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Sunday, 15 November 2020Co-ownership and Trusts of Land
An introduction to co-ownership
Law that applies when 2+ people own an estate in the same land at the same
time
- Concurrent/simultaneous co-ownership > successive co-ownership
Key idea is ‘Unity of Possession’ - the ‘irreducible core’ of co-ownership
- Each co-owner is entitled to possess all of the land at the same time
Leads to fragmentation of the legal and equitable ownership via a ‘trust of
land’
- Legal owners called trustees (management role)
- Equitable owners called bene ciaries (bene cial role)
- Must consider ownership position at both levels to fully understand how the land
is owned
The law in this area is an amalgam of statutory and common law rules
- Law of Property Act 1925 (‘LPA 1925’)
- Trusts of Land and Appointment of Trustees Act 1996 (‘TOLATA 1996’)
- Judicial decisions (including new cases!)
Co-ownership occurs regularly in both a commercial and domestic context
- Important therefore to consider:
- How might co-ownership be structured and how might this change over
time?
- What rights and duties will this e ect on trustees and/or bene ciaries?
- How do we resolve disputes between co-owners and with third parties?
Co-ownership: Why does this topic actually matter?
Co-ownership is very common in both a commercial and a domestic context
- Re ects the wide scope of human relationships and increasing cost of land
acquisition
- Useful way of increasing legal recognition
Proper regulation is especially important in a domestic context
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- The family home is often the most valuable asset owned by the parties but key
legal questions on its ownership often decided at a time of great personal
vulnerability
Many cases also involve a co-owners creditors (or the Trustee in Bankruptcy)
- Such groups clearly need some degree of protection (esp in Covid-19) but how
much?
The law in this area is thus trying to balance multiple goals simultaneously.
- It is important therefore to keep in mind the following questions:
- What does each interested party want from this area of the law? How far are
they prepared to sacri ce a exible, fact-sensitive approach for a clear and
certain one?
- Does the current law strike the right balance between those parties? How
easy should it be for the law to interfere in an individual’s (often highly
valuable) property rights?
- Should it take the same approach to commercial and domestic cases? How
far should land be viewed simply as a nancial investment or should we also
consider its use (often as a family home)? Does it matter we are now in a
time of economic recession?
Classifying Co-ownership: 2 Key Concepts
- Co-ownership regulated via a ‘Trust of Land’ - divides legal/equitable ownership
- 2 basic forms of co-ownership
- Joint Tenancy: Everyone owns the land together
- Tenancy in Common: Everyone owns a share in the land
- Important to now consider each of these in more detail
Classifying Co-ownership:The Joint Tenancy
- Nature of the JT
- An undivided whole
- No distinct shares
- All 4 unities required:
- Possession, interest time and title
- Can change into a TiC via ‘severance’
- Doctrine of survivorship ‘ius Accrescendi’ applies:
- Ownership stays in JT when a JT dies
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- Continues until one JT is left - ‘Last JT standing’
- S184 LPA - Scarle
- Aids purchasers, probate and in domestic cases often better re ects the
parties’ actual intentions
Classifying Co-ownership: The Tenancy in Common
- Nature of the TiC
- A distinct share
- Can be mortgaged or sold by TiC while alive
- Only 1 unity required:
- Unity of possession
- Doctrine of survivorship does not operate:
- Interest in land is transferable via will or intestacy on death
Structuring Co-ownership: Distinguishing Law from Equity
Must distinguish position AT LAW from that IN EQUITY
- Co-ownership Occurs via a Trust of Land
- Leads to the fragmentation of the legal and equitable ownership of co-owned
land
- These legal and equitable estates in that co-owned land will then each be
held by the co-owners via a joint tenancy or a tenancy in common (or a
combination of the two)
- When considering how co-owned land is structured it is therefore necessary to:
- Identify the initial ownership structure at law
- Identify the initial ownership structure in equity
- Consider if either of these has changed due to subsequent events
(‘severance’)
Structuring Co-ownership: Co-ownership at LAW
- First look at the co-ownership position AT LAW
- Can only be a JT at law: s1(6) LPA 1925
- No severance at law: s36(2) LPA 1925
- The legal ownership must therefore ALWAYS be structured as a JT
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