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6.1.2 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.

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.

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 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).

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.

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.

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).

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).

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).

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.

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.

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

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).

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).

It is unclear in these cases at what point the joint tenancies were severed into tenancies in common.

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. 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.

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.

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.

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).

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.

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.)

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).

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.

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.

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.

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). 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.


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