Co-ownership, Trusts and Undivided Shares
This domain tests concurrent ownership: how the beneficial interest is held, how it can be severed, and how a purchaser takes free of it.
Joint tenancy or tenancy in common
- A joint tenancy requires the four unities - possession, interest, title and time - and carries survivorship; there are no distinct shares.
- A tenancy in common gives distinct but undivided shares; on death the share passes under the will or intestacy.
- Words of severance, unequal contributions or a declaration in the transfer may create a tenancy in common. Equity presumes a tenancy in common for business partners and unequal contributors, but the presumption is rebuttable.
Severance
A joint tenancy may be severed by:
- written notice under s.36(2) LPA 1925 served on the other joint tenants - no agreement is needed, and service is effective under s.196;
- an act operating on the severing tenant's own share, such as a transfer or mortgage of that share, or bankruptcy, where the share vests in the trustee;
- mutual agreement or a course of dealing (Williams v Hensman).
Trusts of land and overreaching
- Under TOLATA 1996 trustees have the powers of an absolute owner, subject to the trust and to consulting beneficiaries (s.11); a beneficiary may apply to court under s.14.
- A purchaser overreaches beneficial interests by paying purchase money to at least two trustees (ss.2 and 27 LPA 1925); a sole trustee cannot overreach.
- A Form A restriction prevents registration of a disposition by a sole proprietor where capital money arises, forcing appointment of a second trustee.
Worked example
A and B are registered as joint tenants. A serves written notice of severance in 2020 but no restriction is registered, and A dies in 2024 leaving a will gifting 'my share' to C. The notice severed the joint tenancy on service, so A held a half share as tenant in common which passes to C; B cannot rely on survivorship, and a purchaser from B alone would not overreach C.
Traps
- Believing a restriction protects the beneficiary against every dealing; overreaching defeats it.
- Treating severance as requiring the other joint tenant's consent.
- Forgetting that a sole proprietor tenant in common must appoint a second trustee to give a valid receipt.