This month in our series of monthly bitesize extracts from Nutshells revision guides, we provide an overview of the differences between a joint tenancy and a tenancy in common, and how each can be terminated.
THE JOINT TENANCY
In the eyes of the law, joint tenants do not have shares in the land or, indeed, any individual existence. They are regarded together as making up a single legal entity, i.e. a sole owner: Burton v Camden LBC (2000). They are together wholly entitled, but individually they own nothing. Of course, they do have rights which are exercisable against each other (e.g. a monetary claim on any eventual sale). The joint tenancy is favoured by the common law. The outstanding feature of the joint tenancy is the right of survivorship (ius accrescendi).
THE TENANCY IN COMMON
This form of co-ownership is favoured by equity and entails that each co-owner has a separate share in the property. A tenancy in common differs from a joint tenancy in the following ways:
• tenants in common hold in individual shares, i.e. they have distinct, notional shares in the land that has not yet been divided between the co-owners. Although each tenant in common has a separate interest, it is not possible to say who owns what piece of the land;
• there is no right of survivorship. The size of share of a tenant in common is fixed and unaffected by the death of any other tenant in common. The tenant in common can leave his share by will and, if not, it will pass on intestacy to his next of kin;
• of the four unities only unity of possession is essential. Without this there can be no co-ownership at all. There would, instead, be individual ownership of distinct parts;
• the size of the shares of each tenant in common need not be equal. For example, one tenant in common may have a 60 per cent share whereas the other may have a 40 per cent stake.
Severance of the Joint Tenancy
It is to be remembered that the legal estate must always be held on a joint tenancy and cannot be severed, i.e. converted into a tenancy in common. Severance is only possible in respect of the beneficial interests of the co-owners. A joint tenancy behind a trust can be converted into a tenancy in common in a number of ways:
Acting upon one’s share
The clearest method of severance is to alienate (sell or otherwise dispose of) one’s own interest to a stranger or, indeed, another joint tenant. This must occur inter vivos (i.e. be a lifetime dealing) and cannot, therefore, be effected by a will. The act must be final and binding which means that there must generally be a valid contract/written transfer dealing with the land.
Mutual agreement of the joint tenants
The joint tenants can all act together and effectively agree to sever their joint tenancy: Williams v Hensman (1861). This is more informal than acting on one’s share and does not need a valid contract or writing. It must, however, be such that it shows a common intention to sever. The parties must have reached a definite understanding and a fixed mutual attitude to sever: Slater v Slater (1987). For example, if the joint tenants agree that, on death, their shares will pass to their next of kin this will be a severing event: McDonald v Morley (1940). Similarly, if the joint tenants agree that, on sale, the proceeds should be divided (whether equally or unequally) a tenancy in common will immediately arise: Burgess v Rawnsley (1975).
Mutual conduct of all existing joint tenants
This covers any course of dealing which intimates that the interests of all joint tenants were mutually regarded as having been severed. The conduct must fall short of an express or implied agreement, but must show an unambiguous, common intention to sever: Greenfield v Greenfield (1979). For example, where the co-owners execute mutual wills it is not the wills themselves which sever (severance cannot be effected by will); but rather the intention which underlies them shows the decision to sever: Re Wilford’s Estate (1879). It is not entirely clear whether inconclusive negotiations in relation to disposing of the co-owners’ respective shares will operate to sever the joint tenancy. The better view is that such negotiations will not have this effect: Harris v Goddard (1983).
A person cannot benefit from his crime so that if one joint tenant unlawfully kills another he cannot take any benefit by way of survivorship: Cleaver v Mutual Reserve Fund (1892). Section 2(2) of the Forfeiture Act 1982, however, gives the court a limited discretion to override this rule (but not with murder) where it is just to do so (as in Dunbar v Plant (1998): suicide pact). It appears that the consequences of the forfeiture rule will vary according to how many other joint tenants remain alive. Consider the following examples:
Notice in writing under section 36(2) of the LPA 1925
If a joint tenant desires to sever the joint tenancy unilaterally he can achieve this by giving all the other joint tenants clear notice in writing of this desire. The notice must show an immediate intention to sever and not merely be a statement of future aspiration: Harris v Goddard (1983). A notice which has been posted, but not received remains effective for these purposes: Re 88 Berkeley Road (1971). In Kinch v Bullard (1998), a wife posted a letter notifying severance to her husband in respect of the matrimonial home. The husband was dying in hospital at the time and did not receive the notice. The wife thought she would now prosper better with the right of survivorship and destroyed the notice. The court held that there was severance despite the fact that the husband never actually received the notice. In Re Drapers Conveyance (1969), the issue of a summons by a wife claiming a sale of the matrimonial home amounted to notice for this purpose. In Harris v Goddard (1983), however, no severance occurred where a divorce petition had been served on a husband which merely stated that an order might be made at a future time in respect of the matrimonial home.
Termination of Co-Ownership
Co-ownership can end in a variety of ways:
This is a mechanism whereby the land is physically divided between the co-owners. The joint tenants must be of full age and partition must normally be effected by deed. On partition each co-owner becomes absolutely entitled to a separate plot of land. Under s.7 of the Trusts of Land and Appointment of Trustees Act 1996, the trustees of land have powers of partition.
Where the trustees transfer title to a purchaser, and the purchase money is paid to at least two trustees or a trust corporation, the beneficiaries’ interests are overreached and the co-ownership terminates.
Union in sole ownership (merger)
This will occur where all the legal and beneficial interests are finally vested in one person. For example, when only one joint tenant remains alive, when there is release by one joint tenant of his interest to the other and where tenants in common leave their interest by will or intestacy to a remaining co-owner.
This is an extract from Nutshells Land Law by Professor Michael Haley, available from bookstores and Amazon.co.uk.
Nutshells and Nutcases are the original revision and starter guides with content from Sweet & Maxwell and Westlaw UK. Nutshells are an ideal starter guide to the subject, giving a full overview, while Nutcases give an in-depth case analysis of the facts, principles and decisions of the most important cases.