.36(2)). It is straightforward to render a person as a joint tenant of the legal estate only by invoking the powers of appointment under the Trustee Act 1925, sections 36, 40 and 41(1) and s.19(2) of the Trusts of Land and Appointment of Trustees Act (TOLATA) 1996. A joint tenant can even choose to transfer their legal estate to another person, rather than simply add another co-owner to the existing number of co-owners (Law of Property Act 1925, s.72).

SEVERANCE AND SURVIVORSHIP

For disputes, there are several relevant questions pertaining to the various methods.

  1. Severance by written notice: This method is unilateral (Harris v Goddard [1983] 1 WLR 1203, CA). What is required is sufficient notice and immediacy of effect (Harris v Goddard [1983]), and the notice must state that the severance takes place with immediate effect (Harris v Goddard [1983]).

A testator looking to sever and therefore pass on their title would want to ensure that they have provided the appropriate degree of notice before their death. See Kinch v Bullard [1998] 4 All ER 650)).

Conversely, if a surviving joint tenant wants to frustrate such a means of severance, their only hope is that notice was not provided, either at all or to all the joint tenants, and/or that the notice was said to take effect in the future rather than immediately (Harris v Goddard [1983]).

  1. Severance by a joint tenant acting on their own share: This is where the person looking to sever the joint tenancy acts without the consent of the other joint tenant(s). Indeed, they can even choose to not disclose the alienation to the other joint tenants (Mortgage Corporation Ltd v Shaire [2001] Ch 743, ChD). As with severance by means of serving a notice, a joint tenant must operate on their own share in a manner which is final and irrevocable.

It would appear that if a joint tenant wishes to dispose of their property in favour of a named party in a will, this approach does provide a means of effect for that that disposal. A constructive trust, or a written disposition, will suffice (Law of Property Act 1925, s.53(1)(c) and s.53(2)).

Of course, this notion may indicate a conflict with the notion that a joint tenant relying on a will to pass on their interest is defeated by the concept of survivorship – depends on the language. It is submitted that speaking of a “share” or “shares” in a property will bring about this effect.

Another route open to joint tenants is that they can mortgage or charge their “share” to a third party, thus severing their interest from that of the other joint tenant(s) (First National Securities Ltd v Hegerty [1985] QB 850, CA).

As with the method of severance by notice, there is little that a joint tenant can do if they are relying on the concept of survivorship to defeat the other joint tenant from disposing of the latter joint tenant’s interest via a will. The most that a joint tenant, relying on survivorship, can do is to argue that the language in the instrument of disposition.

  1. Severance by mutual agreement: This method, unlike the ones mentioned above, requires that all joint tenants are not only aware of the initiating joint tenant’s intention to sever the tenancy, but also consent to it (Williams v Hensman70 E.R. 862).

This kind of severance is heavily evidence-based, particularly where the agreement in issue has no written record. If the agreement is not written down, then what is needed to be proven is that the parties expressly agreed.

If the parties only reach an agreement in principle to sever the joint tenancy, and do not evince any subsequent intentions to sever then the court shall presume there was no severance by mutual agreement (Gore and Snell v Carpenter(1990) 60 P & CR 456, ChD).

If there is no written evidence, either of the agreement or of any operations on shares undertaken subsequent to the agreement, the court may infer there was merely an agreement in principle, which as we have seen is not enough to create severance (Crooke v de Vandes(1805) 11 Ves 330).

Conversely, the challenge for a joint tenant hoping to rely on survivorship is that they cannot avoid the consequences if they sign a written document attesting to the severance; they cannot resile from their commitment to the severance.

  1. Severance by mutual conduct: This type of severance relates to ‘any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common’ (Williams v Hensman70 E.R. 862 per Page Wood V-C). The threshold for proving severance by mutual conduct is not the same as that found in severance by mutual agreement. In the case of the latter, there must be evidence of express agreement. In the case of the former the threshold is that of implied intention.

This type of severance relies on evidence of mutually-held assumptions between the parties that severance has taken place (Davis v Smith [2011] EWCA Civ 1603).

  1. Severance by other methods: First, there is severance by reason of an involuntary alienation, meaning where the parties’ interests have severed due to an operation of law (Re Pavlou (A Bankrupt) [1993] 1 WLR 1046). Second, there is severance following an unlawful killing by (one of) the joint tenants (Re K, decd [1985] Ch 85, ChD). Third, if one joint tenant looks to “merge” their interest in the co-owned land with an interest over a different estate, then that may result in severance because the unity of interest has been overtaken by the merger.

For a joint tenant looking to retain (and expand) their interests, the only viable means of the above three is to merge their interest with that of another estate. The first two carry, respectively, civil and criminal liabilities, and would prevent them from being able to obtain the interest of the other joint tenant(s) should the other joint tenant(s) die before the bankrupt/criminally liable tenant dies.

For a successor to the bankrupt/criminally liable/merging co-owner, they will of course be inheriting that which the co-owner is entitled to following the severance. 

TENANCIES WITHOUT THE FOUR UNITIES

To answer the question of whether a joint tenancy is valid we must deal with issues over the four unities.

We will therefore look at ways in which parties may be in a dispute over the alleged validity of a joint tenancy based on the unities of interest, title, and time.

Given what we have said already, we can sum up the outcomes hoped for by the parties in this manner: successors (and tenants who want to pass on their interest to persons other than the alleged joint tenants) want the unities to not be present. The persons claiming to be joint tenants, on the other hand, want to prove that those four unities are present.

  1. Interest: Each tenant must have exactly the same “kind” of interest. How you discern whether the parties have a common type of interest is by looking at distinguishing characteristics between the tenants.

A successor would want to show that the parties did not have the same kind of interest, and would do so by pointing to any distinguishing characteristics in the legal status of the rights amongst the tenants. Conversely, the persons claiming to be joint tenants would rely on evidence that their interests were all equal at the relevant times.

  1. Title: Every tenant must derive their title from the same document or act. If the tenants obtained their interest in the property via different means then the tenancy is a tenancy in common rather than a joint tenancy.
  1. Time: As with title above, all tenants must have obtained their interest at the same time in order for this unity to be satisfied. It is in the interests of the remaining joint tenant(s) that the deceased joint tenant had taken ownership at the same time as the remaining joint tenant(s), whilst hopeful successors of the deceased tenant would hope for evidence that the interests were obtained at separate times.

DISPUTES BETWEEN TENANTS IN COMMON

  1. Physical demarcation: As with joint tenancies, tenants in common are unified in rights of possession over the land. One of the acts that such a unity prohibits is the demarcation or separation of land by one tenant in common where that demarcation is intended to exclude the other tenants in common from using that land (Bull v Bull [1955] 1 QB 234, CA). However, a court does have the power to manage and potentially restrict the occupation rights of the tenants in common (TOLATA 1996, s.12(1)).
  2. Payment of rent: Given the right of possession that exists between tenants in common, it is also the case that a tenant in common cannot require other tenants in common to pay occupation rent (Henderson v Eason(1851) 17 QB 701). But a tenant in common can be excluded from occupation by a trustee if that tenant in common does not pay rent as required by the trustee (TOLATA 1996, s.13(1)). See (TOLATA 1996, s.13(6)(a)).
  1. Paying for improvements and maintenance: If a tenant in common offers to pay for maintenance or repairs to the co-owned property, they cannot require the other tenant(s) in common to immediately contribute a share of the cost. However, the tenant in common making the payment can impose a lien on the property (Leigh v Dickeson(1884) 15 QBD 60, CA; Re Pavlou (A Bankrupt) [1993]).

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