Co-Ownership

Co-ownership occurs when two or more persons owns the same piece of property concurrently. The term 'tenancy' is something of a misnomer as the concept of joint tenancy is not confined to leasehold interests but rather applies to all interests and estates in land - freehold and leasehold property as well as legal, equitable, present or future. Traditionally there are four types of co-ownership: 1. Co-parcenary; 2. Tenancy by the Entirety; 3. Joint Tenancy; and 4. Tenancy-in-Common. The two most common forms of co-ownership is Joint Tenancy and Tenancy-in-Common which I will explore in more depth in this post.

Joint Tenancy

Joint-tenancy will only exist if the right to survivorship (ie jus accrescendi) and the four unities are both present. The four unities are: 1. Possession – all tenants are entitled to possess the whole property. 2. Interest – all tenants received the same interest or estate in the property. 3. Time – all tenants must receive their interest at the same time. 4. Title – all tenants must receive their title from the same documents/series of documents. The common law presumes that a JT exists every time there is more than one property owner. Joint tenants have 100% ownership and possessory rights over the property. Joint tenancy is generally incapable of being inherited as it is subject to right of survivorship. The death of one tenant will also lead to the death of her entitlement to the land. Property acquired through joint tenancy cannot be left in a will or disposed by means of rules of intestacy. The central feature of a joint tenancy is that when one joint tenant dies, his undivided share in the land passes to the surviving joint tenants; this is called the right of survivorship.

Tenancy-in-Common (TIC)

In a tenancy in common, each tenant is entitled to dispose of his interest either by deed or will. A TIC is where all co-owners are said to be entitled to an undivided share of ownership. Not subject to the right of survivorship and does not require the four unities to be present. A TIC only requires the unity of possession to be present which generally exists where there is something to indicate that the parties intended that the presumption of a joint tenancy would not operate. TIC have the right to possess the property 100% but not the right to own it 100%. Generally, TIC is created by using words of severance, such as ‘equal shares’ ‘share and share alike’ ‘to be divided between them’ ‘equally’ etc. In contrast to common law (where joint tenancy is presumed) equity prefers a TIC.

Rights of Co-Owners

Right to possess the whole – one co-owner cannot exclude another from the property. If one does attempt to do this/or their reasonable guests and invitees – they will be deemed as trespassing. They also have a right to have a share in rent and income. Right to alienate the property – co-owners have the right to sell and the proceeds of that sale will be held in co-ownership. Doctrine of overreaching applies.

Equitable Intervention

There exists three means of equitable intervention in the law of co-ownership; 1. Unequal Contributions, where parties contribute unequally to the purchase price of the property, equity may intervene and find that the operation of the right of survivorship to be unfair. In such cases, equity will treat the parties as TIC in equity, and recognise them as holding shares of equitable control, usually commensurate with the proportions of their contributions. 2. Commercial Arrangements: Equity will generally consider commercial co-owners as TIC even where no formal commercial relationship exists between the parties. Must be a “truly” commercial arrangement as seen in Reilly v Walsh. 3. Co-Mortgagees: If two separate banks had granted mortgages over the same property and because of some oversight, they were construed as JT in law, equity would intervene and deem them TIC in equity.

Severance of a Joint Tenancy:

Severing a joint tenancy does not bring a co-ownership to an end, rather it changes the nature of the tenancy from a joint tenancy to a TIC. Two elements of severance exist – severance in law and severance in equity.

Severance at Law: 1. Alienation to a third party: if a joint tenant alienates his ownership to a third party, then his ownership is severed, and the purchaser becomes a TIC in relation to the remainder of the joint tenants. The remaining joint tenants are not affected in relation to each other. 2. Unilateral dealing: secret dealing. 3. Acquisition of an additional interest – requirements of four unities. 4. Statutory powers: an act of a third party exercising statutory powers, this is unusual because it is not one of the JT who are doing something that changes the nature of the relationship.

Severance in Equity: This only affects equitable ownership and therefore only relates to a joint tenancy in equitable land. Similarly, it will change the nature of the relationship from a joint tenancy to a TIC. Three mechanisms exists to do this: 1. Furthering the mutual intentions of the Parties (such as case of Burgess v Rawnsley). 2. Individual joint tenant acting upon his own share – (see case of Tempany v Hynes) – where a joint tenant enters into an enforceable contract with a third party to alienate their interests to them and the third party pays some of the purchase price but the contract is not completed – then tempany dictates the third party has acquired the interest in equity. 3. Course of dealing: effectively, if tenants hold themselves out as TIC, equity will treat as such.

There are a limited ways to end a co-ownership: 1. Sale; 2. Partition & sale and 3. Vesting.

Commorientes

This is when the co-owners die together, creating an obvious problem in a joint tenancy situation where the norm is that one joint tenant dies the right of survivorship would apply. In cases of simultaneous death, it is difficult or impossible to determine which JT has survived the other due to lack of evidence. At common law, the heirs of deceased JT were treated as themselves holding in JT. Section 5 of the Succession Act provides for the presumption of simultaneous death. Section 5 was amended by the Civil Law (Miscellaneous Provisions) Act [2008] so that where two or more persons immediately before their death held property as JT then die simultaneously, then they are deemed to have held the property immediately before their deaths as TIC in equal shares (Section 76). The shares will pass to their respective separate estate, and right of survivorship will not apply. Section 5(1) of the Succession Act [1965] provides that where one or more person dies where it is unclear which survived the other, they shall be deemed to have died simultaneously for succession purposes. Here, persons will be deemed to have held the property in immediately prior to their death as TIC in equal shares.

The reformation of co-ownership - LCLRA Act [2009]

Prior to the Act, the Law Reform Commission recommended that one joint tenant should not be able to sever a joint tenant on a unilateral basis, this recommendation was given effect by virtue of s.30 of the Act. The requirement for consent can be dispensed by court on the basis of unreasonably withholding. Abolition of unilateral severance of joint tenant - any conveyance (which includes mortgage) or any contract for a conveyance of land held in joint tenancy. This prohibition operates from 1 December 2009 but applies to co-owners already in existence at that date. It has already created controversy. It might, for example, be difficult for some co-owners to get consent (especially, from the elderly or parties in a relationship that has broken down). The 2009 Act does not provide objective criteria to assist the court in determining whether consent has been unreasonably withheld. This change may also be problematic for purchasers, as they will have to ensure that consent to the severance is obtained (in the absence of a court order); otherwise, the conveyance will be void. A question not addressed in the legislation is whether there is any duty on the purchaser to ensure that the consent is genuine and has not been obtained, for example, by duress. In addition, it is unclear what happens to a purchaser in the event that consent is overturned at a later date. The Act does not expressly provide protection to bona fide purchasers for value without notice (unlike the family home legislation).

Significantly, the 2009 Act also clarifies that registration of a judgment mortgage against the interest of a joint tenant does not sever the joint tenancy. If the joint tenancy remains unsevered, the judgment mortgage is extinguished upon the death of the judgment debtor. This removes the anomaly that existed prior to the 2009 Act that the registration of a judgment mortgage severed a joint tenancy over unregistered land but not registered land. Importantly, the Act does not alter the position where the estate or interest of a joint tenant vests in the Official Assignee in Bankruptcy or in a liquidator; so that the joint tenancy is still severed in these circumstances. The Law Reform Commission had proposed that this be amended, but this was not done in the 2009 Act.

Case Law

Bull v Bull [1955] – son and mother bought property together being their intention to share the house, son vested greater proportion to original purchase price and took on full legal title. After some time the parties had a disagreement and the son subsequently asked his mother to cease occupation of the property. Issue was whether mother entitled to continue to occupy the house until it was sold on grounds she was TIC, entitled to co-possession. Court held that son was holding the property jointly on trust for his mother and himself and presumption of sale should not interfere with mother’s right of occupation before then. Where property is owned by tenants in common, all tenants are entitled to enjoy the benefits of the property and thus a constructive trust can be identified as existing: equity presumed TIC, legal principle of fairness was focused upon by the Court.

Denis v McDonald [1982] – cohabiting couple bought a house as TIC in equal shares, 5 children. Rship broke down due to domestic violence perp onto the mother. She left and cared for the 2 youngest children. 3 other lived with farther in house who continued to make mortgage repayments. Court held that the order for sale was refused - one of the primary purposes of the trust as originally envisaged was to provide a home for the family, and this purpose was still subsisting. However, the father would have to pay an ‘occupation rent’ to the mother throughout the duration of his residence in the property. Therefore, the rent was fixed at half a ‘fair rent’ for the premises.

Bradshaw v Toulin [1784] NI – traditional approach was that if 2 JT died simultaneously, the estate remains in JT in their respective heirs. In modern times, this may prove difficult as a person may not necessarily have only one succession.

Jones v Jones [1977] The defendant’s father bought a house. The defendant, Frederick Jones, supplied one quarter of the purchaser price on the mutual understanding that it would be his home for the rest of his life. He gave up his job and council house and moved into the property. When the father died, the house vested in the defendant’s stepmother, the plaintiff Alice Jones. She demanded rent from the defendant and, when he refused to pay, brought proceedings for possession. The trial judge refused to grant an order for sale but ordered the defendant to pay three quarters of a fair rent. The Court of Appeal held that the plaintiff and the defendant were tenants in common having three quarters and one quarter shares respectively. Tenants in common cannot claim rent from each other even though the other occupies the whole property. Therefore, the plaintiff could not claim rent. Lord Denning MR said that the father’s conduct induced the defendant to rely on it to his detriment in giving up his house and job. Therefore, the plaintiff was estopped from turning him out. The court also refused to grant an order for sale as this would frustrate the purpose the house was bought for, namely, to provide the defendant with a home.

O’D v O’D [1983] –Murphy J expressed considerable doubts as to whether there remained any jurisdiction enabling the High Court to order the partition of property held by joint tenants or tenants in common. He took the view that the repeal of the Act for Joint Tenants of 1542 by the Statute Law Revision (Pre-Union Irish Statutes) Act, [1962] appeared to remove the statutory jurisdiction and he had reservations as to whether an equitable jurisdiction might survive.