INTRODUCTION TO CO-OWNERSHIP
David Thomas
Transcript
This mini lecture deals with the co-ownership of land. In it, we will learn about the basic ideas
behind co-ownership since 1925, joint tenancies and tenancies in common, and trusts for land.
In English land law, since the Law of Property Act 1925, behind any sort of co-ownership of land is
the trust, where the owners of the legal title to land hold the equitable interest on trust for one or
more beneficiaries. The benefit of land, the right to use it, belongs to the beneficiaries, not the legal
owners.
Trusts may be expressly created, in which case they need to comply with the formalities required
by section 53(1)(b) of the Law of Property Act 1925, by being evidenced in writing. They may also
be implied by the law, in which case no formalities are required, under section 53(2). Implied trusts
generally occur where the law considers that it would be unjust for someone to be excluded from
an interest in land, as in common interest constructive trusts. Implied trusts are an extensive and
important area of law, which, however, we are not looking at in this mini lecture.
Let us start with a matter of terminology. We shall be talking about joint tenancies and tenancies in
common. But despite this language, we are not talking about leasehold, about landlords and
tenants. The issues we are discussing apply to freeholds and to leaseholds, wherever an estate is
held by two or more people. The language comes from the roots of English land law, the doctrine
of tenure; how land is held.
As we have said, then, where more than one person owns land, there is a trust. This requirement
was imposed by the Law of Property Act 1925, specifically sections 34 and 36(1), which also
required that the legal owners of the title must hold as joint tenants; they hold as trustees for the
beneficial owners, who may be but do not need to be the same people. There cannot be a tenancy
in common of the legal estate, nor, as a result of section 34 of the Trustees Act 1925, can there be
more than four trustees. The owners of the equitable interest, on the other hand, can hold it either
as joint tenants or as tenants in common, and there is no limit on the number of equitable tenants.
The most important difference between joint tenancies and tenancies in common is the right of
survivorship; if one joint tenant dies, their interest automatically passes to the other(s), not to their
estate. Survivorship is what most of the cases are about. This characteristic of joint tenancies is
because the common law tries so far as it can to treat the title as if it were held by a single person.
The tenants together own a single interest in the whole. Each of them owns the whole. If one dies,
the survivors still each own the whole, and so in effect that tenant’s interest has passed to the
survivors. The interest cannot therefore be passed to anyone else on death by means of a will or
otherwise; the tenant does not own a share and their interest has simply been subsumed by the
whole, before there can be any question of such a succession.
It is because of this that joint tenancies must also have the four unities; unity of possession,
interest, time and title. If one of these is missing then the common law’s illusion of a single tenant
would fail and the tenancy must be a tenancy in common. Similarly, a joint tenant cannot deal with
their interest in the property, because it is not a separate interest, but one interest held by all of
them. Only a tenant in common can deal with their share.
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It is also because of this that the 1925 legislation chose to require the legal estate to be held by
joint tenants. The main aim of that legislation was to make transactions in land easier. If the legal
estate was held in a tenancy in common, then each of the tenants would own a share and
potentially each share would require a separate investigation into their title. In contrast, a joint
tenancy can only have a single title and need only be investigated once. In combination with the
doctrine of overreaching, which means that a buyer would not normally be concerned with
equitable interests, this made transactions in co-owned properties much simpler.
Tenancies in common, therefore, can only be of all or part of the equitable interest in an estate in
land. There is no limit on how many tenants in common there may be of an estate. The tenants
each own a share, but it is an undivided share in the whole; they also have unity of possession –
each has possession of the whole. As they have a share, they can sell it or otherwise deal with it.
The shares can be unequal.
So how can you tell whether the equitable interest is held by joint tenants or tenants in common?
Well, there might be an express trust, in which case the question is settled. Otherwise, if there is
any reference to a share, then what you have is a tenancy in common. There are no shares in a
joint tenancy, even though if it is severed so that it becomes a tenancy in common the joint tenants
will receive equal shares at that point. So, if a conveyance says that land is held beneficially in
equal shares, it is saying that there is a tenancy in common.
Is it necessary to have two forms of co-ownership?
Some people have suggested abolishing joint tenancies and simply reducing all forms of co-
ownership to tenancies in common. You may well think that the way that joint tenancies work is
arcane and not at all intuitive, whereas the tenancy in common works in a way that seems much
more like common sense. There are advantages to the joint tenancy, however, especially as
regards the trustees holding the legal title, where survivorship means that the trustees are
generally also beneficial owners of the land rather than being strangers to it, and the death of one
trustee does not require any formal documentation. There is also the advantage, already
discussed, of simplifying the investigation of title and therefore the ease of transferring land.
Finally, many couples in a relationship might specifically want the consequences of the right of
survivorship, the transfer of one share on death to the other partner without paperwork or trouble. It
is often hard to envisage your relationship breaking down and the need to take precautions against
that possibility.
Joint tenancies are more of a problem where they apply to residential periodic leases, especially
social tenancies, where they can interfere with statutory rights to succeed to the property. And,
because of their arcane nature, people who don’t have the benefit of legal advice may well be
taken by surprise by the nature of joint tenancies, having never heard of the right of survivorship.
There are no serious proposals to reform the law at present.
Under the 1925 legislation, with the rare and unimportant exception of strict settlements, trusts
where the trust property included land were automatically “trusts for sale”. This form of trust caused
many problems; most significantly, the trustees were under a duty to sell the land, although the
sale could be postponed, and formally speaking the beneficiaries only had a right to a share in the
proceeds of sale, rather than the land itself. It was not suited at all to the kinds of residential
properties that became the most common form of tenure as the 20th century went on. There was a
major change to the law of trusts and co-ownership brought about by the Trusts of Land and
Appointment of Trustees Act 1996. The most important change so far as this mini lecture is
concerned is that the trust for sale was transformed into the trust of land, fixing many of the
previous problems and giving beneficiaries an interest in the land and a clear right to possession of
it. There are other important changes and rights incorporated in the Act, but we are not looking at
those today. The trust of land is the principal form of trust that we are concerned with in this
module.
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That concludes the mini lecture, in which you have learned about the basic ideas behind co-
ownership of land, the nature of joint tenancies and tenancies in common, and the replacement of
trusts for sale by trusts of land under the Trusts of Land and Appointment of Trustees Act 1996.
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