Co-Ownership
Where land is owned by two or more people, they each have interest in the land and are known as "co-owners".
There are two ways in which co-owners may hold property:
  • As joint tenants
  • As tenants in common
Co-owners hold the property on a trust of land. Where property is held on a trust of land, the legal estate in the property is separated from the equitable estate. The legal estate is held on trust for those who are entitled to the land in equity. Ownership in equity is called beneficial ownership and it confers rights of occupation, the right to receive any rents and profits from the land and the entitlement to the proceeds on a sale of land.

In many cases, the legal and the beneficial owners may be the same. For example, if a husband and wife buy a property, they will usually be the legal and beneficial owners. In other cases, the legal estate may be held on trust for different beneficial owners.

The maximum number of trustees of a legal estate is four. The legal owners (normally A, B, C and D as the first four names on the transfer) would hold the land on trust for A, B, C, D and E.

The legal estate in a property must be held by co-owners as joint tenants. The equitable estate may be held as joint tenants or as tenants in common.

Joint tenants
Under a joint tenancy each tenant has an indivisible share in the property and all of the tenants are equally entitled to the whole of the property. The key feature of a joint tenancy is the right of survivorship which means that if one of the tenants dies, the other tenant inherits their share irrespective of the provisions in the Will of the deceased.

For a joint tenancy to exist the following points must all be satisfied:
  • Time – the interests of all the co-owners must arise at the same time.
  • Possession – each co-owner must have an equal right to occupy or possess the whole of the property. A co-owner cannot exclude another co-owner from any part of the property as this would mean they would not co-own it. However, such exclusions may be imposed, for example, by a court in a domestic violence case.
  • Interest – the interest of each joint tenant must be identical in nature, duration and extent. Any dealing with the land requires all of the joint tenants to participate in the transaction.
  • Title – the interests of the co-owners must arise from the same document.

Tenants in common
If co-owners hold the property as tenants in common, they each have a distinct share in the property in equity. The co-owners should indicate expressly the proportions in which they hold the property; otherwise, disputes may arise. The individual shares may be expressly stated in:
  • The wording of the transfer document, such as using the words "in equal shares", "amongst", "divided between", "equally" or "50:50". These will usually create a tenancy in common rather than a joint tenancy.
  • The Land Registry forms of transfer include a panel in which the co-owners may state how they wish to hold the beneficial interest in the property. If there is more than one buyer, all the buyers should execute the transfer to give effect to the declaration of trust.
  • A separate agreement between the owners, which is usually referred to as a declaration of trust.

Stack v Dowden
In this case, an unmarried couple had lived together for many years. Both had contributed financially to the purchase of the property. The transfer of the property to the couple did not contain a declaration of their beneficial interests. The House of Lords ruled that the parties were entitled to joint and equal shares in the property, unless a clear contrary intention could be shown.

The House of Lords established some key principles for determining the respective beneficial interests in this, and in similar, cases:
  • A conveyance into joint names will result in a legal and beneficial joint tenancy, unless the contrary is shown and the burden of proof is on the owner seeking to show that they intended to hold their beneficial interests as tenants in common.
  • The court must ascertain the parties' intentions in the context of the whole course of their conduct relating to the property. They will consider:
- the purpose for which the house was acquired;
- the nature of the parties' relationship;
- advice or discussions at the time of the transfer that would indicate their intentions at that time;
- why they purchased the house together;
- if they had children for whom they both had a responsibility to provide a home;
- why the survivor of the couple was authorised to give a good receipt for capital monies;
- how the purchase was financed, both initially and subsequently;
- how the parties arranged their finances, for example, whether their accounts were held separately, together or a combination of both; and
- how the couple discharged their outgoings on the house and other household expenses.

The principles established in Stack v Dowden have been applied to:
  • A mother and son who had shared a home for several years.
  • A mother and daughter who purchased an investment property.
  • A co-habiting couple who were in dispute over their beneficial interests in the family home.
  • An unmarried couple, where the man had moved out 12 years previously, leaving the woman solely responsible for the property.
Careful consideration needs to be made before deciding how you wish to own the legal and equitable estate of a property that is jointly-owned.

If you would like to discuss co-ownership with us please call us on 01562 514872, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or contact us using the contacts page of our website. Alternatively you can view our property team's co-ownership page.

 
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