What is Co-Ownership? : The Law of the land

When does Co-ownership arise?

Co-Ownership exists where there are two or more people who simultaneously enjoy the rights and responsibilities of ownership over a piece of land (either a freehold or leasehold).

Types of Co-Ownership

Since the 1st January 1926, there are two forms of Co-ownership: 

  1. The Joint tenancy

  2. The Tenancy in Common

The Joint Tenancy

Under a Joint tenancy the co-owners are regarded as a single entity owning the whole estate. In the eyes of the law the two or more owners of the property will be regarded as one person.

There are two distinct characteristics of a joint tenancy, these are:

  1. Joint tenants enjoy the right of survivor ship

  2. There cannot be a joint tenancy unless the ‘four entities’ are present.

The Right of Survivorship

Because Joint tenants are seen as one person and have no distinct or separate shares in the property, She/ he cannot dispose of their interest in the land through a will if they die. If any if the joint tenants’ try to do this it will automatically be ineffective because unless the joint tenancy has been severed before the death an so each tenant will have their own identifiable share in the property, then basically there is no share to transfer.  

The right of survivorship happens where one joint tenant dies the remaining joint tenants will assume the rights of the interest that the deceased has left behind.

The Four Unities

The Four unities are; 

  1. Possession- The co-owners must be equally entitled to the whole of the land. There can be no physical division of the land separating each joint tenants share and there must be no restriction on the co-owners use of all the land.

  2. Interest- The interest of the co-owners must be identical. Each interest must be for the same duration and of the same nature. 

  3. Time- The interest of all the owners should vest at the same time.  

  4. Title- All the co-owners should have acquired their interest in the land at the same time through the same way, or by adverse possession (i.e. Squatting)

Tenancy in Common

For a tenancy in common to exist, only possession is required. Each tenant in common has a separate share of the property (for example a half or a quarter of the property) which they can dispose of during their lifetime or when they die, But this is an undivided share, basically the separate share is not physically separated or outlined, just the percentage of the land is determined. 

Because the share is undivided, each tenant has the right to occupy all of the land. One tenant in common cannot exclude another from a certain part of the land or restrict the use of any part of the land even if one tenant in common may have a larger share than the others.  

No Legal Tenancies in common

Since 1925 co-ownership of any legal estate in land must be a joint tenancy. A tenancy in common can ONLY exist in equity.  

Legal Joint tenants are actually trustees

In every case of co-ownership, the legal estate in land is held by the joint tenants on trust for one and other.

Maximum of four trustees

Where there are more than four joint tenants (trustees) of a piece of land, the first four named trustees of full age will be classed as the trustees of the land, holding the land/property on trust for all the joint tenants, including those who are not named as trustees.  

For a person to be of full age and therefore able to become a trustee over the land in favour of the joint tenant, they have to be of 18years of age or older.

What is overreaching? And when does it happen?

Overreaching is where there are two or more trustees holding land on trust (such as what happens in the case of co-ownership and joint tenants), they decide to sell the land. As long as the purchase money is paid to the two trustees, the purchaser of the land will receive the land free from any of the beneficiaries’ interest. This means that because the trustees where holding the property for the beneficiaries, the joint tenants in this case, the person who bought the land could be stuck with having property which many people have a legal claim to.  

Overreaching occurs where the beneficiaries of the land have an interest in the money paid for the property, so can claim from that rather than have a claim on the property which is now owned by someone else.  

What happens if the property is conveyed to tenants in common under equity?

As previously stated, a tenancy in common is a title recognised by equity and not a legal title.  

A joint tenancy will occur in co-ownership as the legal title of the joint tenants, but there is also a title of tenants in common through equity which will represent a persons contribution to the purchase price.

For Example, Andy and Betty decide to purchase Tree Hill cottage. In Law they will both be joint tenants. If in the conveyance deed they state they want to be tenants in common or they say or imply that they have specifically identified shares of the property then a tenancy in common will also be applied through equity. 

This will then mean that in Law they are joint tenants and in Equity they are tenants in common with Andy having a 60% share and Betty having a 40% share.

As they are also tenants in common if Andy dies leaving his share to Carl, Betty will hold the legal estate in the property on trust for her and Carl. 

By becoming tenants in common, co-owners will have their spate share identified and will be able to leave their share in a will.