What is co-ownership? : The law of the land

What are the types of co-ownership of land?

If one person owns land or property, he or she is the sole legal owner. If two or more people own land or property they are co-owners. Where there is co-ownership of land, each legal owner simultaneously enjoys the rights and responsibilities of property ownership.

Types of co-ownership

There are two forms of co-ownership in law: joint tenancy and tenancy in common. ‘Tenancy’ in this context is not to be confused with ‘tenancy’ in the context of leases.

Joint tenancy

Under a joint tenancy, the co-owners each own the whole estate. There are two distinct characteristics of a joint tenancy:

  1. The right of survivorship.
  2. There cannot be a joint tenancy unless the ‘four unities’ are present.

The right of survivorship means that under a joint tenancy, no co-owner (‘joint tenant’) can dispose of their interest in the land under their will when they die, because they do not have a divisible share. When a joint tenant dies, the survivor/s automatically inherit the whole of the property. Likewise, one joint tenant cannot sell a ‘half share’ in the property as they do not own a divisible share to sell.

If the property is sold, the co-owners are entitled to an equal share of the sale proceeds – regardless of how much money they have actually put into the property.

The four unities

This is simply what the law requires to show that the co-ownership is a joint tenancy in law. These are:

  • Unity of possession: ie. there is no physical division of the land separating each joint tenant’s share and there must be no restriction on the co-owners use of all the land.
  • Unity of interest: ie. the interests of the co-owners must be identical.
  • Unity of time: the interest of all the owners should have been created at the same time.
  • Unity of title: all the co-owners should have acquired the legal and beneficial interest in the land at the same time through the same way (or by adverse possession, ie. squatting).

Tenancy in common

Where there is a tenancy in common, each tenant in common owns a separate, identifiable share in the property. They can sell or transfer their share during their lifetime, and they can leave their share to a third party under the terms of their will.

A typical scenario where a tenancy in common will be preferred is where the parties pay different amounts towards the purchase price. If a couple, for instance, buy a property costing £300,000 and the parties contribute £30,000 and £150,000 respectively (with a mortgage advance for the balance), it would be considered fair for the couple to own the property as tenants in common. The transfer deed (or a separate trust document) would show their respective shares to reflect those shares put into the property (1:5). If, for example, the property is sold – the parties may then take their share of the sale price proportionately to reflect their respective contribution.

This relates only to the beneficial interests. The legal interest (estate) is always co-owned under a legal joint tenancy. This means all co-owners have a legal right to occupation and use of the land as is the case with a beneficial joint tenancy. They are effectively trustees of the property holding the property on trust for themselves and all other co-owners. However, please note that an individual must be at least 18 years old to be a legal owner of land and property.

What is overreaching?

Overreaching is where two or more trustees (joint tenants) decide to sell the land – but there are beneficial interests in the property. So long as the purchase money is paid to at least two trustees, the purchaser of the land will receive the land free from any of the beneficiary’s beneficial interest – such as money vested in the property.

Severing a joint tenancy

A joint tenancy can be ‘severed’, converting it into a tenancy in common. Specific events automatically sever a joint tenancy:

Divorce: a joint tenancy is severed by Divorce Absolute. This means the two parties then each own a share of the property and they can dispose of it as they wish (subject to a court order in financial remedy proceedings).

Bankruptcy: a joint tenancy is automatically severed when a joint tenant is made the subject of a bankruptcy order. This serves as a form of protection for the other co-owners.

A joint tenancy can also be ‘severed’ unilaterally. One co-owner can serve a written notice on the other/s informing them that they are severing the joint tenancy. No reasons need to be given. This would be typical in the case of marriage or relationship breakdown, and one of the parties wishes to protect their ‘share’ in the property, without waiting for the decree absolute to automatically sever the joint tenancy. Ideally, a copy of the notice of severance should be sent to the Land Registry so that a note is placed on the registered title.

If you have any legal issue in relation to co-ownership of your property, take specialist advice from expert property solicitors.