By Law Teacher
THE LAW ESSAY PROFESSIONAL
6.1.1 Joint Tenancies v Tenancies In Common – Introduction
Welcome to the sixth topic in this module guide – Co-ownership! Co-ownership is where any two or more persons each simultaneously owns a given estate in land and are thus entitled to an interest, or interests, in that estate. The two types of co-ownership covered in this module are joint tenancies and tenancies in common. The reference to tenants here has nothing to do with tenants and landlords. Tenant here simply means ‘owner.’
A joint tenancy exists when each person owns the whole of the property – in other words, each person has a 100% stake in the property’s value. In the eyes of the law, joint tenants must act as a single owner. Upon death, the deceased’s part of the property automatically passes to the survivor(s) and the deceased cannot leave their part of the property to someone else in their will. If joint tenants wish to sell the property, they must all be in agreement. In relation to joint tenancies, this module will cover: survivorship, how and why a joint tenancy might be changed, the four unities; and the issues surrounding family breakdowns and joint tenancies.
Tenants in common exist when each person owns a separate share of the property, and these shares do not have to be equally sized. Unlike a joint tenancy, each owner can leave their share of the property to whoever they choose in their will upon death. However, as with a joint tenancy all tenants must all agree if they want to sell the property. In relation to tenants in common, this module will cover: right of survivorship; the unity of possession; rights of occupation and enjoyment; the payment of rent; contributions towards the maintenance of the land; and equity’s preference for tenancies in common.
Goals for this section:
- To be able to identify the distinctions between joint tenancies and tenancies in common.
- To be able to analyse and evaluate why equity prefers tenancies in common over joint tenancies.
Objectives for this section:
- To understand the concept of the right of survivorship as it relates to joint tenancies.
- To appreciate and comprehend the rights tenants in common have, such as the right of occupation and enjoyment, and the right not to pay rent to occupy the property.
- To understand the result of a tenant in common’s contributions towards the maintenance of the land.
- To appreciate the importance of the four unities; possession, interest, title and time.
6.1.2 Joint Tenancies v Tenancies In Common
INTRODUCTION AND CO-OWNERSHIP
Co-ownership is where any two or more persons each simultaneously owns a given estate in land and are thus entitled to an interest, or interests, in that estate.
JOINT TENANCIES
These types of tenancies are a type of co-ownership of land, under which each tenant – or ‘joint tenant’ – is equally and ‘wholly entitled on the whole’ to the estate (Burton v Camden LBC [2000] 2 AC 399, HL per Lord Millett). A joint tenancy is able to exist as either a legal or equitable interest, or both. In joint tenancies, no joint tenant is said to hold a share in the land; instead, each is invested with the whole interest in the land (Wright v Gibbons(1949) 78 CLR 313 (HC of Australia) per Dixon J), regardless of whether their interest is in the freehold or the leasehold.
Joint tenancies have two characteristics in particular that distinguish them from tenancies in common. First, joint tenancies provide a right of survivorship. Second, joint tenancies always require the presence of the so-called four unities.
Right of survivorship
This right, also known as ius accrescendi, provides that upon the death of any of the joint tenants, the entire co-owned estate is said to ‘survive to’ the living joint tenant(s). The deceased cannot have provided for their rights to be passed on to nominated beneficiaries in their will. This is because, by definition, they have no share in the estate to pass on, because shares do not exist in a joint tenancy.
The law is to a degree archaic in this area when it comes to multiple deaths of joint tenants: if several but not all of the joint tenants die at a similar time, and it is not certain in what order they died, the deaths are presumed as a matter of law to have occurred in order of seniority (the so-called “commorientes” rule).
The surviving joint tenant(s) takes the entire co-owned estate irrespective of their (lack of contributions) towards the initial purchase of the property. Survivorship is therefore often a useful measure for ensuring that a family home stays within the family.
Legal title is generally unimportant: it is a paper title that is held on trust, meaning that the legal title denotes the party with administrative and fiduciary responsibilities over the land, whereas the equitable title denotes the person who may benefit from the land.
Changes in legal joint tenancy
Joint tenants may opt to transfer the legal estate in land to themselves, or to transfer it to others, and hold the land as legal joint tenants (Law of Property Act 1925, s.72).
The Four Unities
A joint tenancy necessarily requires the presence of the so-called “four unities” in order to exist (AG Securities v Vaughan [1990]1 A.C. 417 per Fox LJ).
Possession
The unity of possession pertains to the right of each joint tenant to possession of the land; the right of each tenant to the land applies to each and every part of the land. Therefore, no joint tenant may take possession of any portion of the land, such as by sectioning off that portion of land, to the exclusion of the other joint tenants (Meyer v Riddick(1990) 60 P & CR 50, CA).
Interest
This form of unity derives from the idea that each joint tenant is ‘wholly entitled to the whole.’ The interest of each and every joint tenant is exactly the same in terms of extent, nature, and duration.
Title
The unity of title holds that each of the joint tenants derives their title to the land from the same act or document, such as an act of adverse possession, or a document such as a grant. For a co-owned legal estate, this type of unity also means that when a purchaser is looking to purchase the title to a portion of co-owned land, the purchaser need only purchase one title.
Time
Put simply, this unity requires that the interests of all joint tenants must have been vested in them at the same time.
Case in focus: A.G. Securities v Vaughan
Family breakdowns and joint tenancies
Joint tenancies have given rise to issues where the joint tenants are a marital couple, or are in a civil partnership, and their relationship irretrievably breaks down.
Ending of periodic lease
The first issue is that the legal joint tenancy over the periodic lease requires unanimous action by joint tenants, yet where there is a breakdown in the relationship that unanimous action may not be possible. As a result, the court has indicated that a single joint tenant may be entitled to bring the lease to an end by refusing to enter into a further term for the periodic tenancy (Hammersmith and Fulham v Monk [1992]).
The problem, as noted in Qazi v Barrow [2003] UKHL 43, is that the service of a notice to quit by one tenant of a periodic lease effectively brought the lease to an end without any consideration of the effect the loss of property had on the other joint tenant(s) (The matter was considered in Manchester City Council v Pinnock [2010] UKSC 45).
Social norms
The terms of the equitable joint tenancy upon breakdown may not necessarily reflect social norms of justice of who is entitled to what share, particularly where the breakdown is followed by the parties no longer cohabiting (Stack v Dowden [2007] UKHL 17; Jones v Kernott [2010] EWCA Civ 578).
It is unclear in these cases at what point the joint tenancies were severed into tenancies in common.
TENANCIES IN COMMON
Unlike with joint tenancies, in tenancies in common the co-ownership arrangements are such that each of the co-owners holds a distinct share, or proportions of entitlement. Tenancies in common take effect only in equity. There are two defining characteristics to tenancies in common, both of which set tenancies in common apart from joint tenancies:
- There is no right of survivorship between tenants in common, and
- The only unity which exists between the tenants in common is the unity of possession.
No right of survivorship
There is, unlike joint tenancies, no right of survivorship between tenants in common. The size of each tenant in common’s share is defined, finite and fixed; it is unaffected by the death of any tenant in common.
Only unity of possession is required
Again, unlike with joint tenancies, tenancies in common do not require that all of the four unities be fulfilled. Instead, there is only one requirement: that each of the tenants in common has a right to possession of the land.
Occupation and enjoyment
As with joint tenancies, given the unified right of possession between tenancies in common, no tenant in common is permitted to physically demarcate or erect boundaries on any part of the co-owned land for their own use at the exclusion of all other co-owners.
What may also be noted is that there is no inherent right of trustees, i.e. those that hold the legal interest in the land, to compel one beneficiary (i.e. a tenant in common with an equitable interest) to sell their share to another beneficiary (Rahnema v Rahbari [2008] 2 P. & C.R. DG5; Bagum v Hafiz and another [2016] Ch. 421 per Lord Dyson MR).
Liability of occupation rent
Between the tenants in common, it is usually the case that no one tenant in common can require the other tenant(s) in common to pay rent, even where one of the tenants in common effectively enjoys sole occupation of the land.
Where rent is received from a letting of co-owned land, paid by a stranger occupying the land that has been let out, the paid rent is divisible between the tenants in common in exact proportion to the value of their respective share (Job v Potton(1875) LR 20 Eq 84).
Liability for repairs and improvements
When one tenant in common offers to pay for or make repairs or improvements to the co-owned land at their own expense, they generally have no right of immediate recovery of his costs from the tenant(s) in common. (This principle applies also for joint tenants.)
Equity’s Preference for Tenancy in Common
The common law has tended to favour joint tenancies for purposes of certainty and the value of the concept of survivorship, whereas equity has tended to favour tenancies in common. Equity views tenancies in common as providing fairness in the property relations of co-owners (Kinch v Bullard [1999] 1 WLR 423, ChD per Neuberger J).
As mentioned the common law favours joint tenancies, and this has been given statutory backing: co-ownership must take the form of a joint tenancy where it pertains to a legal estate in the land (Law of Property Act 1925, ss. 1(6) and 36(2)). Yet equitable estates can take the form of either a joint tenancy or a tenancy in common.
There is an advantage, regarding the equitable estate, for favouring tenancies in common. Survivorship means that in the event any tenant dies prematurely, their interest passes wholly to the other joint tenants, and thus the deceased tenant has no means of diverting the interest to the persons they would have designated in their will.
What happens then where a tenant is simultaneously a joint tenant of the legal estate and a tenant in common of the equitable estate? This simply amounts to a full separation of those measures which attach to legal and equitable estates respectively.
Generally, as equity will follow the law, equity’s prior assumption is that where a person is a joint tenant of the legal estate, they are also joint tenant of the equitable estate (Pettitt v Pettitt [1970] AC 777, HL per Lord Upjohn; Cowcher v Cowcher [1972] 1 WLR 425, Fam Div per Bagnall J). There are a variety of circumstances which act to override the presumption of equity following the law and declaring a joint tenancy of the equitable estate. Thus, in the following cases, equity will declare a tenancy in common over the equitable estate rather than a joint tenancy, and the list is not exhaustive (Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549, PC per Lord Brightman):
- Express or implied words of severance – This instance will usually arise in a document or transfer or conveyance in which it is expressly or impliedly clear that the parties intend to take distinct and separate shares in the land;
- Absence of the “four unities” – As mentioned, the presence of all four unities is required for a joint tenancy, so an absence of any of the unities (save for the unity of possession) will necessarily mean the tenancy cannot be a joint tenancy;
- Contributions towards the purchase price in unequal proportions – Where the contributions are unequal, such circumstances give rise to the presumption that the parties had intended to take distinct shares in the property that were proportionate to their respective contributions, and given the contributions are unequal, the parties were necessarily recognising that one party would hold a greater share of the estate over the other tenant(s);
- Commercial partners – Given that joint tenancies have the right of survivorship as an essential characteristic, commercial parties would be presumed not to intend to divest the whole of their share in favour of the other commercial party, and instead would have opted to retain distinct shares (Lake v Craddock (1732) 3 P Wms 158);
- Business tenants – Where such tenants take a joint tenancy, they are also presumed to have taken a tenancy in common in equity given their ‘several individual business purposes’ (Malayan Credit Ltd v Jack Chia-MPH Ltd [1986]);
- Joint mortgagees – Mortgagees are of course the lenders in a mortgage relationship, and so where there is more than one mortgagee, it would be in their respective business interests to retain their own shares and contributions towards a property, meaning each mortgagee is taken to have intended to ‘lend his own and take back his own’ (Morley v Bird (1798) 3 Ves 628).
6.1.3 Joint Tenancies v Tenancies In Common – Hands on Example
The sections set out above discuss various parts of the law for both joint tenancies and tenancies in common. This section provides a series of problem questions that probe different areas of the matters we have just been examining. The answers to the questions can be found at the bottom of the page, however you are encouraged to attempt to answer the questions first based on your own recall or notes of the topic before looking at the answers.
Always think about the facts, the relevant statutory provision, the cases that interpret that provision, and what the outcome will be based on how those principles and cases apply to the question. As you may have gathered, both the Law of Property Act 1925 and TOLATA 1996 are especially important. Although you would not be expected to give the full citations of cases you cite (just the names of the parties and the year is usually sufficient, the name of the judge giving the ratio is even better!), you will be expected to accurately cite the relevant sections and subsections of the legislation. Simply reciting the name of the statute in your exam without the corresponding section and subsection will not be sufficient.
As a rule of thumb, always look to see if the four unities have been satisfied. If only the unity of possession is present, it is a tenancy in common. If only three of the unities are present, it is still a tenancy in common, because a joint tenancy requires all four unities at once. Finally, remember the differing policy considerations which underlie joint tenancies and tenancies in common, i.e. the issue of survivorship. In family homes, it may be helpful for the interest to pass wholly to the other joint tenant (the spouse or civil partner) without the need for investigating the will and so on. On the other hand, the tenant may wish to have the freedom to dispose of their interest to a named person and not have their interest pass automatically to the other joint tenant, particularly where there is an irretrievable breakdown in the relationship between the joint tenants.
Q1. Albus and Beryl purchased Blackacre together as a married couple. They purchased Blackacre at the same time, and their names are both on the same deed which granted them the title. The relationship breaks down, and Beryl is now looking to leave Albus. She wants to use Blackacre to raise some capital. Thus far, she has made more than 70% of the mortgage contributions. Advise Beryl.
A1. This question is asking whether Beryl can sell her “share” in the property. In joint tenancies, we have seen that the concept of shares does not apply. What is owned by Beryl is wholly owned by Albus. She therefore cannot sell any “share” if it is a joint tenancy. However, because she has made a much greater (unequal) contribution to the purchase price than has Albus, the court may infer, following Stack v Dowden that the parties intended to create a tenancy in common.
Q2. Chuck, Charlie and Doris are joint tenants of Whiteacre. Chuck is Charlie’s older brother, and Chuck and Doris had married after Chuck had gotten divorced. Chuck has a son from his previous relationship, Eric, who also occupies the property and is not a joint tenant. Chuck and Charlie are killed in a car crash, and the evidence says they died at or about the same time. Eric wants to know if he will inherit any of their combined interests in Whiteacre.
A2. The right of survivorship (ius accrescendi) arises here. Given that both Charlie and Chuck were joint tenants with Doris, their interests pass completely and wholly to Doris. None of their interest is transferred to Eric. Given the timing of their death is effectively simultaneous, one could raise a point about the commorientes rule. It is at most an academic issue in this question, but it is worth revising.
Q3. Florence and Gareth live with Gareth’s parents, Harriet and Ian, in Redacre. Harriet and Ian, tenants in common, had paid the deposit and had maintained much of the mortgage payments. Florence and Gareth, acting in their capacities as joint tenants, decide to charge the property to Jupiter Loans Ltd. They don’t tell Harriet and Ian about the charge. Florence and Gareth fall behind on their instalments. When Jupiter Loans looks to repossess the property via the charge, Harriet and Ian come to you for advice. They are hoping that they can continue to live in the property.
A3. This is a reprise of the facts in City of London Building Society v Flegg. You will recall that the tenants in common in that case had effectively no recourse against the bank; as tenants in common, they could not exercise legal rights over the estate. However, it was open to them – as it is open to Harriet and Ian – to pursue a personal claim against the joint tenants. That is at most what Harriet and Ian can get; there is no recourse for them against the holder of the charge.
Q4. Karen, Lynn and Mike live together as tenants in common in Greenacre, each holding a one-third share. They decide that they want to sell the property. Karen thinks it would be best if the property were improved; the condition of the garden and the water pipes, for example, need to be fixed. Karen discovers it will be a considerable expense, and tells Lynn and Mike. They say they just want to sell the property, but if she wants to be out of pocket to make those improvements, she can do so. Karen pays the necessary costs for those improvements. Karen comes to you for advice, asking if she can get payment from Lynn and Mike for the improvements.
This is to do with the tenants’ obligations regarding improvements. Generally, there is no immediate personal right on the part of a tenant in common against the other tenants if that first tenant chooses to pay for improvements. However, at the time of the sale, Karen can then ensure that the amounts Lynn and Mike receive will be subject to effectively two-thirds of the cost of the improvements undertaken.